What's holding you back?
Posted by Faith, 4 February 2010
If you could change one thing to solve all of your money problems, what would it be?
- Job?
- Time?
- Education?
- Other people?
- The Economic Recession?
- You?
Lack of money and time are the 2 most common reasons given for not getting ahead. That last item on the list is also significant but not often mentioned.
Let's start with money. If you think this is a problem, then how much money do you need? Have you ever worked it out?
Some time ago one of my clients told me he'd be happy with around $NZ3000 more per year. Jack was in London and wanted a return airfare home to New Zealand once per year, to catch up with friends.
He was single with few commitments, self-employed, in excellent health, had good skills and worked a number of lucrative contracts. An annual sum like $3000 should have been well within his reach and I was curious why he had problems raising this amount.
Through Jack I discovered the real reason why many people can't "get ahead".
The erratic nature of Jack's work was one part of his problem. When the money flowed he spent accordingly. When the money stopped he kept spending at the same level but went into debt to fund it. When he scored the next big contract he cleared his debt but then he went back on the spending wagon.
Coping with the ups and downs of income was not just an issue with Jack; some of my other client's, who were in business or self-employed struggled with the same problem. It's one of the key reasons that businesses fail within the first three years.
Like many other financial advisers, I had spent hours trying to figure out a strategy to help. From changing the way his bank accounts operated, to budgeting and forecasting, Jack just couldn't seem to make it work.
One day Jack told me that he'd had quite a poor upbringing, which had driven him to do better. That one sentence stuck in my mind and got me thinking. I wondered if the problem was not with Jack's erratic work schedule, but how his deprived childhood may have affected him.
I asked him to tell me more about how he grew up and what he had done to change his life. He said that his parents were alcoholics and never had enough money to look after the family. He and his siblings were always hungry and cold. He was determined to get out as soon as he was old enough and he won a scholarship to a university in another city. While at university, and away from his childhood home, he developed good friendships for the first time in his life. Once he and his friends graduated they all headed straight to London for the high paying jobs. His friends gradually returned home to New Zealand to settle down and have children, but Jack stayed in London to keep earning at top rates so he'd never feel deprived again.
I asked him if "never feeling deprived" meant having a big bank account. His answer surprised me. "Numbers on a bank statement don't feel like wealth to me. I need to buy things to confirm I really have money."
Suddenly, 'the penny dropped' as we realised the significance of what he had just said. Here was the answer on why he couldn't follow a plan to save money. It was nothing logical. Instead, it was a purely emotional response to his childhood.
This response had created an attitude around spending that drove Jack to constantly upgrade with the latest electronics, cars, furniture and clothes, and to eat at the most fashionable restaurants. This was why he spent money, even when he didn't have it.
Attitudes like this can lie deep and so we are often unaware of them. In Jack's case he was particularly vulnerable when he was feeling lonely, sad or going through a tough patch. While my client was happy in his work in London, he missed his friends in New Zealand.
Jack may be more extreme than most, but he represents an important principle, particularly for those who are self-employed or have erratic incomes. With a normal 9 to 5 job, income comes in every week or fortnight and we spend to that deadline. It becomes a habit. We buy groceries and pay our bills according to our pay period.
When you are on an erratic income, habitual spending doesn't work. You need to learn how to tailor your spending timeline to your income so you don't get caught short. However, if you don't understand the underlying issues of why you spend, you'll always run out of money no matter how much you earn.
Once Jack understood how his attitudes to money controlled him and held him back, there was nothing stopping him flying to New Zealand every year. He could even fly business class and without going into debt to pay for it.
So, what's holding you back from your dreams?
- Money
- Time
- Education
- Other people
- The Economic Recession, or
- You?
There's no point working out a plan to make your dreams happen if your own attitude torpedoes any chance of success.
Take time now to ask yourself 3 questions:
- What do you want from life and why?
- What's stopping you?
- What can you do to stop those 'stoppers'?
Respond to these questions and, like Jack, you’ll start flying high.
Need more help? Check out:
- How to swim in a sea of money
http://www.keepingthefaith.co.nz/financial_planning_faith_blog_080909.cfm
Buy my new book Faith Speaks Money Talks to discover how to:
- Decide what is important to you
- Get a better life with the 7-week money challenge
- Smash the spending habit so you have more money for what you really want
- Stop money pouring out of your life
- Handle the big money decisions with ease
- Buy property with confidence and without going broke
- Make the most of KiwiSaver
See previous blogs:
Don't sweat the small stuff.
Can you grow a money tree?
What's holding you back?
Money or your life - which has more value?
The seven secret thieves
Five questions to change your life
Find that spark
Switching lives - what would you choose?
Who can I trust to help grow my money?
How to swim in a sea of money
Life can be unfair
The rule of happiness
No way to live
Anyone can be good with money
Best ways to warm up winter
Who wants to be a millionaire?
The secret of wealth
Keeping your money safe
Having it all
Win an all-expenses-paid trip for two to Europe (Part 3)
Win an all-expenses-paid trip for two to Europe (Part 2)
Win an all-expenses-paid trip for two to Europe (Part 1)
Make a change for good
A recipe for a happy Christmas
Nothing else matters
Rage, rage against the dying of the light
Make a wish come true
Buying or Selling a House – Those that care least, usually succeed
When is a good time to buy a house?
Sleepless Nights in a War Zone
Transitions - more life or more of the “same old, same old” boring stuff?