From an early age, the value of a good education is drilled into the minds of most youth. Based on this information, the process of going from elementary, to middle, to high school begins. Along the way, learning different types of arithmetic and math is expected: ABC’s and 123’s, decimals, ratios, percents, Algebra I, Geometry, Algebra II, and Calculus. Throughout this system of indoctrination, the connection between addition, subtraction, multiplication, division, emotions and money is rarely taught.
When people understand the importance of four simple calculations, it is easier to make quality financial decisions. Remember when you were finally in a position to borrow enough money to finance your first car or house? How much of your purchase was based on emotion and how much was based on math? Or better yet, remember the feeling you had after receiving the new car or new house keys? Isn’t it funny how quickly excitement seems to fade after you’ve made a series of monthly payments?
As with all things, eventually boredom sets in and the desire to feel good and look good becomes greater than the desire to live below your means. Since most financial transactions are done in secret, the weight of more debt and higher monthly expenses is usually counterbalanced by one self-talk declaration: I deserve this! Replacing that statement with the question, “Can I afford this?” should yield better financial outcomes. Months and then years go by without realizing the financial impact of short-term decisions. It is easy to do because the act of counting money when making a purchase has been replaced with the action of inserting, clicking, swiping, or scanning.
Fast forward another few years and living life without a budget could make a person believe they don’t work. However, the truth is that budgeting, when done correctly, works 99.9% of the time. Budgets are only as good as the level of commitment toward staying within the boundaries of income and expenses. Unfortunately, as a person’s income increases, some of the things that once were considered luxuries incorrectly become necessities. Confusing the two can make the journey to wealth creation long and difficult.
Rewriting this common financial story can begin tomorrow. Imagine how your life could change if you started using math instead of uncontrolled emotions before making financial decisions. What if you took the time to think about the short- and long-term implications of your spending behavior? How much less stress might you feel if you decided to take 100% control of your financial future from this day forward? There are several possibilities within reach. The only thing you have to do is determine what you want money to do for you now and in the future. Once you have that answer, create a system which produces that result. All systems can be improved, so if you have to tweak yours, that’s what learning looks like.
