On a basic level personal finance should be an easy subject to learn. After all the math required only includes a working knowledge of percentages, compound interest, addition, subtraction, multiplication and division. By the end of elementary school you had all the skills you needed to do it and the concepts are very easy to learn like spend less than you earn. Yet despite that fact, lots of intelligent people have problems with their money. So what’s wrong with us?
Well the fact is despite our best intentions you are likely a little like me and have those moments where you are lazy, selfish, impulsive, stubborn, willfully ignorant…take your pick of your most unflattering moments. We keep telling ourselves that things would work if only we were better people. It’s time to face the truth we are never going to be better all the time. Everyone has their off days, so rather than planning around you suddenly getting a halo, perhaps the solution is for you to plan for those unpleasant moments as well.
How? You make the good things you want done as painless as possible for yourself. Set up automatic bank transfers to your savings account and RRSP for the day you get paid. Or sign up for a slightly higher mortgage payment to help get that mortgage paid off faster.
Then on the reverse side you make the things you know are bad more difficult to do. This is where you really start planning for your own particular weakness areas. In my case, it means using spending cash rather than a debit card or credit card for those day to day little expenses. Why? Because I’m lazy. I hate tracking little expenses so by using cash I don’t have to. I would much rather just use cash for lunches out, the occasional coffee at Timmy’s or a DVD that just came out. So when the cash is gone I know that I’m done my budget.
Another example is a friend of mine recently got an ebook reader, but specifically got one without a Wi-Fi connection. Why? She admitted she had poor impulse control around buying books and being able to buy them just about anywhere was too much temptation.
So rather than hoping we would suddenly become better people we faced the truth and planned for what we actually are: lazy and impulsive. It’s ok to admit we all have our bad moments. Actually if you want to really take control of your financial life you need to admit to yourself what you bad moments are and start working around them. It’s certainly easier to do than trying to wear a halo that just doesn’t fit you.