What are Your Money Tapes?

This is a fantastic guest post by Gary Foreman. Gary is the editor of The Dollar Stretcher.com website and various enewsletters including Financial Independence. Financial Independence is designed to walk step-by-step with you as you take control of your finances and achieve financial freedom!

Gary’s post touches on a lot of issues that interest me when it comes to money, because it deals with how human psychology affects our spending decisions. Enjoy!

I’ve often heard it said that the longest distance is between the human head and the human heart. What is meant is that there are many things that we know intellectually. We understand them and have no doubt that they’re true. But, we still have trouble acting on them. In other words, our heart doesn’t know the same truth.

How many of us suffer the same thing in our financial affairs? We know we should budget or begin saving for retirement. But we can’t seem to do it. Intellectually we know what we should be doing. But we just can’t get going on it. Our heart isn’t in the program.

One way to identify when our minds and hearts aren’t in sync is to notice what financial decisions make us uncomfortable. What financial activities make our palms sweat? Our hearts beat faster? Make our stomach quesy? When we feel uneasy about a financial event that’s a clue that it’s an area that we need to examine.

So I invite you to keep a brief log. Notice those financial events that cause discomfort. Include the date, time and any circumstances that seem like they could be relevant. Don’t try to analyze it now. All we want to do now is capture the moment and make note of it and how we feel at the time.

Once you’ve assembled your journal (after a few days to a week) it’s time to study the entries.

First, were you able to recognize what tape was playing in your mind during the event that made you uneasy? For instance, I’ve often heard “You shouldn’t be spending this money. Not on some luxury.” Or “Go ahead and buy it. You’ll never find it again this cheap.” There are many messages that our minds play when we’re considering making a financial decision. Each of us has our own set of tapes. Almost like an iPod full of messages that you frequently listen to.

Some of the messages are good. It’s true that I shouldn’t be spending money on unneeded luxuries. And I should look for bargains.

But we need to be careful about the application. For instance, if the ‘luxury’ is buying a steak to cook at home and I do it once a month is that a luxury? Sure, it’s more expensive than cooking a chicken. But, a steak with baked potato and veggie eaten at home isn’t an outrageous expense. And, perhaps that little luxury is enough to keep me from being tempted to eat at a restaurant that evening. So maybe the money tape shouldn’t apply to this situation.

Or the bargain purchase. If the item I may buy is used and well worn, perhaps it’s not such a good purchase. Especially if it’s something that I’ll use often. Maybe it’s worn so that it is likely to break when I need it. Perhaps spending a few more dollars could buy something that’s dependable and will last much longer. In that case being the cheapest isn’t necessarily a good thing. Again, finding a bargain is good. But it isn’t always the only thing to consider.

So what does your money journal tell you? What tapes were playing when you were uncomfortable about a financial decision? Take a look at them in light of the choices you were facing. Was the tape appropriate to the situation? Or were you hearing something that could lead you to the wrong financial outcome?

Remember that these money tapes almost always have some truth in them.
But, it’s important for us to know whether the tape is true in this specific situation.

One final thought. Since these money messages have been in our heads for years and feel true to us we often accept them without any questions. We jump right to making a decision based on them. If we’re applying them to the wrong situation that can be bad. And, if we don’t stop to think before making the decision we won’t even recognize that we could be making a mistake. In fact, we’ll congratulate ourselves for making the ‘rational’ choice.

So the next time that a financial decision makes you queasy, stop for a moment. Listen to the tape in your head. Ask yourself if the message is true in this particular situation. And, only after you’ve completed these steps, then make a decision.

By doing so, you’ll move your head and your heart closer together. Close enough so that your heart will feel good about the logical decisions your head is making!

Keep on Stretchin’ those Dollars!

Wojciech: Have you ever stopped to think about your money tapes? If you’re willing, I’d love to hear about some of the things playing in your head and how you react to them!

Whenever I make a stupid mistake, it always seems like “I’m getting screwed” is playing in my head. I just wish I’d listen to that voice more often!

Photo by Bakar_88

7 thoughts on “What are Your Money Tapes?

  1. “Do something!” is what I’ve been hearing in my head lately on a couple of financial fronts. I have some cash sitting in a brokerage account that is earning zero. I should be either committing to a GIC or investing it, but I can’t bring myself to do either.

    The second front is our income taxes. Our situation happens to be particularly complicated this year, and I haven’t been able to get myself to sit down with Quicken and my calculator. On the plus side, I actually did begin to look at it last night, and I will continue tonight – won’t I?
    .-= 2 Cents´s last post: True or False: Compatibility = Similarity =-.

    1. Thanks for sharing yours! I agree completely–it’s tough to face difficult choices and tasks. But at least in my own life, I’ve found that the best feeling in the world is after we’ve gotten through these challenges and they’re finally off our “plate.”

    1. Denial can be so destructive to your finances! I’m glad you were able to turn things around.

      Interesting comment about your wife “turning the volume up”–it’s amazing how other people that come into our lives can really reveal things that need to come to light.

  2. I’ve worked with a couple of clients over the years who have had some pretty damaging “money tapes.” Their tapes are a little more severe than what is mentioned in this (awesome) article–“I’ll always be poor” and “I’ll never get out of this hole” are just a couple stellar examples.

    I agree that writing down these messages is hugely important, but if you have cognitive distortions going on, they can still seem perfectly valid on paper. An excellent resource to get some sanity back into our thoughts is to use some simple tools of cognitive therapy. I use (for myself and clients!) Dr. David Burns’ book “Feeling Good.” Very simple steps that can help right any unhelpful thought patterns.
    .-= ConsciouslyFrugal´s last post: Tuesday’s Tip: Valentine’s Day on the Cheap =-.

    1. “…but if you have cognitive distortions going on, they can still seem perfectly valid on paper.

      That’s an absolutely fascinating concept, because even with self-awareness, we may not have the necessary tools to “snap out of it.” Thanks for the reading suggestion!

  3. My current money tape is “do we really need that?” I guess it’s becuase I just got another cut in pay. I’m still glad to have a job, though.
    .-= Ken´s last post: Weekend Roundup =-.

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