Discover the hidden pitfalls that hinder your financial success and learn how to overcome them in our exclusive livestream. Join us as we explore four common categories of subconscious choices that sabotage your money goals. Gain valuable insights on identifying and preventing these obstacles, ensuring a smooth path towards achieving financial prosperity. Don’t let these mistakes derail your financial aspirations!
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Dr. Sev
On today’s episode, we are discussing for financial pitfalls, and sharing strategies to manage them. Because friends, it is important that we identify those subconscious choices that may lead to derailment of our financial goals. And once we’ve identified them, for us to find strategies that can help us overcome those hurdles. Now, these are a bit different. And they really require deeper exploration than I’m sharing in this short session. And that is due to the psychological and emotional aspects around the why behind our choices. We’re not going to talk about the why today. Because it requires, again, deep exploration. But what we’re going to talk about is the how, and the what.
So first, we want to start with friendships. Friendships, is one thing that can derail our finances. And you might say, How does friendship derail my finances? Well, let’s talk through a few scenarios. Think about the peer pressure that comes with belonging to a certain group. Let’s say for example, all of the individuals or the couples in your circle are buying new cars. So what do you do? You buy a new car, and you probably don’t even think about the financial ramifications of your action, you just want to fit in with your friends. Or maybe the group of friends you hang out with go on yearly vacations, and you’re struggling to pay your bills, but you still want to go on the annual vacation trip, your focus is on your friendship, you’ve put staying friends with your group, or belonging ahead of your financial well being. We can’t unpack, you know the why behind that choice here. But there are some things that we can do to mitigate that kind of scenario. There are things that we can do to think ahead of, if this were to happen, what would I do so we don’t get into that emotional quagmire.
So here’s another scenario, you and your girlfriend’s always go to the after Thanksgiving sale or some other sale. And for some reason, you don’t have enough money like you usually do. But you don’t want to be left out. So if this is you in any of those scenarios, or similar scenarios, let’s talk about some things that we can put in place to set boundaries. First, you want to know your financial limitations? What are your limitations? Not what your friends are doing. And I know it’s hard. But you need to know what you will and will not do in certain situations. If my friends decide they are going to buy the newest. I’m not into purse, but what Kate Spade purse. I’m going to say Listen, guys, I’m going to celebrate with you. But I’m going to stay out of this one. Again, it’s hard because we have friendships and we want to belong, we want to do the same thing. We want to make the same decisions. We want to have the same choices. But you have to think, how is this going to impact my finances? Is this going to cause me to not send my child to private school? Because I’m going on that vacation? That’s gonna eat up all my money? What if I were to lose my job? If I blow my emergency savings to fit in with my friends? How is that going to help me? How is that going to set me back.
So again, set boundaries before things happen. And that’s key before things happen. Set the boundaries, know your financial limitations, know what you will and will not do. Strategize ahead of time. So when these things happen, we don’t get pulled into making emotional decisions that really don’t serve us. And don’t be afraid to say I can’t go this year. Or to say, I will go hang out with you guys. But I’m only window shopping and ask one person in the group, can you be my accountability partner to make sure I don’t spend money. If they’re your friends. It’s okay to be vulnerable with them. And get one person who you know will hold your feet to the fire so that you don’t make choices that derail your finances. And really, I just want you to be aware of the subconscious choices that we make around our friendships that may derail our financial goals. I remember the company I used to work before this one. They would always say severine do you want to go out to lunch? And I will say no, all the time. And well most of the time, and eventually they stop asking and they say don’t ask severine she’s not gonna go. Well, I had a plan. I knew If I was only going to go out to eat maybe once a week, or once every two weeks, that was my plan, I had already decided ahead of time. That’s what I was going to do. And I didn’t allow what they said about me, because I know they talked about me. I didn’t allow what they said about me to stop me from continuing my plan, because here’s the thing, if they are your friends, they won’t kick you out of the circle, if you can’t do the things that they’re doing.
