Episode: 313 - Breaking the Cycle: Stop Self-Sabotaging Your Finances!
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Have you ever felt like you’re making strides in achieving financial independence, only to find yourself back at square one? It might feel as though every time you take a step forward, something pulls you back. You’re not alone. Many people grapple with self-sabotaging money behaviors, which hinder their financial success.
Understanding Self-Sabotage in Financial Habits
Self-sabotaging money behaviors are essentially actions or inactions that hold us back financially. These are habits we know aren’t ideal, yet we indulge in them nonetheless. Consider overspending after a stressful week, frequently dipping into your savings, or entirely avoiding budgeting. According to a recent study by Bankrate, a staggering 74% of Americans have regretted at least one financial decision, with overspending frequently topping the list.
Why Do We Self-Sabotage?
Understanding the root cause of self-sabotage often leads us to emotional and psychological triggers. Stress, fear, and our upbringing can all play a role. The American Psychological Association consistently finds that money is the leading source of stress for Americans. When stressed, our brains seek immediate relief, which can result in impulsive spending or unhealthy reliance on credit.
Common Self-Sabotaging Behaviors
Here are some prevalent ways people tend to self-sabotage financially:
Impulsive Spending: Retailers and marketers know exactly how to hit our emotional pain points, enticing us into purchases we may later regret. Nearly half of Americans find themselves regretting purchases within a few days.
Avoiding Financial Conversations: It is noted that over 40% of couples shy away from discussing money matters, often leading to larger issues, including divorce, down the road. Open dialogue about financial goals and issues is crucial.
Living Beyond Means: A Federal Reserve report from 2022 noted that the average household carries significant credit card debt, which can quickly escalate over time.
Neglecting Savings: With nearly 60% of Americans lacking even $1,000 for emergencies, prioritizing building a savings fund of $1,000 to $3,000 is imperative.
Spotting and Preventing Financial Self-Sabotage
Recognizing self-sabotaging habits is the first step toward overcoming them. Ask yourself: Do you feel guilt or regret after certain financial decisions? Do you frequently delay starting a budget or saving money? Addressing these behaviors requires reflection on what may be driving them.
Steps to Break the Cycle of Self-Sabotage
While breaking these habits isn't easy, it is achievable and worthwhile. Here are some strategies to help:
Identify Triggers: Keeping a money journal can help track spending habits and reveal emotional triggers prompting overspending.
Set Boundaries: If credit cards are tempting, consider using cash or a debit card instead, and leave credit cards at home.
Create Accountability: Sharing financial goals with trusted friends or a supportive community can provide motivation and accountability.
Celebrate Progress: Recognize and honor small wins, whether it’s saving an extra $50 by avoiding takeout or cutting unnecessary expenses.
Seek Education: Sometimes, a lack of financial literacy fuels self-sabotage. Investing time in learning about budgeting, saving, and debt management is key.
Embrace Growth and Financial Freedom
Recognizing self-sabotage is a significant step toward personal growth. It symbolizes readiness to seize control of your financial destiny. Remember, achieving financial freedom isn't about perfection. It’s about progress. With motivation and structure, you can break free from the cycle of paycheck-to-paycheck living, reduce financial stress, and reach your savings and debt payoff goals.
If you're ready to embark on this transformative journey but unsure of where to start, explore resources like weekly financial tips or join a thriving online community for support in your financial endeavors.
Resources Mentioned
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Trascript
Amber:
Have you ever felt like you're working hard to get ahead financially, only to find yourself stuck in the same place or even falling behind? Maybe you've been making progress, but then you splurge on something you don't need or dip into savings. Just this once Sound familiar. You're not alone. Today, I'm talking about why this happens. You're not alone. Today, I'm talking about why this happens.
Amber:
Welcome to the Debt-Free Debt Podcast, where we help normal, everyday people like you live a happier, less stressful life. I'm Amber and in 20 months, my husband and I saved and paid off $54,000, and I've been living debt-free outside of our mortgage since 2018. Today, I'm talking about self-sabotaging money behaviors. So what are self-sabotaging money behaviors? They are actions, or even inactions, that hold us back from achieving financial success. They're those habits that we know aren't good for us, but we do them anyway. Think overspending after maybe a stressful week constantly raiding your savings account or avoiding budgeting altogether. According to a 2023 study by Bankrate, 74% of Americans say they've made at least one financial decision they later regretted, with overspending being one of the top culprits. So why do we self-sabotage? Self-sabotage often stems from deeper emotional, psychological triggers. It could be tied to stress, fear or even how we were raised to view money. The American Psychological Association Stress in America report consistently shows that money is the number one source of stress for most Americans. When we're stressed, our brains crave quick relief, and that's when we're more likely to engage in behaviors like impulsive spending or relying heavily on credit cards.
