While having some conversations about business related issues recently, one topic that came up was that one person was talking about how he just doesn’t understand how he believes he works very hard to generate results yet number wise it shows that he is always sinking more into the red. The first thing I commented was how whether or not he truly believed that he did everything there was to be done as I personally saw so many things that he neglected to do. He asked me what I believed was the reason for that and I mentioned that it was because he felt that if he messed up the consequence wasn’t bad enough for him to truly make him not want to fail.
When I think about this, it can be true for personal finance as well. For example, there are a lot of people who would carelessly purchase hundreds of dollars of items that they don’t need with a credit card even though they can’t afford it. They openly admit that it is bad yet they do it anyways. Now many may say the fact that you put yourself into debt is punishment in itself. But in many ways I would say no as while you are in a bad predicament, for many it is viewed as more of a burden rather than something critically damaging.
An example would be say someone purposely parking their car in a parking lot for longer than expected. Basically, the repercussion is usually that you would have to pay a fine. For many, it is simply consider as a burden or annoyance so they will take the risk. If the punishment was something very critical such as you would go to jail or that your car will be destroyed on the spot, do you think you would take the matter more seriously? That is a very over the top example, but I think it is similar in regards to financial management.
Of course that doesn’t mean that if you are trying to save money that you should do something ridiculous such as you agreeing to jump off a cliff if you do something irresponsible to really make you not want to mess up. A great and fun way would be to say have a friend hold you accountable for certain things such as every time you use a credit card to buy something without actually being able to afford it, your friend has the right to try and get a refund for it and at the same time you will owe them $30. They then get to keep the funds in say a jar or their own bank which you will get back if they decide you have been good financially. You’d be surprised on how much money I have seen people save this way too.
For myself I guess I am more of a long term thinker which is why when it comes to say imagining the repercussions of doing something I tend to take it more seriously than most. For example, I have always paid a bill on time and to me the repercussion isn’t simply say an interest charge, but rather I can see other things such as how it can effect say my credit score which in turn can affect a whole lot of other things as well. At the same time too, you have to balance it as you should be able to enjoy what you have earned as well. But, if you are continuously struggling in managing your finance then maybe you need to search for a more compelling reason to do better or to implement something to truly make yourself accountable when it comes to money.