And again, this is hard. But if they do kick you out, or if they do ice out, as my daughter would say, or block you from your friendship, or not as welcoming as they used to be, then they were not your friends. They were about what you did together and not about true friendships, find some friends who won’t mind if you say no to whatever group activity they’re doing. And again, these are not easy decisions. But I just want you to be aware of the choices we may make, because of our friendships, and the patterns we recreate because of it. And these are patterns that may not serve us. So let’s look at the second one, which is habits. Yes, habits are things that can derail our finances. So let’s talk about some of these habits that could derail our finances. I walked into Publix a few days ago. And this is where the start of this YouTube session is coming from. Because I did something that I thought how many of us are doing that? So I walked into Publix pick up a prescription. And after I paid for some reason, I felt like I needed to do something else. I felt like I was missing something. Because when I go into the grocery store, I always have a list of things. And I always come out with a list of things, right. And so I felt like something was missing. Because all I got was a prescription. And it was only $2 in some sense. So I walked over to the hot food section. Now I don’t want anything there. I looked at my list and I keep on my phone. No, I’m not gonna get any of those from Publix. Then I walk over to the cold section where the salads are like, No, I don’t want that. And then I’m walking slowly towards the door.
Because I’m still thinking, what should I be getting in here, because I’m conditioned, My habit is to go into store and get several things. I did end up getting a carton of Lactaid chocolate milk because my daughter likes it. And it’s not like it was an emergency like I needed it. But out of habit going shopping, I always leave with more than one items. And I felt like something was missing, because all I had was a measly prescription. So how many of us fall into that boat, where we go into a grocery store or we go into any kind of store. And we end up feeling like, we need to get all the things? Because if we don’t get all the things we haven’t really gone shopping, and that’s a habit. So how do we break that habit? We’ll talk about that in a little bit. Here’s another habit that I have to try really hard to break. And that’s procrastination. It’s another habit that could derail our financial goals. For example, my auto insurance expired July 6. And it’s been on my to do list, but it’s not something I enjoy doing. So I’ve been putting it off. And I was getting ready to shut my computer down. On the night of July 6, I think I worked with him at 11:30 that night. Then I looked over my list and I’m like, Ah, I didn’t do my insurance. I didn’t renew it.
But the reason I delayed is because I needed to research some additional places for auto and home insurance. Because when I started my home insurance, it went up 200 plus dollars, my auto insurance went up $36 over six months because I pay my auto in six month block. And so I wanted to research and I didn’t, I kept putting it off. And at one o’clock in the morning, I think it was because it was past midnight of July 6, which is when it expired, and I still paid, fingers crossed that it wouldn’t lapse because I was late. So if I had done what I needed to do the due diligence and done the research, I can save some dollars, because I have my auto on home with the same company and I probably need to find somebody else to get auto on home at a lower rate. So we procrastinate about things that end up costing money. So maybe you know you need to meet with a financial counselor such as me to talk about your budget, but this is not a sexy item. Or as Kathryn said to talk about your financial plan, right? So we procrastinate, and then we end up maybe losing our jobs, or something happens, and we have no strategy in place. So, because of that, we end up using credit cards to supplement our lifestyle or worse payday loans. Do not use payday loans borrowed from a friend, borrow from a family member, borrow from your 401 K if you need to. Okay, and this is not advice, this is just giving you some some choices, right.
But the worst thing you can do is do payday loans. Because they are up to eight, nine 1,000%. And you’ll never be able to get out of there unless you get some really great job other than what you had before, that gets you out of the hole. So we procrastinate about putting our financial plans in place. And because we don’t have a plan, we end up having to make decisions out of fear, it becomes now a catastrophic event, because we haven’t put the things in place that we need to. Another thing that I’ve shared on this channel before is unsubscribing from all sales emails, that’s another habit that can get us into trouble. Because when we see those emails, what do we say, I’m just looking to see if there’s anything I need. And we know we don’t really need anything. But in the sales email comes, we scanning it to see, maybe there’s something I need, and I don’t know that I need it. We don’t tell ourselves those other you know, last part of the sentence, we just say, maybe there’s something I need. So we look. And it becomes a habit to look at that. And then we’ll say that chair would look nice in my living room. But we’re not thinking about the whole financial picture, we’re just seeing that chair that looks so nice, that seem like it’s on sale, to put in our living room when we don’t really need it, and we end up buying it.
