Photo (cc) by tuckett
This post comes from AJ Smith at partner site Credit.com.
We all get emotional – it’s human nature. The trouble sometimes comes when our emotional side overrules our rational side in money matters. Check out some of the common ways emotions can hurt your finances, discover if you are an emotional spender and how to combat the problem.
It is easy to become bitter when we see other people (whether they are friends, family members, co-workers, old classmates, neighbors or even celebrities) make big purchases. Between Facebook, Twitter, Instagram, Snapchat and all of our social media options, it’s all too easy to compare our life to those of others. But trying to keep up with the Joneses can lead you to sabotage your own financial goals.
Instead of focusing on the jealousy or being embarrassed by your own means, try to use their success as a motivator. Think about what you have to be thankful for, evaluate your own finances, make a plan to forgo some expenses and save for what you really crave, whether that’s buying a home or paying off student loans.
If you are shocked when you check your bank account balance or get your credit card bill at the end of the month, you probably are not following a budget very well. You may look in your closet and find that you suddenly have a lot more clothes or shoes or have vague memories of eating out at fancy restaurants. It can be a good idea to pinpoint your triggers, start to weigh every financial decision carefully and track your spending.
3. Prone to procrastination
It is easy to put things off, but at some point the future comes around. If you tend to avoid responsibility for or procrastinate when it comes to activities like saving money, your future self may suffer. For example, your retirement can be in serious danger. If you don’t trust yourself to put money away, try to find ways to make it easier. It can be a good idea to set up automatic deposit to send some funds straight from your paycheck to savings, emergency or retirement accounts.
The same is true with your credit. The costliest mistake home shoppers, car buyers and credit card users make is not knowing where their credit stands before they apply. That mistake can add up to tens of thousands of dollars over your lifetime because interest rates are heavily dependent on your credit scores. Doing the work to rebuild your credit well in advance of applying for loans can make sure you get the best deal possible. You can check your credit scores for free on Credit.com to see where you stand.
Sometimes when you come into a windfall or are making more money than friends and family members, you feel uncomfortable and think you need to share the wealth. This can lead to picking up the tab at dinner, for vacations or for other expenses. That money advantage can quickly disappear. To avoid this, it can be important to make a new financial plan and budget immediately. Then you can set up a section in your budget for spending that allows you to be generous with family and friends. You can also do things like invite friends to dinner in your home or choose a less expensive restaurant to visit.