Mapgirl’s Fiscal Challenge

All too often people avoid their finances out of fear. Out of the many finance books I’ve read. The one that struck the deepest chord with my fears was the 9 Steps to Financial Freedom, by Suze Orman. Unlike other personal finance gurus she really points out that each person has a relationship with money that affects their financial decision making.

As you read each chapter you read about a person and a story about their relationship with money. If you are familiar with different treatments of clinical depression you may know what Cognitive-Behavioral Therapy is. One of its foundations is the idea of cognitive distortion and how a person’s mental thoughts reinforce their depression. As I read these anecdotal stories I realized that a lot of these people had cognitive distortions that affect their financial decisions. Let me make one up for you now that I’m sure you’ve heard coming out of the mouths of babes. “I’m so young that it doesn’t matter what I spend now. I can worry about that later.” If you ask me, that’s a classic avoidance statement and it demonstrates Minimization. My response is that there are many benefits to starting today, compounding interest being the first and greatest one.

How about another one? “I played the stock market once and I lost my entire investment. If I play the stock market I’ll just lose my shirt again, so I’m never going to invest in stocks again.” This one is a combination of two, Jumping to Conclusions/Fortune-telling and Magnification/Catastrophizing. My response to this is to say that education can help you make better investment decisions. There are stock-based mutual funds where the need to pick individual stocks is removed, therefore you can put your trust into a professional stock fund manager, diversify your portfolio and give stock investment another try. (Caveat here being that you do some research into the fund and its manager, etc. Don’t just throw a dart at a page and put 100% of your portfolio there.)

I watched a member of my family go through a pretty emotionally painful divorce and I cannot say that the subject of money wasn’t involved. My family member and their spouse had different attitudes and relationships with money and they just didn’t mix. How many couples fight about money because they weren’t on the same financial page? I know my boyfriend and I struggle our attitudes about money. We’re not at loggerheads but we aren’t quite moving in parallel either. Knowing your own personal attitude towards money and investment can help you overcome some of your fears and make better financial decisions. I was out shopping today and one of my friends commented that she spends less now that her boyfriend is changing her attitude. They’re about to get engaged and it sounds to me like they are actively discussing when and how to spend money. They’ve identified the spender and the saver and are comfortable with their roles.

Even if you don’t read Suze Orman, I encourage you to think about money, what it means to you, how you relate to having it/not enough of it, what its purpose is to your happiness, etc. It can help you turn the tide of your spending and saving by helping you see where you can change your attitudes to reach your financial goals.