And maybe that causes us to, we can’t sign up our children for tennis lessons, or we can’t sign them up for that math tutor that they need. So those are some of the habits that because we do them, you know, subconsciously we don’t realize how they can derail our finances. So one of the things I always tell people unsubscribe, because it will help curb impulse shopping. I have unsubscribed from all sales emails. And I have not had my first of all, my email is uncluttered. Now, I still have a lot of emails I need to get rid of. But it’s uncluttered. And I’m not tempted to go look at what I can buy when I really don’t need anything. And in terms of talking about the, you know, the shopping and going grocery shopping. Another solution is to create a shopping list when you go to the grocery store. And I had a shopping list on my phone. But I didn’t tell myself ahead of time, which is a good habit to have is to say what I will not do when I walk into that grocery store. I’m going to walk past those dollar sale items. I’m not going to get anything that I don’t need. Because I’m being strategic with my money today. I walk in there, get what I need, and walk out. I see too many posts on social media. And listen, I’m not telling you how to spend your money.
That’s not my job. That’s not my business, okay. But I see too many posts on social media, with people saying, I just walked into Target to pick up two things. And I walked out with a cart full of things. I just walked into Walmart to pick up one item and I came up with a cart full of things. And if that is something that happens all the time, that’s a bad habit. And we may want to think about ways that we can get rid of that habit. Another thing we can do to help with the habits that we have, especially procrastination is to get an accountability partner to help us stay on track. And Amazon Prime Week is coming up. So planning ahead. Tell yourself Do I really need anything from Amazon Prime? Or am I going to buy because it’s habitual to buy something? Yes, because it is Amazon Prime wheat. Okay. So these are some of the things to think about. Because again, we do these things without thinking. And when we end up at a place that we don’t want to be financially, we don’t maybe have the bandwidth to see how we got to where we got to. But it’s good to be intentional. Does that mean you’re gonna win every time? No, I am good with money. I can tell you that. But that doesn’t mean I win every time. But I win more than I lose with the decisions that I make about my money because I am trying to be very intentional about how I spend my money about how I manage the money that I have. Because in my family we live into our 80s 90s in the hundreds. So if I’m gonna live that long, I need to take care of my coins. So I don’t know about you, and how longevity is in your family.
But you might want to do the same thing, you might want to take care of your coins to make sure that your money lasts. So let’s jump to the third thing that can derail our finances. And that is expectations. And these are around societal expectations. What do people expect from you? And because they expect that, do you do the things that they expect? Are you making the decisions that they’re expecting from you? So one of the things that I know about expectation is that our families, our friends, and society, may think there are certain things you need to do because you’re in a certain leadership role. I was in an organization when a member got a new house. And the leader said, Now you need a new car to go with the new house. And he was serious. And this is the kind of thinking that can get us into big financial trouble. Just because you have a, quote, unquote, nice job, or have gotten that raise doesn’t mean you should buy that big house that everyone thinks goes along with the new job title, or that new car. And we call that lifestyle creep. The more you make, the more you increase your spending. So you seldom get ahead, because you’re always matching your expenses to your income. Maybe the raise at that new job will allow you to pay off debt and give you breathing room instead of jumping into more debt.