Amber:
I'm going to dive into some common self-sabotage behaviors and ways we sabotage ourselves financially so impulsive spending. We sabotage ourselves financially so impulsive spending. We've all done it, and a survey from Credit Karma found that 46% of Americans have made a purchase they regretted within just a few days. I've been there, I've spent the money, I've made those impulsive purchases, and gosh stores and marketing are so incredibly good at really finding our pain points so that we make these impulsive purchases.
Amber:
The second most common way we sabotage ourselves financially is avoiding financial conversations. Studies show that over 40% of couples avoid talking about money, which can lead to bigger problems down the road. In fact, money is one of the number one causes of divorce. It is so crucial and important that you have these conversations with your partner, with your significant other, whether it's about where your goals are headed or maybe it's a problem that you may have with your finances, but it's really, really important that you have these conversations. So if you're finding yourself in a situation where you're not communicating with your partner and maybe you want to bring these topics up but you're not sure how, I'm actually going to link one of our free resources the Money Conversation a conversation guide for couples in the show notes. So be sure to check out the show notes and grab that free resource.
Amber:
Now, number three of ways that we sabotage ourselves financially is living beyond our means. A 2022 Federal Reserve report revealed that the average household carries over $7,000 in credit card debt and I would almost bet, if they did this study again, it's likely getting higher and higher. Now, number four on the ways that we self-sabotage ourselves financially is neglecting savings. Okay, according to CNBC, nearly 60% of Americans don't have $1,000 in savings to cover an emergency, and these days, $1,000 really isn't that much. A lot of emergencies you're going to find and come across are going to be more like $2,000, $3,000. So at Debt Free Dad, we recommend that your emergency fund, your first initial emergency fund, is $1,000 to $3,000. And we recommend you try to really focus on building the emergency fund within 30 to 60 days Now if you want to dive into ways to build your emergency fund and build it quickly. We do have a couple of episodes that will dive into that episode 222, as well as episode 191. So be sure to check those out if you want to dive into ways to start saving and be the minority when it comes to having that emergency fund ready for when emergencies happen.
Amber:
So we've talked about some of the most common reasons that we self-sabotage ourselves, but how do we spot these behaviors in ourselves? How do we spot them and then prevent them from happening and make that conscious decision to go oh no, this is a trigger and find a way to work around that? So identifying the behaviors is definitely the first step towards changing that. So you want to ask yourself do I feel guilty or regret after certain financial decisions? Am I constantly saying I'll start saving next month? Or I'll start working on my budget on the first and then the next, first and the next first, on my budget on the first and then the next, first and the next first. Do I avoid looking at my bank account or bills? If you answered yes to any of these questions, it's probably time to dig deeper into what's driving these actions. So then, how do you break the cycle. Breaking self-sabotage behaviors isn't easy, but it's worth it. So I'm going to give you some steps on how to help break your self-sabotaging behaviors.
Amber:
Number one identify the triggers. Keep a money journal to track your spending habits and note what's happening emotionally or situationally when you're overspending. If you're overspending when you've had a bad day at work and you're just like frustrated and on your way home you're stopping for some retail therapy or you're stopping for takeout even though you have food ready to cook at home, this may be a trigger. Number two set boundaries. If credit cards are a weakness for you, consider using cash or a debit card instead. Leave the credit cards at home. Number three create accountability. Share your goals with trusted friends or family or join a community. We do have a free friends or family or join a community. We do have a free online Facebook group called Debt-Free Dad Community. You could jump in there and start interacting with us.
Amber:
Number four is you want to celebrate your progress. Focus on small wins. For example, extra $50 this week that you saved because you didn't go for that retail therapy or you cut out a bill or you opted to not eat out for lunch all week. Don't downplay it, whether it's $5, $50 or $500. Celebrate your wins. Number five seek education.
Amber:
Sometimes, self-sabotage comes from a lack of financial literacy. Invest time in learning more about budgeting, saving and debt management. And I mean, if you're listening to this podcast, you are in the right place. If you haven't already, go back to the beginning and start learning right from the get-go. We are on now, episode 313, so you've got a lot to catch up on. And if you have been listening, you are educating yourself, and kudos to you. That's fantastic.
Amber:
Now remember recognizing self-sabotage is a sign of growth. It means you're ready to take control. So I just want to leave you with this Financial freedom isn't about being perfect. It's about making progress, and you are capable of that progress If you're ready to break free from living paycheck to paycheck, reduce financial stress, build savings and finally pay off debt for good. But you're unsure where to start? Don't worry, we've got you covered. Simplify my Money is sent each Sunday to your email. It's your step-by-step roadmap to better financial control, stress-free money decisions and gaining the tools and confidence to tackle your financial goals head on. Sign up for Simplify my Money by clicking on the link at the top of the show notes. We'll see you on the next episode. Take care.
