5 habits that could be ruining your relationship with money
By Cat Rikihana
Cat is an Indigenous Coach (working towards ICF Accreditation), Financial Mentor and Director of Restore Wellness Network.
Many treat their relationship with money like a loveless marriage, they are both physically there but not present and their communication is shallow and habitual – neither party feels loved. They might irritate each other from time to time, you never really get to the core of the problem and then just repeat the cycle over and over! It’s the same deal with your relationship with money.
Do you have money habits that are damaging your long-term money health? We all know that to have a thriving relationship we need to put in time, effort and intentional action. I have five habits you should steer clear of now so that you can have a healthier relationship with money in the future.
- Stop winging it with your money and have a money plan:
Do you just cross your fingers and hope that there is enough in the bank account to cover all your bills coming out? Instead, create a weekly or fortnightly spending plan and review it regularly. To improve your financial future, always have a budget or money plan in place. Let it become a habit. You could habit stack this to something you already do, like having your morning coffee or after taking the dog for a walk. Have a budget check on a regular basis and become more aware of how you spend and use your money so you can make better decisions with what you have.
- Stop using credit and start saving for what you need:
It’s uncommon to find someone who does not have some form of credit like a credit card, store purchase card or the very popular buy-now-pay-later (BNPL) platforms like Laybuy and Afterpay. There isn’t anything wrong with using credit if used in a way that doesn’t harm your finances but using credit excessively becomes detrimental to your relationship with money. Some people find it hard to manage multiple BNPL accounts. Often those purchases are not budgeted for so when all the payments come out, the money you thought you had in your account is gone. Having one credit platform with budgeted repayments will keep your budget smiling. A huge mindset shift for people is ‘save now and buy later,’ which is the very opposite of, ‘buy now, pay later,’ right?
- Stop transferring money back and forwards and use your bank accounts to your advantage:
A common habit that people may have when they don’t have a money plan or a budget is transferring money back and forwards between accounts. Their intention is to try to set aside money so as not to spend it but it always ends up back in the spending account. Try having separate accounts for your bills and expenses (setting everything up on automatic payments), a cash spending account (budgeted petrol, groceries, takeaways etc) and a savings account. Transfer a set amount of money for cash spending into a separate account, and once it’s gone, wait until the next payday. Once you start to see a surplus in your bills and expenses account, transfer a budgeted portion into a savings account. You can speak to your bank or Financial Mentor about other ways to utilise banking to enhance your relationship with money.
- Stop doing your finances solo – do it together as a family:
How do you manage your money in the family home? Working together as a household on a financial plan can be really fulfilling.
If finances are not being discussed and are being managed individually it’s hard to get a real sense of the financial situation of the household. Pooling your finances together and having some shared financial goals could give you more financial leverage in the longer term. Do you have shared financial goals for the future? Do you want to invest or pay off combined debts? Just make some time to talk about it as a whānau or household. If you decide to keep your finances separate make sure you know who is paying for what and so everyone can be clear and happy with the arrangement.
- Stop separating your life goals from your finances:
It’s common for people to think about their life goals but too often planning financially is not part of this planning process. Everything we do in life has a financial component and so it is important to have a financial plan of action sitting right alongside your goals. So next time you sit down and set some goals, work out the financial cost of how to get there. Just like any goal work backwards from where you want to be. Then you will know what kind of changes you need to make and the sacrifices in your budget you may need to commit to in order to make your plans a reality. You may need to adjust your expenses or increase your income to reach your goals.
Creating a more positive relationship with money can come from focusing on the things you do well. When you do something well, acknowledge this. Build on your strengths and stop focusing on the things that go wrong from time to time – it happens to us all. Having worked as a Financial Mentor for over a decade, I’ve had the opportunity to observe hundreds of people and their money habits and help them work towards improving their relationship with their finances. Kicking those five habits to the curb is a great start to building a healthier relationship with money that will last long into the future!
– Cat Rikihana