Our psychological makeup works against us, giving us reasons to delay exercising, eating healthier or saving money.
Research shows that the same areas of the brain that are responsible for emotional states are also involved in the processing of information about risk, reward and punishment.
Positive and arousing emotions such as excitement induce people to take on more risk while negative emotions such as anxiety have the opposite effect. if you are behaving in strict accordance with your emotions and a wardrobe of clothing arouses sufficient excitement in you, it is possible that you will buy the new wardrobe without giving too much thought to the alternatives that are available.
Emotional reactions stop us from setting up a savings plan and instead we overpay on big ticket items, even though those decisions may cost us thousands of Rands.
Psychological barriers such as fear and physical barriers such as not having the correct forms to complete can stop us from making decisions that would otherwise benefit us in the long term. Often our barrier to success lies inside our head.
Barriers are more than excuses. They are the things that prevent us from getting things done.
The most successful people remove the barriers while others let the barriers control them.
You can also use barriers to your advantage. If you don’t want to watch excessive amounts of television, get rid of the remote.
If you want to save money for that dream holiday set up a monthly debit order to take money from your bank account and invest it before you spend it.
Becoming aware of how you react emotionally to certain events and stimuli provides you with the opportunity to change your behavior.
Once you are aware of what you value the most you will prioritise that item, so have a look at your priorities
What do you value the most? Do you value building your wealth? If this is high on your list of priorities, once you have made money this is where you will direct it.
It could be that overseas holiday in three years’ time that you need to save towards, or it could be retiring at age 55. Your tendency will be to put your money towards higher priority items and the lower priority items won’t consume it.
If you raise your lifestyle now at the risk of your savings and investments, you will effectively go backwards financially
You are a slave to money if you earn it but don’t invest it.
You need to know and understand the lifestyle that you want to live and how to get there. If you don’t take the steps to save towards your lifestyle it will remain a fantasy. If you raise your lifestyle now at the risk of your savings and investments, you will effectively go backwards financially.
In conclusion, it is not about how much money you make but what you do with the money that you make, and until you can understand and manage your emotions effectively you will not be able to manage your money.