And how many professionals, doctors, lawyers, highly paid executives are drowning in debt. And believe me, they are because they believe what society says about how they should live. Due to their profession. I want to share a statistics with you. According to Lending Club 49% of six figure earners are living paycheck to paycheck. That’s nearly half of people who are making over $100,000 and more, who are living paycheck to paycheck. So that tells me if they’re living paycheck to paycheck, then they’re not being able to save for your kids college, you’re probably not able to set aside money for their retirement. There’s so many things that they are foregoing. Because they’re living paycheck to paycheck, I was one of those who live paycheck to paycheck. And thankfully, I was able to get out of that cycle, because living paycheck to paycheck, just to satisfy societal expectations doesn’t serve, because that’s what they don’t pay your bills, they are not paying your bills. So if they want you to have the new car in the big house, let them pay for it, let them buy it. Okay. So I encourage you to do what I call a Warren Buffett, Warren Buffett, every time he increases his income, or his investments, he does not move from where he’s living, he stays where he’s living, he drives while he’s driving. So I encourage you to not fall into the trap of increasing expenses. With increasing professional advancement. Every time you get an advancement.
Think carefully about what you can do to set yourself up. Because your job is not promised. Your profession is not promised. If you are a business owner who’s making money hand over fist right now, God forbid you have a stroke, then you’re not able to make that money. So have you set up some kind of safety net for yourself, instead of living paycheck to paycheck, and increasing your standard of living just because you’ve increased your income. So one of the things you can do is you can manage your financial goals and your expectations before that career choice kicks in. So let’s say you’re a lawyer, and you’re graduating, you want to go ahead and meet with a financial planner, or a financial coach, or a financial counsellor such as myself, and sit down and think about what the expectations are around your money. What are your expenses? What are the things that you’re going to have to manage Now, if you’re going to open a private practice, there’s going to be insurance around your practice, they’re going to be build expenses for your building, there’s going to be a lot of things plus you have to pay back the buku student loans. So think about before you get into the practice, think about the things that you can put in place to help provide guard rails is what I would call them, their guard rails to help you so that when the money He starts to come in, you’re not just doing what everybody else in your profession is doing. You’re not doing what everybody else expects you to do. But you are making decisions around Your Money, Your Goals, and the things that are required of you in terms of what you’ve planned, right? So you’ve decided before, if you’re in a place where you’re going to get maybe promotions and raises, decide what you’re going to do with that promotion, what are you going to do with that bonus, before you get it, not because society said, you get $30,000 bonuses every year, you need to go on a vacation. No, maybe you need to go on a vacation. Or maybe you need to do a staycation because of the other requirements of you because of the other commitments that you have.
So it’s not about what society expects, but you’re going to work in your parameter, and within your financial goals, within your financial strategies, and your expectations of what it is you want to achieve, to make the decision. So the fourth one is traditions, traditions are some things that can help to derail our finances. So let’s talk about some of the ways that could possibly happen. Let’s think about Christmas, for example, how many people do you know who scrambled after Christmas to pay bills, because they went all out on Christmas gifts. There’s nothing wrong with celebrating, right? But we have to think about not what the jobs are doing, not what the next door neighbors are doing, but how I’m managing my money. And some of us, we think our kids are gonna die, they don’t get the latest, whatever, they won’t die, they’ll be okay. I’m okay. And I didn’t get the latest, whatever, you’re okay, and you possibly may not have gotten the latest, whatever. So have a conversation with your kids, you don’t have to tell them that you can’t afford to buy fancy stuff, because you don’t want to put that message of lack in their head, but have a constructive type of conversation. The conversation can be we’re starting a new tradition for Christmas in this family. And we’re going to select names. And we’re just going to give one gift to each other.
