Five Ways to Ruin Your Financial Life

1. Lack of Planning for Future

People with money problems lack skills for life planning and have no road map to attain life goals. Maybe you live for today and don't think too far into the future. Maybe you've never been hopeful about the future. Maybe you've never reflected on the consequences of today's decisions. Or maybe you don't think planning is necessary.

Regardless of the reason, if you don't plan where you are going, you aren't very likely to get there. Not planning impacts every area of life - relationship & family, financial, career, home, and your leisure hobbies.

Steps to take now: Draw a timeline of your entire life – from your birth until about 80 years old.
Enter every major life decision or life change you’ve had so far. Then look to the future. Reflect
on what you want 10 years from now and concentrate on that little window of time. If you can’t
think of anything you want to plan for – then get some friends to brainstorm with you. If you are
still having trouble, then think about people you are jealous of – what do they have that you
want?

2. Lack Clarity about Unique Values

People often get into money troubles because their financial behavior doesn’t align with their
values. You might think you value intangibles like your relationships, or your health or love or
nature. However, you don’t always put your money into those values. Most likely you haven’t
taken time to reflect about your values.

Again, regardless of the reason, not knowing what makes you tick as a unique person in the
world impacts every area of your life. Financially, it drives folks to spend up the wrong tree – in
areas that will never bring satisfaction because they are the wrong values. Perhaps you are
operating from society’s values, your parents’ values, or your spouse’s values? Maybe you are
even still operating from what your best friend at age 13 liked – and have never taken the time
to find what you really value.

Steps to take now: Make a list of your favorite things – hand knitted socks, Beethoven’s 9th
Symphony, watching your grandmother yo-yo, beating someone at tennis. Make another list of
what makes you unique, what do you want folks to say about you at your funeral, what footprint
do you want to leave on earth? Find ways to participate in those things you love -- now.

3. Unconscious and Disrespectful of Money

Not keeping good records of your finances is disrespectful to money, and ultimately to yourself.
If you don’t monitor your money how will you ever be able to improve it? People do this
because of habit, not understanding the importance of recordkeeping, or unconsciously not
wanting to see reality.

Again, regardless of the reason, you can’t improve your life by doing the same old behaviors.
It’s imperative to act on your own behalf with your money, and that begins by respecting it
enough to keep track of where it is going. Every change begins first by determining a baseline.

Steps to take now: Start keeping track of everything you spend, including small items under
$1. Start collecting your receipts and write down all your purchases. Don’t judge yourself, just
record it. You can look at it later – at first just get the numbers down. Add it up at the end of the
day, week or month. Invest time and energy into managing and tracking your money. You’ll
need to do this to ensure that you direct your spending toward your real values (See #2 above.)

4. Confusion about What Money is and What Money Isn’t

Money can’t buy happiness; it is a means of exchange. Having it or not having it doesn’t make
us happy. The research shows that money and happiness are not correlated once basic needs
are met. This means that not having money to pay for basic necessities can make you
stressed, worried and depressed. However, once you have enough to meet basic essentials,
then more doesn’t mean happier. Money isn’t love either – or power, or anything else. It’s a tool
to help you buy things you need to live. You trade your labor for money, then trade your money
for someone else’s labor.

Steps to take now: Reflect on times in your life when you were truly happy. What were the
circumstances of that happiness? Aim to create more of that in your life. Who are people that
you think are happy? Ask them what makes them happy. Also reflect on what makes you
happy that doesn’t cost money? If you don’t know the answer to this, then go back and do the
exercises in #2 above.

5. Buy Things You Don’t Need

We all run our lives by our impulses. People who are highly Impulsive with money often buy
things they don’t need. People who are easily swayed by advertising, popular trends, or what
others have also tend to buy what they don’t need. Sometimes people buy things they don’t
need because they think that’s what others expect of them.

For example, you might convince yourself that you need a particular item. Soon after, you
realize that item wasn’t what you wanted at all. Next, you are onto a new item, again you
believe this next one is necessary. All the while, you believe that you can’t afford something
you really want. It’s common in the modern day to think we need a lot. Sometimes people feel
insatiable about what they want.

Steps you can take now: What would happen if you waited to see how necessary the item
really is? Don’t buy anything unless you have a list, talk to another person beforehand, or wait
24 hours before purchase.

Reflect on a time in your life that you didn’t need this? What is different about your life now?
Why do you think you need this? Do other people need this item? Do they need this in other
countries? How does this fit in my plan (#1 above)? Does this reflect my values (#2 above)?
Does this purchase demonstrate that I respect money (#3 above)? Do I expect this item to bring
me some thing intangible like happiness, or esteem or love (#4 above)?

©2008, Sally Palaian, Ph.D.