It’s always the same with me. When things are going well, the whole future will look bright. I’ll feel lucky, confident, optimistic and make decisions based on those feelings. Like buy a new dress I can’t afford, or eat out three times that week.
Then things turn, and I look back on those decisions and think ‘What I wouldn’t do for that money now’. So how can I change my good time behaviour to reflect the tough times ahead?
Knowledge Is Power
It’s no different whether it’s your finances, relationship or- as espoused in the blog Stop Buying Crap- health. You feel fantastic, so you eat hot chips when they come your way. And I do, every time. Then one day you come down with the flu and every time you skipped the gym or ate an entire round of Camembert cheese comes back to haunt you.
It’s hard, but it’s important to learn from those moments for the next time you’re on either side of the extreme scale. I read somewhere once that when humans are happy, they remember predominately happy memories. When they’re sad, it’s the sad memories that dominate their headspace. It seems obvious, but psychologically we are conditioned to think things will only ever stay the same, whether good or bad. Appreciating that life is flux, and tough times always follow good (and vice versa) will help you make more rational financial decisions.
Implement The Pause
When I have money, I have a tendency to throw it around. I am somewhat cavalier. I like the freedom of having money, of not penny pinching, of being able to shout a round of drinks. But generally I will do that to the point where I end up back at Penny Pinching Street at frightening pace. If I could employ just a little of moderation, and not be either flush or broke, then life would become a whole lot simpler for me. This is where the pause comes in. Before you spend money, pause.
Make it a week long pause if needs be. Delayed gratification can be pretty exciting, so use it to your advantage. If you still really want it after a week, maybe you should get it. If you’re not in thrall, let it go to the keeper and save your money for a rainy day.
Away, Out Of Reach
The Extreme Scale of flush or broke becomes even trickier to deal with when your money flow isn’t steady. Like all self-employed people, my income can vary hugely from week to week. After a couple of weeks of stringency, if some extra work comes my way, I’m likely to feel like I ‘deserve’ some fun and therefore can spend it.
The only way to deal with this mindset is to lock the money away. Put it in an account that isn’t attached to your keycard. Sit down and revise your budget, and plan your expenses over the next month. The reality of check of how far the money will go will make you much less likely to blow it quickly.
If you can get a sustainable savings program underway, your problems with the ebb and flow of income might become easier. While dipping into your emergency fund to get through a weekend of partying probably isn’t the wisest of financial decisions, if you can save some money in the good times, your straightened circumstances won’t feel so overwhelming. It’s advice I definitely intend on taking up.