Best Holistic Life Magazine Fall 2021

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M O N E Y B L O C K S & B A D H A B I T S

"If you spend more than you earn, then you are on your way to entering into a vicious cycle of debt."

If you're not familiar with money blocks, a few instances that are provided here will give you a clue on what they are. Think of a situation where you earned money and you spent it all almost immediately. Have you ever tried to save for a goal, only to discover that you have no resilience to meet the savings target? Do you always fail to stick to your budget each time you go to the grocery store? Do you ever find it difficult - if not impossible - to get a hold on credit card spending? Well, it may be the case that you're yet to be equipped with the right financial knowledge to improve your situation. Alternatively, you might be faced with money blocks. The reality is that you don't have to study finance to be able to deal with money blocks. Money blocks are simply beliefs and mindsets that get in the way of you accomplishing financial goals such as getting out of debt, saving for a future goal, increasing your income streams, or even affording the kind of lifestyle you desire. Most people with money blocks do not know they have them. This is because they are subconscious beliefs that eventually become habits. If you are an ardent believer in the, “Money is the root of all evil” theory or you grew up in a home where your parents struggled to make ends meet, you might be suffering from money blocks. The hardest part about dealing with money blocks is identifying the money blocks you have. Spending More Than You Earn If you spend more than you earn, then you are on your way to entering into a vicious cycle of debt. Is it possible that you have certain variable expenses that take a great toll on your monthly income? Action step: The first rule as far as personal finance is concerned is to spend less than you earn. To do this, you will have to analyze your financial habits. This includes tracking how and where you are

spending your money and cutting back on your expenses. By doing this, you will free up extra cash to save or pay down bills. Living Above Your Means Everyone craves a life of luxury; however, the kind of luxury everyone can afford differs from one another. You own a small home or a small car. If you consider what you earn monthly, are you able to afford a bigger home or car? What about expen- sive vacations? Spending ridiculous amounts of money that you have to borrow to acquire a luxury apartment, for instance, when you're still strug- gling to gain a foothold of your finances, is a bad money habit. Action step: You should be able to distinguish between your wants and needs. Basically, every human needs food, clothing, and shelter; every other thing falls under the ‘wants’ category. You must also be able to identify what truly brings meaning to your life. Can you cope without a TV? How much do you like junk food? Do you really need a fancy car or is it just for a show? The simple logic is this: if you cannot afford something, then you don’t need it. Work with this and you’ll over- come the temptation to live above your means. Impulse Buying Ever been to a store and you're lost on what to buy? Even if you picked up some items, you might even- tually discover that there were better things you could have purchased. This is impulse buying, and it tends to occur as a result of a lack of budget. With a budget, you state clearly your monthly income and expenses, including discretionary items if your monthly income permits it. Having a budget is important but sticking to the budget is more important. Action step: Make a budget and stick to it. Even at that, you cannot completely rule out the need for variable spending. Depending on your income and

expenses, a few dollars could be thrown into your fun money, which you can then use to buy what- ever strikes your fancy, even if you never planned for it. At this time, it would no longer be regarded as impulse buying. Not Having An Emergency Fund One of the key components of good financial health is having worthwhile savings. Even with the expenses you incur every month, it is wise to have some money saved for emergency situations. Think about the hurdles you tend to come across in life? If you do not have a shock absorber – in the form of an emergency fund – to cushion the effect, you might be heading toward financial instability. Action step: Open a high yield interest savings account and automate deposits into the account specifically for emergencies. Apart from the monthly deposits, you can also funnel extra money (cash gifts, bonuses, tax refunds, etc.) into the account. It helps you reach your goals faster. Not Planning for Retirement The moment you start a working career, you should plan for its end. There are employers that offer retirement contribution accounts for their employees. If you're lucky to have such an employer, you shouldn't hesitate to join and start saving for retirement. On the flip side, if your employer does not offer any retirement saving option, you can try out a traditional or Roth IRA. Action step: If your company offers a retirement plan, such as a 401(k), and the offer matches your contributions, then you should direct your savings dollars into the account. You can also consider establishing an individual retirement account (IRA). It is important that you self-reflect on your possi- ble bad money habits. With this knowledge, you are a step closer to building a healthy relationship with money.

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