When beginning your journey of financial stability, it is important to take a look inward. Oftentimes our spending habits have a lot more to do with us than they do with the objective value of what we are buying, and it is vital to ensure we understand all the factors involved. Without evaluating why we spend the way we do, we will be hard pressed to change bad money habits. In order to assist you in your efforts, below are 5 major things that influence finance decisions. In these categories, I’m going to skip the “what you want” rant, because I’m sure you already know that wanting every little thing doesn’t mean you need to buy every little thing. We are going to be focusing primarily on things outside of your personality that you may not think about as often. With that covered, let’s get into it.
1. Your Needs
This one is obvious. There are some things that you just need to buy, whether it is a car for work, a roof over your head, or food. Though a lot of this article is going to be about unnecessary spending, it is definitely worthwhile to address that life has requirements. When you tighten your belt, there are certain guilt-free expenses so long as you treat them responsibly. Getting an old beater to get you to work, paying your rent, and getting food of decent nutritional quality are all vital to your well-being and you do not need to sacrifice these things to be financially responsible. Lastly, an often neglected need is physical and mental health. No matter your budget, make room to ensure you are in a good place mentally and physically. The longer these issues are ignored, the more dangerous they get.
2. Your Culture
Society is a real pain in the butt. It has normalized purchasing new cars you can’t afford, buying a home before you’re ready, and focusing more on where you buy your material possessions than the value they provide. Be aware of when you’re buying things because they are worth your money, and when you’re doing so because the people around you expect you to have them. This is the trap that so many end up killing themselves over with immense negative car equity, or a mortgage that drowns them for the rest of their life. The biggest examples here are student loans. Society has made it a “failure” to enter into college at the community level, and that is a damned shame. Stop worrying about what your friends or family think about what school you go to, and make sure the numbers make sense for you and your career.
3. Your Knowledge and Experience
This is an umbrella that includes book learning, examples of family and role models, and issues you have overcome (or failed to) in your past. The examples you grew up with are often the strongest factors in your spending, and depending on how things panned out for those role models, you could be sent in some dangerous directions. Don’t let your parent’s spending priorities contradict what you have personally seen cause them financial ruin. If you have a strong negative family influence when it comes to money, make sure you balance out the scales by gathering the book knowledge and positive experience that will give you more confidence in making the right moves for you.
I hope this helps you get an idea of some of the subconscious players that will affect your spending habits. Cover your basics, keep other people’s shallow opinions out of your pocketbook, and evaluate your knowledge base. Lean into good examples and experiences, and constantly learn to counterbalance negative ones. Take care of yourself, make sure you are spending for the right reasons, and you will see an immediate shift in the financial progress you make.