I often present the following scenario to my clients:
Quote: If someone was bleeding out, say from a perforated artery or vein, what would a doctor try and do first: transfuse more blood or stop the bleeding?
People don’t need a medical background to answer this correctly. It just takes common sense. Yet, when it comes to money, common sense disappears. People place themselves in a quagmire of debt but don’t think about trying to stop spending. Their self-talk seems to be, “I need more money” without considering the thinking behind what created the problem in the first place.
So in the context of money, what does mismanagement look like?
- Signing a 36 month contract (with all the ‘add-ons’ of admin fees, insurances) for an overpriced car and being unable to afford the repayments after 2 months and/or the Warrant of Fitness and/or the car registration and/or repairs.
- Signing a credit contract to regularly purchase heavily overpriced, low quality products, when you struggle from day to day with how you’re going to feed your children. (In defence of unwitting customers though, some businesses have left many budget advisers gobsmacked at the overtly predatorial behaviours that appear to target the low educated, the elderly, even the mentally impaired, most often in our low socio-economic districts and communities.)
- Choosing to live in a home or rental accommodation that leaves no money for other essentials like: food, power.
- Using credit cards for unwise purposes and then not even making the minimum monthly repayments. In my droll opinion, most people have displayed a lack of financial sense to justify being banned from using one until they understand how credit card institutions make money off them.
A lust for spending?
Most people I work with spend emotionally and without a plan. They have no solid rationale besides the fact that they just want it. Unfortunately, one of the consequences of living in a fast-paced society is, and that’s due to the rate of change and advances with technology, credit is so easy to access.
Even tougher on the unquestioning consumer with a lust for spending, is the powerful influence of the media which is more than complicit with retailers as their streams of revenue are highly dependent on advertising for their existence. New Zealand society is constantly bombarded with unrealistic media images that reach and teach us how we should define ourselves- brand clothing, fashion accessories, the latest electronic devices to engage in social media, cooler vehicles (that end up being repossessed), bigger houses and the list goes on…
Question: Why are we spending money we don’t have to keep up or impress people we don’t know and probably don’t even like?
Answer: Is it because we want to feel like we belong somewhere, whether it’s with our extended family or a group of friends, a small part of our community, even if it harms us?
Opinion: Feeling like we belong to anything at the expense of our happiness, of giving up control over our money, safety and security and all logical financial sense, is overrated.
Advice: We may want to consider seeking out what common sense and good financial management is that provides you with a sense of control. Go and make an appointment with your nearest NZFFBS budget adviser, read up on whatever information you can find.