Because we want to celebrate our family more than the holidays, right? Or whatever conversation you want to have. But what you’re doing is you’re setting up in their minds, that it’s not about the tradition, but it’s more about celebrating as a family. Right, you could set $1 limit, you could say we’re selecting names, and getting one gift and no more than $50. Right. And maybe you give your kids if they are of an age where they don’t have that money, you take them shopping, and you show them different things. And at the same time, you’re teaching them about how to comparison shop, you’re also teaching them about money, and how they can balance their money for what you’re buying. And another thing you could do is, parents could just make a list, have the kids make a list and say, give me a list of what it is you’re expecting, we’re just going to select one thing from your list. And that’s what we’re going to buy this year. No conversation about, we can’t afford to buy multiple, but it’s just we’re going to have a list. And we’re selecting one thing from it. So the kids more than likely we think of this as a fun activity. They’re not saying Mom don’t have the money because the money doesn’t come into the conversation. Money or the lack of it doesn’t come into the conversation. It’s more about we’re creating this new tradition that doesn’t require us to spend our retirement money on gifts. Okay. Another thing we can do is when we’re doing gift giving, we could say we’re going to set an overall dollar limit for gift giving.
So we’re saying everybody, don’t spend more than $50. If you want to spend $50 on one gift, or $20 on two and 10 on one or however you want to do it, but $50 is our limit. And this is what we’re going to do as a family this year. You’re not telling them you’re doing $50 Because you don’t have the money, but you’re giving them ideas about how to strategize about their money. And again, it’s your money, and it’s your choice. But I’m sharing these things because it bothers me to see all the extravagant graduation shindigs. Right. And many of those kids don’t even have college funds or they’ll drop out of college due to lack of funds. So as parents, we have to decide is spending 1000s on a bed graduation shindig to maybe compare with the neighbors to compete with our family member is worth more than getting my child from college. You know, that’s one conversation or however you want to think about it, but again, it’s your money, it’s your choice. I’m not telling you what to do, okay? And listen, I didn’t promise that this personal finance journey is going to be easy. It’s not easy. What we have to do is decisions around our money doesn’t have to be feast or famine decisions. It shouldn’t be feast or famine decisions, you get your tax refund, and you just go hog wild, and just spend, spend, spend. And then two months later, when it’s time for your child to go off to college, or to start a new school year, you don’t have money to pay for school supplies, you don’t have money to pay for shoes, and, and clothes or whatever for your kids to go back to school. It shouldn’t be a feast or famine. But we should be strategic with our money. And as I said at the beginning, a lot of this is out of habits. It’s out of things that we’ve learned over time, but we have to consider are these things serving us? It’s your decision.
It’s your money, right. And I’ve shared a lot of stories before on this forum, where I talk about hard decisions that I’ve had to make. But here’s the thing today, because of the hard choices that I made, I have financial freedom, I still work my job because I want to not because I have to. And I’m not boasting, I’m just telling you, the decisions that I made are all my money that were hard choices. That leads me to this place. There was a time when I couldn’t say this. There was a time when I didn’t have a choice about the decisions that I could make. But because of the hard decisions and the barriers and the guardrails that I put around my money, and my decision, today, I have the freedom to make choices about certain things. Does that mean I’m debt free? No, I still have a mortgage. I have some student loans. But I still can make good choices. And I still have a freedom and peace of mind because of those hard choices. So I listed at the beginning of the session, the why behind the decisions that impact our financial goals are deeper than this session can cover and maybe the decisions you’re making around your finances, or because that’s what you saw your parents doing. So now you have to decide, does what I’m doing serve me.
And I want to reiterate the importance of proactive planning, and strategies to minimize the influence of friends, habits, traditions, and societal expectations on our financial goals. If we can, again those guardrails, set them up, then we can minimize the influence of those four things on our financial goals. We can minimize the impact of making decisions. That doesn’t serve us because it’s, the friends are doing it. And then because it’s the habit to do it, or it’s because traditions in our families or because society expect me to live a certain way or drive a certain car. And I’m not here to tell you it’s easy. It’s not easy to change, ingrained emotional and psychological responses when we’ve been practicing them for a long time. It’s not easy. And if nothing else, I really hope that this episode creates self awareness and prompts us to put strategies in place to mitigate the realm in our financial goals.
