Being human naturally involves the occasional avoidance or excuse, especially when facing difficult situations. This is primarily due to our brain’s instinct to shield us from risk, prompting us to find temporary relief through rationalizations. However, in the realm of personal finance, succumbing to such excuses can often prove detrimental. This is largely because they stymie any real problem-solving efforts, preventing the implementation of viable solutions. While it might seem daunting initially, it can be immensely rewarding to proactively address your financial complications, rather than resorting to superficial denial-based justifications. Here are five prevalent financial excuses that have the potential to obstruct your financial progress.
1. I CAN ALWAYS SAVE FOR RETIREMENT LATER
It’s too easy to distinguish between “now” and “later” in your head. You might convince yourself that currently, you are in need, and you can think about retirement when it draws nearer. This mentality, however, overlooks the benefits of compound interest as a long-term financial strategy. With compound interest, your investments in a retirement fund generate interest, which then collects more interest. Simply put, your interest earns interest itself, making your money work on your behalf. Hence, initiating savings as early as possible is crucial.
To eliminate this excuse, start saving even a small amount in a retirement account. Whether it’s through an employer’s 401(k) or your own IRA, starting early allows you to establish consistent investing habits. By continuously increasing your savings, you can build a substantial nest egg over time.
2. I’LL START BUDGETING NEXT WEEK, MONTH, YEAR, ETC.
Many people procrastinate, saying they don’t have time to deal with their finances because of work, family commitments, hobbies, and travel. Realistically, however, carving out around 20-30 minutes a month to manage your finances is manageable. Begin by allotting a half-hour slot within the next week. Make a commitment to familiarise yourself with your finances. Be strict about following through. Gradually extend this commitment to a weekly, biweekly, or monthly practice. Family members also should be onboarded in the budgeting process.
3. I HAVE TOO MUCH DEBT TO REALLY MAKE A DENT IN IT.
Debt is one common stumbling block, sometimes leaving individuals feeling helpless and unsure of how to manage their finances effectively. Regardless of the amount of debt, there are always feasible strategies and solutions to offload your financial burden. Depending on your specific circumstances, solutions like debt settlements or using the snowball or avalanche method to strategically pay off your debt may help.
4. I DON’T MAKE ENOUGH MONEY.
Feel restricted by a limited income? Consider savings objectives and expenditures in relative terms, as a percentage. Regardless of the scale of income, there will always be potential areas for cost-cutting: home-cooked meals versus dining out, eliminating costly subscriptions, reducing mobile phone bills, using public transportation etc. Remember, it’s not about earning more, but spending wisely.
5. I’M JUST NO GOOD WITH MONEY
Financial nous comes with experience and is a continual learning process. Just as you specify time for budgeting, dedicate some time to consuming personal finance content in forms of podcasts, online articles, YouTube videos etc.
Avoiding these common financial excuses and cultivating good money habits is key to improving your personal finances. Recognize them, and work to eradicate such fallacies from your financial decision-making process.
