Your Money Is Where Your Heart Is
One of the most popular questions I get asked regarding personal finances is “What issues do I see the most on personal budgets?” I used to think it would be that your average person spends way more on food than they think, and that’s often the case, but the one thing I notice the most was just how much a person’s emotions dictate where their money goes. I’ve seen a person with a near six-figure salary struggle to invest in a new pair of shoes because they weren’t used to spending on themselves. I’ve also seen a person just coming out of bankruptcy buy a brand new car for the same reason. How you “feel” directly impacts how you spend.
It’s helpful to understand that our financial decisions aren’t made in a vacuum. The single man in credit card debt isn’t just a reckless college student, he’s a first-born son that’s always had to be the “responsible” one. Now that he has some freedom, he’s using credit cards to do everything he couldn’t do at home.
A frustrating work week can lead to excess spending over the weekend. I know I’ve seen many a bank accounts full on a Friday only to be empty come Monday morning. We use money to reward ourselves after stressful times or to mark an occasion. Much like food or alcohol, money is not inherently bad, but when overused or focused in the wrong direction, it can cause damage.
3 Ways to Separate Your Heart From Your Money
Tip #1: Sleep on it. I personally use this one. I am notorious for online shopping after a stressful day. I log on to Asos.com or West Elm, depending on my mood, and fill my cart with all the things I “need.” Everything seems like a deal but before I check out, I make myself sleep on it. By the next day, that marble coffee table or sequined dress doesn’t seem like much of a necessity.
Tip #2: Give yourself some “Fun Money”. Even the nerdiest of budgeters can find it hard to completely stick to a plan. It’s good to leave aside some money that you don’t have to account for. It has to fit into your budget and debt repayment plan and shouldn’t be a large amount, but it can help you curb excess spending when the feels are just too much.
Tip #3: Leave the money at home. This might take some time to get comfortable with, but when I first started changing my finances, I left my credit and debit cards at home. I knew it was too much of a temptation to over spend when the money was right there. If I only had a finite amount of cash in my wallet, then it was harder to get that fix. By the time I got home, where the money was, I was usually de- stressed from whatever situation prompted me to overspend in the first place.
There’s no one size fits all when it comes to separating our hearts from our dollars, but these are just a few tips that have helped me to be more in control.
Do you think emotions play into how we handle our finances? How has your money been positively or negatively impacted?
About the Author. Yetunde Okesola is a financial coach in Washington, D.C. and is the founder of Life On Budget, a blog and an online resource for getting out of debt and taking hold of your finances. In 2016, she became a Dave Ramsey Certified Financial Coach and today helps singles and couples get out of debt and build wealth by taking an honest look at their finances.