I was talking with a friend of mine who works for Consumer Credit Counseling Services and one of their sayings is “Act your Wage”. Oh boy! As soon as she said it, all kinds of lights went off in my head. People cannot live within their means if they don’t act their wage. And they can’t act their wage if they have a deep-seated fear that, if they did, they may not be respected, envied, trusted, etc….
This is a problem. This is one of the many reasons why behavioral finance caught my attention. It’s not about the money, it’s how you think about and react to your financial situation that determines your financial position.
I had heard a report on NPR a month or so ago that stated that there are three factors that determine success in life: (1) Family socio-economic status (2) IQ and (3) Self control. The first two you may have little control over, the last one…well, the term is SELF CONTROL.
Why are some people better able to control their impulses? Why are some people natural savers while others seem to never have two nickels to rub together? I believe it’s the difference between choosing (proactive) and doing (reactive). Choices require thought, and thoughts are time intensive. Time is a precious commodity and some people choose not to invest it by “just” thinking. So, instead, they just do.
But pride plays a role here as well. We want the approval of and even praise from other people, and we mistakenly believe that we need stuff to obtain approval and praise. We don’t need stuff. But we use stuff to put up facades to keep people from knowing and appreciating the parts of us that cannot be bought or sold, that we, mistakenly, undervalue.
Or, we may not want to be the object of pity should we fall on hard times, and risk revealing our vulnerability, shortcomings, or consequences of choices that didn’t serve us well.
It doesn’t matter how much or how little you earn, what matters is what you choose to do with the resources you have. Carve out an hour or so every week to just think about your finances. That time is a good investment as you face decisions ahead.
