Happy Wednesday, everyone! If you don’t know, April is Financial Literacy Awareness Month, and the lovely Shannon at The Heavy Purse is hosting a carnival on financial literacy and bloggers’ biggest money a-ha moment. If you’re not familiar with Shannon’s writing (though who in the personal finance subculture isn’t?), she’s a CFP who not only talks about the importance of financial literacy and setting long-term financial goals, but aims to teach her readers about the root of financial problems and methods to manage it. I have learned so much from her posts, and at the risk of being the biggest brown noser on the block, I attribute a significant a-ha moment due to one of her posts.
When I finally resolved to kick my debt to the curb in early 2013, I turned to personal finance blogs for methods, support, and encouragement. Knowing that people ‘out there’ shared a common goal was a huge motivator for me, since it gave me an outlet to relate to others that I wouldn’t normally have in real life. It was also eye-opening as there are a ton of blogs and great information out there on the different methods to attack debt, whether it be the strategies behind the snowball vs. avalanche methods, setting a budget, creating a money envelope system, etc. While all this information was extremely useful in the implementation of my goal, it still felt something missing. I recall reading a couple of blogs that stated that financial goals and emotions don’t, or rather shouldn’t, mix, and that seemed a bit puzzling to me. However, since these bloggers obviously had their financial stuff together, I figured if I needed to also get to their level, that I had to learn to extract the emotion out of anything related to finance.
That’s when I came across Shannon’s blog, in particular this post. She essentially states that money is emotional, but understanding the emotions behind spending or not spending is where you can truly gain financial freedom. Once I read that post, a few things started to gel with me during this particular ‘a-ha’ moment. First of all, that the simple acknowledgement of what I was experiencing was really validating, especially coming from a finance expert. Also, it kind of felt like it was one of these things that seemed to float around in my head, but doesn’t truly click until someone says it in a coherent and understandable way. It isn’t so much that I had to deny or stop these emotions from occurring, but rather recognize and work through them before acting impulsively. It might seem really logical to some like my Spock-like husband (and I say that in the most endearing way possible!), but for me it takes some practice.
The biggest take-away from it, though, was when she talked about emotional spending and identifying your triggers. While I knew that I had a history of overspending because of my emotions, whether it was because I was happy because I got a new job and I “deserved” it or sad because of a break up, I didn’t really make an effort to acknowledge these triggers as the reason behind my bad financial habits. However, after some practice on identifying these spending triggers, I was also able to identify other emotional triggers when it came to debt repayment, whether it was feeling anxious about ‘missing out’ with friends’ outings or just from debt repayment burnout. Once I was able to identify these debt repayment triggers, I was then able to figure out the reasons behind these emotions, as well as talked myself through it since I knew my long term goals were more important than these fleeting emotions. It took some time, but recognizing these emotions and, basically, troubleshooting them was definitely helpful in completing my debt repayment goal.
Even though I no longer have debt, I do understand that being able to identify financial triggers will most likely always play a role in my life. Whether it’s catching myself falling back into emotional spending (it happens, though infrequently) or, most recently, feeling skittish about now putting all those debt repayments into investing due to the risk involved, at least I’m aware of the emotions that come into play, and take steps to resolve them by realizing how these actions affect my long term goals. And for me, that’s become a pretty important step in my experience to become more financially literate.
Be sure to check out Shannon’s Carnival on Financial Literacy Awareness – I’m grateful to be a part of this carnival, as well as excited to read about others’ a-ha moments (see what I mean – emotional about everything, I am ;) ).