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Mar 11, 2020

Mel’s Money Minute: Committing to Discipline

Mel’s Money Minute: Committing to Discipline

My goal with the last “Money Minute” was to provide a different perspective when it comes to thinking about money. Certain strategies may work for some, but I found a behavioral understanding approach to work more effectively than a rule-based approach.

We live in a YOLO world. We’re encouraged to live life to the fullest as if every day were our last. Despite the benefits of pursuing new experiences, we all know that some of the behavior that stems from this mentality is not wise or prudent. We only live life once. So why wouldn’t you do it, right? We are surrounded by social media that reminds us of what we don’t have, and we often neglect what we do have. Was that trip to Europe really worth the credit card debt that’s going to take you months, maybe years, to pay off? Impulsive financial decisions can feel freeing and fun, but we are quick to pretend that consequences don’t exist.

Despite being a professional in this field, I’ve often been guilty of making impulsive financial decisions, and I’ve always known that those habits needed to change. I wanted to make changes. But wanting to change has to be paired with commitment. You may want to change spending habits or live a healthier lifestyle, but are you committing? How are you justifying your decisions? Why are you justifying your decisions? Personally, when I started taking spending habits seriously, I often forced myself to ask and answer these questions. Asking yourself hard questions is a great sign of wanting to change. Answering them honestly is the first sign of commitment.

I recently finished tracking my February expenses using some of the methods Your Money or Your Life suggests. I have been doing this since September 2019, and I have seen some major changes. This approach works because it forces you to categorize your expenses at the end of the month and decide whether or not you are satisfied with your spending amount for that particular category. This process of expense tracking can be daunting and time-consuming, but what you could get from it is priceless. As you ask and answer the hard questions, you will feel your anxiety from overspending begin to recede.

Below are some critical thoughts from Your Money or Your Life that I found useful and encouraging as I began to tackle my personal financial habits.

Financial Independence is the experience of having enough — and then some. The old notion of Financial Independence as being rich forever is not achievable. Enough is. Enough for you may be different from enough from your neighbor– but it will be a figure that is real for you and within your reach.”

The concept of “life energy” and how to compute your real hourly wage. Life energy can be described as “our allotment of time here on earth, the hours of precious life available to us. When we go to our jobs, we are trading our life energy for money.” Calculating real hourly wage requires you to think of all the monetary expenses and hours that are directly associated with your job: travel time to and from job, clothing for work, meal prep, time to cook those meals, relaxation time from the stress of your job, etc.

Social media is an external influence that has an immense impact on our behavior. A large portion of my spending habits originated from social media by comparing myself to what others had and what I thought I was lacking.

Substituting frugality for “YOLO expenses” isn’t limiting, it’s freeing.

Remember, substitution as a frugality strategy isn’t about downgrading pleasure. It’s about ensuring that I get precisely what I am seeking for less- or nothing at all. I’m not limiting myself; I’m focusing myself.”

Figure out your gazingus pin (your “gotta have it” purchase). These purchases will leave us with nothing but feelings of guilt and some credit card debt. We need to become conscious of our consistent spending behavior, so they don’t remain spending habits.

Since money plays an essential part in your life, we have to integrate it into our whole system. Approaching your financial decisions with a perspective of personal accountability will be different. It will probably be difficult. If you are tired of just asking questions, start answering them with behavior change. You may find yourself free of the guilt, envy, frustration, and despair that often results from spending without limits. As always, if you are interested in receiving a free copy of “Your Money of Your Life,” contact me at [email protected], and we will send one to you!

Melissa Dotson, CFP®, CSLP®

Financial Planning Associate

Melissa came to Narwhal in the summer of 2018 following the completion of her master’s degree in financial planning from the University of Georgia, where she also earned her bachelor’s degree in consumer economics. Her interest in the field started with learning about consumer behavior, specifically its relation with complex moneymaking decisions. Melissa recently received her CFP® Certification in January 2021. Working with a CFP® professional can help you find the path to achieving your financial goals. Your goals may evolve over the years as a result of shifts in your lifestyle or circumstances such as an inheritance, career change, marriage, house purchase , or a growing family. Melissa is here to help you through that process. When she’s not working, Melissa enjoys cycling, cooking, and spending time with her beagle and two nieces.

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