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Why you’ve failed with money in the past, and how to fix it:
Everyone makes financial mistakes. It’s easy to beat yourself up for past money decisions. Financial gurus call people idiots, stupid, and F-bomb people about how they handle or have handled their money. The truth is that no one is immune from making mistakes with money – not even Financial Coaches.
I wish I could say as a Money Coach that we’ve been phenomenal with our money, but then I’d be lying to you. When James and I bought our first home, we put 20% down and had pretty much nothing left over. We moved in and two weeks later the water heater went out.
Shoot, we didn’t plan on that! You kinda have to have hot water.
We wrote a check for a new water heater (I know I’m really dating myself), but we didn’t have that much in our account. The check bounced. Boom, we got a fee. We were scrambling on what to do. No fancy money moving would cover what we needed. Now to plan b (that we never wanted to do), we borrowed money.
This is just one example in a slew of financial mistakes we’ve made. We’ve made purchases we regret, stopped paying attention to our money, over drafted, worked for people who burned us, and more.
It’s easy to shift blame and be frustrated at past mistakes. Focusing on the past is only beneficial if you learn and grow from it. Every mistake is an opportunity to learn something new.
We learned so much during our first year of owning our first home. A lot of the learning wasn’t pleasant, and I wouldn’t want to do it again. But when we purchased the home we are currently in, we didn’t repeat our past mistakes. We made sure we had a strong emergency fund set up instead of putting every dime towards a down payment. Our past mistakes helped us not repeat them.
If you have a laundry list of money mistakes, keep reading. There’s hope and lessons in it all.
6 Reasons why you’re not making financial progress
1. You believe you’re bad with money
There are many reasons why people feel like a failure with their money. Honestly, it’s easier to remember mistakes than remembering every good financial decision you’ve ever made. Our failures stick out like a sore thumb, and if we have a lot of failures, we start to believe that we’re bad with money.
And that, my friend, is a recipe for disaster.
What you say to yourself matters. Those negative words become beliefs, then they become your actions. If you truly believe you’re bad with money, you make decisions like someone who is bad with money. If you didn’t, you’d be going against your identity.
Paying attention to how you talk to yourself about money is key. Is your mindset undermining your financial life? Everyone has money blocks, what’s important is discovering what yours are and being proactive about them.
With our financial coaching clients we go through exercises to help identify what their money blocks are. Each person is different, and it is key to figure this out. When you’re able to determine what money blocks you have, you’re able to get to the root of your financial struggle.
2. Your money is all over the place
Let’s be real. Most of us feel overwhelmed by our money. It’s going all over the place. We have credit cards, debit cards, loans, bills, rent/mortgage, car payments and more.
There is so much to keep track of. Often we ignore it and just hope for the best. This is why we miss payments, our insurance goes up without us noticing, we have subscriptions we totally forgot about, and so much more.
Is there a solution to this ever-moving web of money? Yes and no. Money needs to go to a lot of different places, that’s a fact. But there is a MUCH simpler way.
Simplifying is the first step. It’s so easy to overcomplicate our money. Do you really need to use 5 credit cards? What if you just used one? Would that make it easier for you to keep better tabs of your money?
Do you bank in a bunch of places? Do you really need to? The more places your money is at, the more tracking you need to do. How can you make this simpler?
Before James and I got married, we talked a lot about money. I was shocked to find out he banked at six different places. I had never heard of such a thing. He grew up that way, and it was normal to him.
When we started working on combining our finances once we got married, we decided to go with one credit union.
Having one place where our money is at makes it so much easier to track. We make as many separate savings accounts as we’d like. We get the benefits of multiple banks without having to memorize a bunch of logins.
We do recommend putting your emergency fund in a separate banking institution if you’re easily tempted to dip into it.
When we work with our clients, we work on simplifying and automating as much as possible. If you can automate 70% of your money, you only have 30% to worry about.
We help our clients set up systems to help automate good financial behaviors like saving, paying down debt, investing, and more. Then we work on adding friction to financial behaviors we don’t want. When your money is simplified and automated, you’ll start experiencing traction and financial progress.
3. Lifestyle Creep
Lifestyle creep is slow and silent. It appears undetected, but leaves us feeling perpetually ‘behind’ with our money. How often do we just upgrade our stuff when we start to make more? That’s the American dream, right?
We moved from our 756 sq. ft. apartment into our first 2,500 sq. ft. home. I couldn’t imagine how we would ever fill the space, oh, but we did. We had to buy furniture to fill it right? We became frustrated that we didn’t have as much garage space, when we used to have no garage.
I remember my mom saying that people are like jello, they fit into whatever container they’re put in. Isn’t that so true? We get a raise and spend it as quickly as we get it. We buy a bigger house, and we fill it.
We’re advertised more to than any moment in history.
The average American is exposed to 4,000-10,000 ads per day. That’s nearly double the number of ads the average person saw in 2007 and over five times as many ads as the average person saw in the 1970s.
We’re bombarded by tailored advertisements in our news feeds, our internet searches, billboards, radio, and more. It takes effort to say no to more. Being intentional is key to curbing lifestyle creep.
Just to be crystal clear, upgrading your lifestyle isn’t a bad thing IF it doesn’t interfere with your financial goals and your financial future. If lifestyle creep is leaving you with nothing to show for your hard work, something has to give.
We’ve seen so many of our clients get a hold of their financial creep, so they can live the life they want to live right now, while setting themselves up for a good financial future.
