By Steve Gillman
It is normal to blame your financial troubles on outside factors.
Sometimes unexpected things do happen, after all - in anyone's
life. Then again, some people manage to handle the unexpected
without any real financial difficulty, don't they? So what are
they doing differently from others?
First of all, some people - even some with a very low income
- set aside money for the inevitable car repair or visit to the
dentist. Repairs,dental problems, a washing machine breaking
down - these are all unexpected at the time, but it is totally
predictable that they will happen at some point in your life,
isn't it? When we think and act as if they won't - and so don't
set aside money for them - we have problems - with the way we
The good news? You can change how you think. Reflect on your
past, for example, and you might note that every year you have
had several "surprises" that cost hundreds of dollars
each. Remember the financial trouble these caused, and the stress,
and you might decide to be ready for the next "surprises."
You can choose to set aside a little bit of money each week in
expectation of these "unexpected" things. It doesn't
mean worrying about these things - you plan so you don't have
Financial Trouble Comes From Poor Thinking Habits
There are many ways in which poor thinking habits affect financial
matters. You probably know how much easier it is to buy things
when you have a credit card, for example. Research, by the way,
shows that people will definitely pay more when paying with a
credit card. For example, there was a study in which those who
were allowed to use credit cards at an auction for Boston Celtics
tickets bid twice as high as those who were required to pay cash.
This was true even though the latter were allowed two days to
pay (this was to be sure that immediate cash availability wasn't
This tendency to be freer with credit can get you into trouble,
so what's the solution? You can start by training yourself to
think of all money as cash in your pocket. When faced with a
possible purchase using a check or credit card, ask yourself
if you would do it if all you had was cash. A more drastic solution
is to get cash from your bank account before you go shopping,
and leave the credit cards behind.
Our minds work in certain habitual patterns, so why not use
these habits in your favor? Here is another way to do this; procrastinate
in making purchases. Procrastinate about something, and you often
just won't do it. This is certainly true when buying something.
Don't worry, if it's important enough, you'll still buy it later,
but some things will be forgotten - as they should be. Procrastinating
on buying decisions can radically reduce what you spend.
Another habit to program into your thinking, is to think of
things in terms of hours worked to pay for them. Let's suppose
a new television you like costs $1,700. If you make about $11
per hour after all taxes, it takes 154 hours of your labor to
pay for that TV. Do the math, and then imagine going to work
for an extra day each week for more than 19 weeks (8 hours per
day) to pay for it. Maybe that price is too high when you see
it that way? Or maybe not, but at least you'll know, and you'll
avoid some bad purchases.
By the way, you should include the costs of interest if you
are buying with a credit card. It might be $2,400 for that television
before you're done. Now the price is 200 hours of work (working
Saturdays for half of the year would cover it). Consider the
total cost with interest for all purchases and you might change
your mind on some things.
A quick review: Procrastinate when spending money, and think
of it all as cash or hours worked. Look at the total cost with
interest if you are financing a purchase. Plan for the unexpected.
Try to think differently, because financial problems start in
your mind, so that's where the solutions are.
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