Eliminate These Four Self-Destructive Financial Behaviors

Sometimes, unfortunately, the primary barrier to wealth building is our own perspectives and the resulting actions. Habits we’re barely aware of may be undermining progress toward vital financial goals. Identifying and modifying self-destructive financial behaviors around money is crucial if we hope to achieve financial security and, eventually, reach financial independence.

Here are four self-destructive financial behaviors that could ruin even the most comprehensive financial plan, and techniques to help you overcome them:

Financial Avoidance

It turns out that pretending a financial issue does not exist won’t make it go away. When it comes to money, procrastination only adds fuel to the fire. Being unwilling to face your finances could lead to late payments, not submitting tax returns on time, and many missed opportunities.

Steps to Take

Break larger financial tasks into smaller, more manageable pieces. Add money-related items to your calendar and to-do lists.

Investigate the root causes of unpleasant feelings you’re experiencing.

Are you overwhelmed because you don’t have the knowledge needed to accomplish what you’re trying to?
Does your frustration stem from a lack of organization or the clunkiness of your processes?
Are you jaded because of past personal financial experiences?
Is money tied to uncomfortable memories, such as your parents fighting?

Create positive money interactions. That may mean working on your budget with soft music and a glass of wine (just make sure your math doesn’t get fuzzy), or treating yourself to something special once you’ve finished a financial task. Once you’re starting to get things done, reflect on your progress and be sure to celebrate milestones, both large and small.

Impulsive Spending

Impulse spending, buying without consideration of or concern for the financial impact, is often a response to stress, boredom, loneliness, or other emotions. Among other things, this can quickly lead to financial insecurity and high levels of credit card debt.

Steps to Take

Some people find it helpful to sleep on purchases, to follow (minimally) a 24-hour rule when spending. For more expensive items, a one-week or one-month waiting period may be advisable.

My husband and I take a “save before you buy” approach to spending. When we want something, it’s added to our wish list. There, it must not only wait for funds to become available but also compete for our savings with other desired items.

“Never spend your money before you have it.”
Thomas Jefferson

It’s very difficult to break an emotionally driven habit without exchanging it for another behavior. Try to find a healthy outlet for whatever feelings are driving your impulse purchases, such as going to the gym, walking in the park, journaling, or calling a loved one.

Living Beyond Your Means

Over time, are you going further into debt, breaking even, or getting ahead?

Those who live beyond their means, whose spending exceeds their earnings, soon find themselves buried under a mountain of debt. They start to feel like they’re “drowning” in it.

Steps to Take

I find those who spend more than they make typically aren’t keeping track of the money that is coming in or going out. To rectify that, I have them do a cash flow analysis. The next step is to design a strategy for spending and saving.

Those that struggle to make ends meet are often spending too much on their house and vehicles. Housing, ideally, shouldn’t exceed 28% of one’s monthly earnings.

A good overall benchmark to strive for is 50% to needs, 30% to wants, and 20% to saving and investment.

Trying to Keep Up with the Joneses

People used to watch their neighbors putting in a pool and think, “I need one of those!” Today we’re more likely envious of one another’s Insta-life. If you find yourself desperately wanting things that you didn’t care about until you drove by or scrolled past them, trying to keep up with the Joneses may be your financial Achilles’ heel.

Steps to Take

Focus on what you have, rather than what is lacking. Either first thing in the morning, or right before you go to sleep, think of three things you’re grateful for.

Engage in intentional self-improvement. Get to know yourself, accept who you are, and decide who you’d like to become. Spend on those things that will help you become more authentically you, suit your lifestyle, or align with your core values. This will allow you to use money as a tool, to propel yourself toward an ideal life (of your own design), rather than trying to replicate what others are doing.

Leave the Self-Sabotage Behind!

To reach your financial goals, you may need to eliminate financial behaviors that don’t serve you, or at least no longer serve you. This begins with the willingness to recognize how your habits are hindering progress, the awareness to determine the root causes of those behaviors, and the courage to envision another way.

By making a conscious choice to do things differently, and implementing some of these strategies, you can change your financial trajectory.

Start small, determine the next step and take it. Consistency is key whenever we’re making behavioral changes.

Habits are difficult to break. You may relapse, and that’s okay! Slipping back into former behaviors is a normal part of the change process.

Regularly remind yourself why the change is so important. Visualize, in vivid detail, how your life will be better once you’ve become more financially stable. Keep a running list of the reasons you want to become financially independent. Enlist the assistance of a friend, family member, or a professional.

Know that change is possible. Your financial destiny is not written in stone!

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