4. Debt is out of control
Debt is normalized in our world. Of course, you’ll have a car payment, student loans are inevitable, and credit card debt is standard. A few generations ago, this was anything but normal. Our grandparents would save up and pay cash for what they wanted. They lived more simply. Credit cards didn’t exist.
We live in an era of getting what we want right now even if we can’t afford it. Commercials don’t advertise the whole price of the vehicle, just the monthly payment. The convenience of getting whatever we want, when we want it, (even when we can’t afford it) bites.
In fact, I went to a local furniture store and saw payment plans are available for a $25 chair. What?! The monthly payments were less than a dollar. Yet again, payment plans are marketed to us everywhere.
What we don’t think about is how interest accumulates at record speeds.
A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent. By comparison, APRs on credit cards can range from about 12 percent to about 30 percent.
Making minimum payments on debt can get you nowhere. We’ve plugged in our clients’ debt with minimum payments, and it would take 100 years to pay it off. Yes, you heard me right, 100 years. Compounding interest doesn’t work for you when it comes to debt. If you’re wanting to tackle debt, you’ve got to be proactive and automate the process.
There are three main methods for paying off debt: the avalanche, the snowball, and a custom plan to pay off debt. Our clients make the most progress in paying off their debt when they go with a method that they are excited about. Each method works; the key is to determine which method will work for you for the long run.
5. Everything you’ve tried hasn’t worked
Have you tried everything under the sun, and still you’re not making financial progress like you want? Most approaches are incredibly hard to sustain. It’s like going on a financial diet. You get tempted and go off course, and feel like a screw-up. Eventually it’s just easier to go back to your normal life, and give up. Living on rice and beans until you pay off debt is just not sustainable or enjoyable.
Many of these ‘financial diets’ work, but often they cause guilt and shame. We’ve seen this in our clients and ourselves. When we were working on paying off our home, we had a season where we worked as hard as possible to pay it down.
For our personalities, it was like a game, a race to get it done. It was kinda like peeling off a band-aid as quickly as possible, so we could get that out of the way and start living the life we dreamed. Yes, we paid off our home. But after we tackled that massive feat, we kind of coasted for a while. We were financially burned out. You can’t run a marathon forever; you have to recover.
A financial diet only works if you have a set time limit, and you give yourself time to recover from that sprint. This worked for us, because this method lined up with our personality, our values, and our financial goals. Going all in and tackling financial goals as quickly as possible is not for everyone. That’s why we don’t coach our clients on our values.
When our clients discover what their financial values are and get crystal clear on their goals, they’re able to make financial progress on their terms, not ours. Our goal is to guide, provide tools and resources, and provide accountability for our clients.
If you tried everything, don’t be discouraged. There is hope for you yet. You don’t have to do this alone. You just need to experience a financial plan that is tailored to you.
6. Information overwhelm
There is an abundance of financial information available out in the world. Surprisingly, with all this information, Americans are in a worse place financially than the generation before them. Our nation’s total household debt just reached $16.90 trillion at the end of 2022.
All the information that is available to us can be overwhelming. I view it like getting your medical advice from a Google search. When you go down that rabbit-hole, it’s easy to think you have scary diseases, and then you read another article that contradicts the last one you read. There’s no coming back from that.
Financial information can be just as daunting. Who should you trust? There are so many approaches out there. And sadly so many that are rooted in guilt and shame.
If you’ve been down this rabbit-hole before, I get you. It often feels easier to just throw in the towel and hope your money situation just magically gets better on its own. Sadly, I’ve never witnessed that happen.
What gives?! There’s a difference between knowing and doing. I’m an avid reader. I typically read 3–5 books at a time, and I’ve recognized in myself how much easier it is to consume information versus taking action on it. Doing something new is challenging and it is so much easier when you have someone you can actually talk to through the process.
Each of us has a financial past, current financial struggles, and a hope for a bright financial future. Books and blog posts don’t know your unique situation or what steps you should take next.
One of my favorite parts of being a Financial Coach is that I get to hear my clients stories and create a custom plan for them.
Money isn’t just about numbers. Our clients are able to cut through all the financial noise, and focus on what will help them move forward like never before. We have conversations and guide our clients to identify what next steps they should take.
When our clients work with us, they get to speak to a real human. Someone who they can bounce ideas off of, ask questions, get accountability, and truly see what is going on in their financial world.
That is something no book, podcast, or Google search can do.
You’re not alone
If you’re downright stressed about money, you’re not alone. Financial overwhelm is real. It’s easy to ignore our money, but that isn’t a long-term solution.
If you can identify with…
- feeling like you’re bad with money
- being overwhelmed because your money being all over the place
- experiencing lifestyle creep
- debt that seems to never go away
- being frustrated that every time you try to be better with your money, something goes wrong
- being overwhelmed with all the money advice available
You can experience joy with your money
Your financial struggles are real and valid. But there is GOOD NEWS, you don’t have to feel this stressed and overwhelmed with money. The choices you’re making are costing you your time and money. You get to choose your next steps. You can continue doing what you’re doing and stay stuck, or you could try a new approach.
The easiest way to change your financial life right now is to book a FREE 20-minute Q&A Session with us. We’re able to talk to you about your financial struggles, discuss your actual numbers, and help you on the next step of your financial journey. Our goal is to serve you and help you start to experience joy with your money.