A Financial Life Truth Test
Take some time to consider two important questions about your financial life.
- What do you say to other people (your spouse, kids, co-workers, friends, parents, etc.) in terms of how money should be managed?
- What financial priorities do you think and feel are important?
Here are some possible responses you may have come up with in terms of what you say and how you think and feel about money management.
- It’s important to live within (or even beneath) your means.
- It’s important to save for retirement.
- Credit card debt should be avoided at all costs.
- It’s important to have some money set aside for emergencies and other unforeseen expenses.
- I think it’s important to give to worthy causes, and to those who are less fortunate.
- Christmas (and other holidays) have gotten over-commercialized.
- I’m my own person; I don’t pay attention to what others think about me.
You could have come up with other responses as well, but you get the idea. Now consider an even more important question. How do you actually manage your money? In other words, is the way you spend and manage your money in alignment with what you say and feel is important to you financially? In thinking about that, consider the following.
- Do you live in such a way that you’re able to make ends meet from paycheck to paycheck without turning to your savings or credit cards to make up the difference?
- Do you already have enough saved for retirement? If not, is your present level of savings sufficient to meet your goals?
- Are you presently carrying a balance on your credit card from month to month? If so, are you taking steps to eliminate any credit card debt that you may have? Are your credit card balances increasing, decreasing or staying the same?
- Do you have enough money set aside in savings to take care of an expensive car repair, home repair, or other unforeseen expense?
- How much of your money (and/or your time) do you currently give to your community, church, charitable organizations or other worthwhile causes?
- Do you go overboard in your purchases for Christmas, Halloween, or other holidays? Do you go into debt to do so?
- Do you avoid factoring in what other people may think about you – whether you want to be perceived as successful, sophisticated, cool, etc. – in terms of choosing where you live, the car you drive, the clothes you wear and the personal items that you buy?
Now, are you comfortable with the way you answered the questions above relative to what you said and how you feel about managing money? If so then you can almost be assured that you’re being honest with yourself financially. On the other hand, what if you have every intention of being financially responsible, yet in going through this exercise you realize the way you’re managing your money isn’t matching up to what you say and feel is important to you? If that’s the case then it’s important to recognize that in order to align your actions with your values you’re going to have to make some changes – real, fundamental changes – some of which may be very difficult.
Dangerous Money Management Mentalities:
Exceptionalism and Procrastination
If you’re struggling with the idea of making difficult changes then you can opt for some ever-tempting alternatives. The first is that you can attempt to feel good about yourself simply by justifying your present course action. The speech goes something like this: “There are exceptions in my case. Although I spend all of my excess money on [the latest electronics, fashionable clothes, expensive cars, high-end vacations, serious hobbies, and other things for myself], what’s really important to me is [family stability, having enough set aside for emergencies, giving back to the community, saving for retirement etc.].”
An alternative line of thinking might be even more dangerous and seductive: financial procrastination. In your mind it would sound something like this, “Once I have [done this] or [have that] THEN I will [start paying off my credit cards, saving, etc.]. And why is financial procrastination so dangerous? It’s essentially because it enables you to (seemingly) have your cake and eat it too. In other words, a deeply embedded financial procrastination mentality enables you to spend your money irresponsibly today because you’ve convinced yourself that you’re going to start managing it responsibly tomorrow.
Having said all of this, it ultimately falls to you to be your own judge. After all, perhaps you really are one of those rare exceptions; maybe you really are at a time in your life where your education, career or a personal goal you’re pursuing is temporarily throwing things out of balance from a financial point of view. Or maybe after you have gotten certain things you really will turn the corner in terms of your financial discipline. But just remember, in the end it’s your actions over a sustained period of time – not what you say, think or feel – that are the truest reflection of who you are and what’s really important to you.
Where Do You Go From Here?
So where do you go from here? First, if you’re already living your financial values then don’t get complacent; keep at it! On the other hand, if you’re not then take heart. The very fact you’re reading this article is an indication that you’re serious about getting your financial house is in order. But if you’re really going to right your financial ship you have to take things further: you have to actually be willing to admit to yourself that your money-related actions are out of alignment with your values. If you can do that – if you can cultivate that kind of self-awareness – then you’re being honest with yourself. And if that’s the case it’s an extremely encouraging sign, because if you’re willing to acknowledge there’s a problem then you can start to take constructive steps to deal with it. On the other hand, if you choose to not be honest with yourself by ignoring financial realities right in front of you then I don’t think you will ever truly be able to get a handle on your finances (or any other worthwhile aspect of your life for that matter!). And what does that mean? It means that being honest with yourself is a matter of financial life or death!