Overcoming Financial Roadblocks

Mastermind-Traders-Overcoming-Financial-Roadblocks

Tips and Tools to Help you Stop Overspending

I’d venture to say that the world’s most common advice for people trying to save money is the following: Spend less than you earn. 

It’s common because it’s incredible advice and makes a ton of sense. Spend less than you earn. How simple! How reasonable! But like anything that seems too easy to actually be implementable, there’s a catch.

Money is more complicated than that. If it was truly simple to follow this advice, then people would be doing it more often. But the research shows, they’re not.

43% OF AMERICAN FAMILIES ARE SPENDING MORE THAN THEY EARN EACH MONTH.

And this issue is pervasive in our lives. MONEY IS OUR COUNTRY’S NUMBER ONE STRESSOR (American Psychology Association). 72% of adults reported feeling stressed about money at least some of the time, and nearly a quarter rated their stress as “extreme.” This financial stress is not experienced solely by the lowest earners. It cuts across income levels and age cohorts.

This stress isn’t good for our health, our relationships or our ability to teach our own children about financial readiness.

There’s a lot at play here, including some psychological barriers that keep us stuck in old habits of spending, and neglecting to save for the future. Here, we’ve gathered some of the common stumbling blocks, along with some tips and tools to flip the switch on your financial situation.

  1. The Action-Goals Gap.

The Action-Goals Gap is a cognitive bias. Simply put, we know what we SHOULD do in particular situations, and yet, we repeatedly make decisions that move us in the opposite direction. This happens all the time with financial decisions.

We know that we should spend less than we make, and yet almost half of American families continue to spend more. We know that we should be saving for our retirement, for our kid’s college education and for the next car repair. But we don’t do it.

One way to make a change:  Delay your purchases.

How many times have you purchased something you didn’t truly need or even want, because of an auto-pilot mentality? An easy way to start changing your mindset about purchases is to WAIT. Before you buy something, go for a walk. Call a friend. Have a snack and really allow yourself to decide, consciously, whether you want to make the purchase.

Want to go one step further? Delete your credit card information from the sites that you find irresistible. Is the one-click purchasing option on Amazon hurting your bottom line? Unlink your card. Do it now.

  1. Budgets don’t stick.

How many times have you created a detailed budget and spreadsheet, only to abandon ship a few weeks later. It’s hard to stick to a budget when you continually fail at staying within your own parameters. If you consistently find yourself over your grocery budget two weeks into the month, you need a new plan.

One way to make a change: Ditch the spreadsheet and use an app.

A plethora of financial planning, budgeting and saving apps exist that can simplify your financial life and help you to create reasonable budgets, goals and boundaries around your spending.

For Budgeting: Try Mint or You Need a Budget (YNAB)
For Saving: Qapital, Digit and Dyme

These smartphone tools won’t change how much money is coming in or going out. But they can help you take a good, hard look at what you’re spending and where. It’s a good first step, and one that is critical if you’re continually spending more than you’re earning.

  1. Spending is too easy.

With credit and debit cards, we don’t have to face the cost of our purchases. We swipe and hit buttons and then take home the stuff we want! How lovely. How seamless.

But this lovely and seamless experience is making it too easy for us to buy stuff we don’t need.

One way to make a change: Cash is king!

We’ve already talked about delaying purchases and tracking your spending. Now take it one step further and take actual cash out of the ATM to use for small purchases. This creates an immediate feedback loop. If you don’t have dollar bills in your wallet, you don’t get to have that second coffee. Period. If you have dedicated $100 per month to restaurants, and that envelope is empty, it’s time to get creative in the kitchen.

CASH. It’s vintage, it’s old school. It’s king, and we suggest you start using it.

Spend less than you earn.

This is a statement we’ve heard over and over since childhood, and yet somehow, it hasn’t stuck for a lot of us. Why? Because if it was really that simple, no one would be in debt and we wouldn’t be writing this post.

Life is complicated. We come to our financial position for a variety of reasons, some of which are at least partially beyond our control. Using these tips, you can begin to change your experience around money. Take back the control, and start living a healthier, more stress free life.

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