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You know
what you should do: Save more, spend less, buy enough
insurance.
That
might sound like the same old blah, blah, blah. But do
you actually do what you know you should, when it comes
to managing your money?
If your
New Year's
resolution is to get your financial life in order, let's
chat about some hurdles to sound money management, and
what you can do to overcome them.
The first
thing to remember: This isn't complicated.
"I
don't think more information will change destructive
financial behaviors," said
Brad Klontz
, a clinical psychologist in
Hawaii
who has studied "financial disorders" and
whose book "Mind over Money" was published
recently.
"Our
worst problems in behavioral finance are people who
don't save and people who spend more than they
make," he said. "I have yet to find somebody
who can say they didn't know (they shouldn't do)
that."
Secondly:
Doing the right things with your money probably won't
feel normal or comfortable.
Making
changes for the better may require you to break a habit
or do something you're not used to doing — like
salting away a certain amount from each paycheck or
using cash instead of credit.
Everyone
thinks they can't keep a resolution "because it's
too big and unrealistic," says
Patricia Cole
, associate professor of family therapy and family
business at
Nova Southeastern University
in
Fort Lauderdale, Fla.
"When we make resolutions about money, they really
don't match our belief systems, our philosophy and who
we are."
Third: If
you want to get things on the right track, be fully
committed.
"What
I've found over time is that resolutions are really not
taken seriously," said
Judith Barr
, a
Brookfield, Conn.
, psychotherapist and author. "They have a
connotation of, 'If it's a
New Year's
resolution, it means you're going to fail. It's a big
joke.' "
The
experts I consulted offer these ideas for helping you to
keep your money resolutions in 2010.
—Be
realistic. That's actually a tactic that could deal with
the problem Cole points out: If it's a resolution, it's
probably at odds with what we've been doing or believing
up until now. If you believe adding to your credit card
debt won't hurt you, then it's going to be difficult to
stop adding to it. Instead of saying you'll never put
anything else on your credit card, resolve to take steps
toward that goal — by not putting any more summer
vacations or gifts on your card, for example.
"Don't make your resolution too unrealistic,"
Cole said. "And don't beat yourself up if you slip
up."
—Deal
with yourself first. If making decisions about money
makes you uncomfortable, you need to try to figure out
the reason. Otherwise, Barr says you probably won't
follow through on your resolution until you've wrestled
with your emotions. "At a time of recession, it's
an amazing time for each one of us really to explore our
relationship with money," she said. "It's
something very, very primal."
—Face
up to the two biggest obstacles to change: Klontz says
those are shame and ambivalence. Shame is associated
with not handling finances well, while ambivalence comes
about from the notion that to do better with money,
you'll have to deprive yourself of something.
To move
past those two negative feelings, "It's helpful to
come up with a vision of how you want to spend the
money. It's like flipping the script from what you can't
have to what you really want," he said.
How do
you move forward?
Klontz
suggests you check yourself against these three steps
needed to make a change in behavior:
Your goal
must be important, you must be confident you can reach
it, and you must be ready.
Cole
suggests writing your resolutions down and setting up
some kind of timetable in which you'll check out how
well you're doing.
—Ask
for help if you need it. Buy a book, hire a financial
planner, enlist a friend to go through this with you.
—Finally,
don't get tripped up by the notion that you'll have to
be doing without something in order to save money or
spend less. Because consumers have been reducing their
spending, it should be easier than ever to keep those
resolutions.
"A
lot of people can't charge any more on their credit
cards or borrow more money," Cole said.
"You're not trying to keep up with the Joneses,
because the Joneses can't buy anything that you want to
keep up with."
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