Home' Trinidad and Tobago Guardian : April 19th 2015 Contents APRIL 19 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
PERSONAL FINANCE | SBG15
Spend enough money,
and you ll quickly learn
the definition of a bad
money habit. Few peo-
ple need to be told not to overspend
on credit or debit cards or to curb
impulse shopping. You know you
shouldn t, even if you always do.
What you need are solutions.
But solutions are hard to come
by, says Ramona Pearson, a cer-
tified public accountant and per-
sonal financial advisor in Detroit.
She has been advising clients since
1984, she says, and from what she
has seen, these bad habits are often
practically baked into our brains.
"Money habits are formulated
at a very young age for most peo-
ple," she says. "I think how money
works and what it means is deeply
ingrained in our psyche."
Shelly Smith-Acuna, dean of the
Graduate School of Professional
Psychology at the University of
Denver, agrees. She says if you have
a really bad money problem, ther-
apy might help.
"Sometimes a problem is a pret-
ty simple fix, but other times,
money represents something deep-
er, maybe comfort or security in
a deep way. Therapy can help you
explore and understand some of
the meanings behind why you
spend your money," she says.
Whatever your problems with
money, you can change but it s
going to take work. After all, you re
trying to break lifelong patterns. Start
with these strategies:
1. Set realistic goals.
Smith-Acuna treats many patients
with money problems. The issue espe-
cially comes up during couples therapy.
Naturally, a lot of her patients try to
fix how they manage their finances,
and Smith-Acuna believes a primary
reason people fail to change a bad
money habit, "or any habit, really," is
that they fail to set realistic goals.
"A lot of people set themselves up
for failure because they have a mindset
of either indulgence or deprivation. So
if you try to deprive yourself of too
much, where you spend almost nothing,
then you end up giving up, and you
indulge, and then you overspend,"
Smith-Acuna says. "So if you have an
unrealistic plan, you re probably going
to lose control."
That was the thinking behind Martin
Grunburg s free app, "The Habit Factor,"
available on Apple and Android devices.
The San Diego-based entrepreneur s
app is designed to help people create
good habits, and it sends reminders on
certain dates, enabling users to remem-
ber to complete the tasks they want to
start doing regularly.
"Good habits happen when planned;
bad habits happen on their own," Grun-
2. Change your mindset.
Your bad financial habits may be
something you re hard-wired to do, but
if there is one particular vice you re
trying to fix, you may be able to change
the wiring easier than you d think.
Smith-Acuna says she had a couple
in therapy who constantly quibbled
about what she feels has become a
monetary cliché: "They would always
argue about how much money they
were spending at Starbucks."
Smith-Acuna says the wife loved
capping off each workday with a gour-
met drink, much to the chagrin of her
husband, who disliked the $4.50 she
was dropping so regularly.
Ultimately, the wife ended up quitting
her Starbucks habit without too much
trouble. The secret was drilling down
and figuring out that her daily fix was
important to helping her unwind from
work. So instead of replacing her drink
with nothing, she got something else,
something free, in return. After work,
her husband played with the baby and
gave her 15 minutes of downtime
3. Change how you spend your
Even if you only test this out for a
week, or a day, it may help you slow
down your spending if you switch from
paying for merchandise and services
with a debit or credit card to paying
with cash. It s easy when you re using
plastic to mindlessly swipe and fall into
a pattern of not thinking or noticing
how much you re actually spending.
"Cash is tangible and can make one
feel (more aware) when money is leaving
the household, thus making one more
spending-conscious," says Jeff Fishman,
founder of JSF Financial Services, Inc,
in Los Angeles.
Pearson endorses this approach, too.
"You can divide up your money and
put (it) into envelopes, marking down
on the envelopes what each pile of
money is for. That can make it easier
to see where your money is going," she
4. Track your spending.
Try doing it for a month, suggests
Mark Kantrowitz, publisher of Edvisors,
an informational Web site about plan-
ning and paying for college. Kantrowitz
has seen many college graduates strug-
gling with student debt while learning
to juggle new expenses, such as auto
loans, credit card debt and mortgages.
That s why he suggests becoming
anal-retentive about your money for
an entire month. "Get a receipt for
every purchase, and if a receipt is not
available, such as purchases from vend-
ing machines, write down the amount,
date and description in a small note-
book. Each night, transcribe the expens-
es into a spreadsheet or a free program
like Mint.com," Kantrowitz says.
He suggests breaking up your
expenses into categories like food, cloth-
ing, housing, medical care and so on,
but also labeling each expense as a need
or a want.
"Be realistic as to what is really nec-
essary. A need is something where you
would die or go to jail if you didn t
spend the money," or ruin your credit,
Kantrowitz says. "At the end of the
month, total up all the categories."
Do this, and you ll be more educated
about how much money you actually
have, and how much you have left over
for fun stuff, Kantrowitz adds.
5. Reward yourself.
There is probably a reason you devel-
oped bad habits, which are often adopt-
ed on the road easier traveled. So if
you re suddenly balancing your bank
account every day, or you re regularly
putting money into an emergency fund,
plan to give yourself some sort of prize.
Nothing too crazy, of course. You don t
want to undo all the progress you ve
made, but maybe you can buy yourself
a new pair of shoes, download some
music or go to the movies.
"If you set a challenge for yourself,
and you can do it for two weeks, then
you deserve a reward," Pearson says.
So treat yourself. If, for the past two
weeks, you ve been saving money or
spending it more wisely, you can prob-
ably afford it. AP
Five ways to break
your bad money habits
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