46: Understanding and Reshaping Your Financial Behaviour

Imagine a world where your every financial decision is not a knee-jerk emotional reaction, but a calculated step towards a secure future. What if you could understand the psychological reasons behind your spending and saving habits?

This episode of the Saving for Your First Home podcast peels back the layers of our financial behaviors, exploring how emotions, upbringing, social influence, and financial literacy shape our spending and saving patterns. We dig into how our emotional states, the influence of our parents, the pressure of social media all impact our financial decisions.

Want to make a change? Then we explore how a journey of self-reflection, will help you identify and improve your financial habits. 

 Step into this enlightening episode and let's reshape your financial behaviour together.

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Transcript

Carolyn: 0:00

Hello everyone. My name is Carolyn. Welcome to the Saving for your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives.

Carolyn: 0:14

For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this.

Carolyn: 1:13

Hello everyone, welcome back to the podcast. Man, it's been a crazy couple of weeks and I've missed you guys. So if you're first time joining us, then welcome. But for my longtime listeners you know I've been in my A for a little bit. It's just been a crazy time. My daughter graduated I think I talked about that in the last episode and we had my sister visiting and so it was a lot going on over the last couple of weeks. So I'm excited to be back and I have a lot to share actually this week, and I'm excited about this episode, and what came up for me was that our behavior dictates how we spend and how we save, and there are a couple factors that really play into this psychology, if you want to call it, of money. And the reason this came to mind was because of my busyness. You know when you're busy or when you're stressed or when something is happening in your life, the money and the way you spend money is immediately impacted. And so I thought you know why don't we talk a little bit about financial behaviors and how we can actually just identify them, so that when we're going through them, we can recognize that and maybe we can make adjustments along the way.

Carolyn: 2:39

Okay, so first let's talk about the emotions. If we're stressed, if we're happy, if we're sad, all of these things play a part in how we spend and save. Now I'm the first person to admit that stress eating is a real thing, because as soon as I get stressed, out comes the chocolate. I'm reaching for the french fries I'm doing all the things that I know in my mind are not good for me, but they somehow give you an immediate stress relief. Not only is that bad for your waistline, but it's also bad for your pocket. Then think about when you're happy. I have had so many things to celebrate over the last two weeks and each one of them came with a price tag. So we've had parties and dinners out and brunches and all those things add up and if you don't plan for them, then it really is going to have an impact on your bottom line. And then, alternatively, let's think about when we're sad. When we're sad, we're looking for that pick me up right Something that's going to give us an immediate temporary high per se. So for some that could be shopping, for some it could be being entertained with friends going out. It can mean many things, right, you just want to make yourself feel better, and sometimes spending money helps with that.

Carolyn: 4:09

Now, another thing that has a direct impact on the way we spend and the way we save is our upbringing. It's funny because we all have one person that we know that are the ultimate savers. They're able to put all this money aside and I don't know. They just have it together when it comes to saving. And then there's others that are on the polar opposite end, and so why is that? And you go and you kind of dig a little bit deeper and you look to their parents, or the people that influence them the most, and, sure enough, you find out that they are also savers, and they raise their children to be that type, to be able to put money aside, to allocate. Well, they provided a lot of financial literacy, and that's the reason why they are the way they are. And the flip side also applies. Right, if you saw your parents as spenders, always going out, being entertained, then the same pattern may happen with you as well.

Carolyn: 5:16

Okay, and here's an influence that has come up probably in the last 10 years, and that is social influence. I mean, this become an actual occupation for people to become influencers quote, unquote, and those are people that are purposefully influencing you to purchase or buy a particular product or service or destination, and they're making it so shiny and appealing and it really sways the way we spend our money. And let's not just blame social media. We also have to blame our peers, because you know a lot of us. We kind of compare ourselves to people that we know oh, that person. Look at them. They've bought this beautiful home. Now I have to run out to purchase different items to make my home look nice, and we're always competing with that person. That is either on the television screen, on social media, but it can also be our friends and family as well.

Carolyn: 6:19

Now, another factor and actually this is the primary reason why I started this podcast, and that is to educate and inform people and improve their financial literacy. A lot of the time spending and saving is determined by what their level of financial literacy is. It's like any education the more you have, the more you have the ability to be able to make better and informed decisions about that particular topic. So, for instance, if you're a mechanic and that is your expertise and you know everything there is to know about fixing cars, I'm not going to give you advice on how you should change the oil, because you have the knowledge, you understand exactly how the car works and you're going to be able to make better decisions than I would ever make. And so the same goes with financial literacy the more that you know, the more you understand how to manage your money, the more you understand how to invest, and all of this makes you equipped to handle when things go wrong. You're able to make those educated decisions.

Carolyn: 7:37

Now, another thing that actually has a great impact on the way we operate and the way we manage our money is our cultural differences. You'll notice that with various cultures, it's actually ingrained in them to save or spend. Now, this is a very fascinating topic. So if you're interested, just google cultures and saving money and you'll find all sorts of information about different cultures and how and why they spend or save. I think that's one thing that we don't do enough is look to other cultures to see what it is they're doing and can we learn or do it differently than we've always known, because this is the way we grew up. So I really find that fascinating, and if you do as well, just type that into google and you'll be amazed to see the different type of practices that are out there.

Carolyn: 8:32

So, now that we know all of that, what can we do to change our financial behavior based on some of the things that we've recognized about ourselves? Whether it's our emotions, whether it's the way we were brought up, whether it's the social influence or our literacy level, all these things place such a factor in our financial behavior. So what do we do now? Well, aside from the basics, like creating a budget, setting financial goals, automating your savings, all these types of things that I preach about, they are super important because they lay the foundation and the groundwork. If you have a budget in place, if you have financial goals that you're focused on and you have the tools to set up and automate all of your savings and investing, then you're on the right track.

Carolyn: 9:29

So there's one more thing that you can do, and that is self-reflection. Start by examining your own attitudes and beliefs about money, identifying some emotional triggers or biases that may influence you to spend or save, and then understand why you make certain financial choices. This can really help to address those root causes of problematic behavior and you can make baby steps to correct those bad habits that you've just incorporated all of your life. I'm not saying that you're gonna turn a switch and everything is gonna be different, and if you're gonna go from a chronic spender to a chronic saver. But it's the little things, it's the little steps that we take to change our habits and behaviors that really can make a difference in the overall big picture.

Carolyn: 10:22

I did a three-part series back in April about mindful spending, and some of the techniques that I talked about through those episodes really can help with changing our financial behavior as well. So if you haven't listened to those episodes, they are 34, 35, and 36. Great tips that you can just incorporate in your daily habits that will slowly begin to turn things around for you. So this was a little short episode, but it was on my heart to share with you my thoughts about identifying and changing our financial behavior. So I hope you guys have a great week and we will see you next Thursday.