Everyone has a personal relationship with money. Private even. Some of us also have what we would call a public relationship with money - maybe all of us actually do - that the money we make has a big significance on the public persona we present.
With that, it follows that our incomes can be an ongoing source of worry for many especially when the future, as it almost always, is uncertain. But the extent to which we are worried about our finances differs from one person to another.
And this is not to say that those with a lot of money worry less, or those with lesser fortunes are more worried. The defining difference lies in one’s money habits - how they think about and use money.
Whether these habits are learned from parents and friends when growing up or developed after the onset of the first paycheque, they define our personal relationship with money and could be a maker or breaker of one’s financial future.
It might be a little difficult to identify some of these habits that may have an impact on how smart we are being about our money because they come so naturally to us that we never give them thought.
Today, we look at some money habits many people have, that if not well managed, or worse if one doesn’t identify them, could impact their financial wellbeing negatively.
If your income does not adequately meet your needs, there is a risk of making poor borrowing decisions.
Regular borrowing to maintain a certain lifestyle is a red flag that you are living beyond your means and you need to do something to address the problem.
To know if you have a problem with sustaining a certain lifestyle, consistent borrowing and accumulating consumer debt are signs you are spinning out of control.
To address this problem, can try to:
You could also talk to a financial advisor who will help you get a plan to address this money habit.
Compulsive spending is usually driven by the need to achieve safety and comfort by spending excessively either on oneself or on others. In Kenya, this could be characterised by for instance taking a loan to go to ‘Vasha’ to keep up with the trend.
Using money to buy or do things that you hope will help manage unpleasant emotions, low self-esteem or anxiety, can be a sign of compulsive spending. This is synonymous with what is called retail therapy - shopping to make oneself feel more cheerful.
Other signs that show you could be a compulsive spender include:
In addition, if you do not use everything you buy or you bought too much that you do not need, experiencing problems due to your spending and feeling that the next big buy will improve your life, then you could be dealing with compulsive spending.
Psychologists recommend cognitive-behavioral therapy to deal with a compulsive spending habit. This therapy identifies and corrects problematic thoughts which trigger the behaviour.
There is the more supported concept of saving - for rainy days, for an investment or for holiday. And then there is hoarding - which can be aptly described as ‘saving taken to the extreme’.
This is a habit of stock-piling savings without exactly having a particular purpose for it. It is largely driven by anxiety that impedes the ability to make decisions about the savings
Some signs of hoarding include;
Many would agree that more money is definitely good, but the goal would probably be to enjoy it. Here are a few things you can do to end the hoarding cycle.
Unlike hoarding, a person who is an under-spender will choose to forego spending money on important things and could even be going for knock offs which means they will eventually have spent more in replacing the poor quality they keep buying in the guise of ‘making savings’.
If you are constantly worrying about money even when you have healthy savings, then you could be underspending. Another sign of an underspending habit is say, giving a little to no tips or excessively bargaining when you are more than able to afford.
Other examples of underspending include
Keeping a regular budget where money is apportioned in the order of importance, creating longer-term money goals and working on an abundance money mindset can set you on a journey to ditching underspending without losing the universal benefits of savings.
Financial incest is defined as the unintentional burdening of children by their parents with money-relayted stress pushing them to take inappropriate or unreasonable roles in the family’s finances.
Arguments around money could include using children as a go-between. Other signs of financial incest include requiring a child to work excessibvely to chip into the househood bills or asking a child to keep a financial secret from a family member e.g. a spouse.
Again, it is recommended to consult a psychologist if you find this is happening in your family for expert guidance.
This is defined as a person’s failure to know when to say know to people when they continually ask them for money.
This is generally considered a harmful behavior because it neither benefits the enabler nor does it benefit the recipient.
It could either be parents unable to say not the incessant ‘pleeeease’ of their children or a couple or close friends.
For some, giving away money would seem to be the only way they are able to show love to their dear ones, especially children and spouses such that this habit persists.
For children, giving them money every time they ask for it - if it does look excessive to you - means they might never really learn how to make their own money. Adults and teenagers alike could also take advantage of that habit and guilt trip you into giving in to their requests.
Some additional signs of financial enabling include
Some steps to take to get out of this cycle include;
Do you have any of these money habits? What are you doing about it?