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Maintaining a healthy relationship with money

It is important to break the cycle of debt and poor financial decision-making

Regularly check your credit report or print out a detailed bank statement of a previous month to assess your spending habits.
Regularly check your credit report or print out a detailed bank statement of a previous month to assess your spending habits.
Image: 123RF

Do you ever think of money and how it influences your psychological tendencies and behaviours?

Well, you should.

Momentum Metropolitan consumer financial education specialist Claire Klassen says the world is recovering from a pandemic that may have rearranged our holistic understanding of how best to manage personal finances, especially when it comes to preparing for immediate plans and the future.

Klassen says we are all programmed, from an early age, to respond in certain ways to financial challenges.

“It is important to engage in introspection to break the cycle of debt and poor financial decision-making and to positively change our attitudes and behaviours towards money. Because of this, South Africans must develop a sharp focus on improving financial behaviour that will help disrupt the cycle of debt and poor financial decision-making prevalent in society,” Klassen says.

“The natural outcome of this pattern is self-inducing financial problems, which means SA’s general psychology of finance could be classified as tense and leading to poor financial decision-making.

So, no time is better than the present to get a grip on personal finances and start building to maintain a healthy personality for your wallet/pocket.

“Building to maintain a healthy personality for your wallet/pocket, in this case, will mean putting aside the numbers for a moment, and being clear on why you do the things you do with your money; How are you spending your salary? Why spend frivolously or why hoard money? Are you present, in the moment, or do you absently make decisions with financial consequences.”

She says understanding the psychology underlying our personal relationship with money is crucial for making positive changes in our attitudes and behaviours.

“This requires introspection, particularly when we find ourselves repeatedly making poor financial decisions that lead to over-indebtedness. By reflecting on our past actions and thought patterns, we can identify the underlying beliefs and emotions that drive our financial behaviour and make conscious efforts to change them.

“Stressing the need for ongoing self-reflection on ones relationship with money, Klassen suggests regularly checking your credit report or printing out a detailed bank statement from the previous month to assess your spending habits. We must honestly analyse the effects of our relationship with money, including our spending habits,” Klassen says.

She says this practical exercise can “reveal uncomfortable truths about wasting money on non-essential or impulsive purchases”.

“By confronting these patterns head-on, you can gain a clearer understanding of your financial priorities and make informed decisions about how to allocate your resources.

“Fostering self-awareness through self-introspection can have a positive impact on our financial decision-making. By reflecting on our past financial experiences, we can gain insights into what led to negative outcomes and learn from them.

“This can involve examining whether those outcomes were a result of our own poor financial decisions or due to external factors beyond our control, such as macroeconomic trends. By doing so, we can become better equipped to make informed financial choices and feel more confident in our ability to navigate financial challenges,” Klassen says.

She gives these tips for making better financial choices:

  • Budget and adjust regularly: Create a monthly budget and regularly adjust it according to personal life events. This will help you maintain a healthy personality for your wallet/pocket.
  • Track your expenses: Understand how much your lifestyle costs and ensure that you are not spending more than you earn. If you are, consider reducing your lifestyle costs, finding a higher-paying job, or finding ways to earn extra money.
  • Avoid impulse purchases: Be mindful of impulsive purchases and recognise the effect of subliminal advertising that may subconsciously influence your spending patterns.
  • Prioritise bills and savings: When you have extra money, prioritise paying your bills first. With the money left over, consider depositing it into a separate savings account.
  • Prepare for economic fluctuations: If you receive an annual increase in your salary, mentally prepare for anticipated price hikes and economic fluctuations that can impact personal income and spending.
  • Plan for the future: Consider how you can use your income to grow yourself and reach your financial goals. Also, plan by preparing for retirement or protecting your business or family from financial loss.
  • Seek professional advice: If you are struggling to manage your finances, seek professional advice from a registered financial adviser.

mashabas@sowetan.co.za

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