Kat's Money Corner: Show me some attitude...

KatOver the course of coaching countless CommunityAmerica Credit Union members about managing their money better, I’ve found that the first and biggest hurdle is attitude.

The key to improved money management is reducing frivolous and unnecessary spending, but it just isn’t fun to say “no” – especially to yourself. To truly be successful, you need to reorient your thinking so that your new financial discipline feels like an accomplishment, rather than a punishment.

Change your spend-versus-save contest from an internal battle to a challenge of you against the forces of marketing. Think of it as a tug-of-war for your hard-earned dollars between you and those who want to take your money by selling you things you often don’t really need. Every time you say “no,” you win and they lose. Winning always feels better than losing!

Psychology plays a huge role in the spending decisions we make. For example, people who buy with cash consistently spend less than those who use credit cards, checks or gift certificates. Scientific studies have proved it. Find out even more about the psychological aspects of spending by taking this quiz.

Once we learn how our brain wiring affects our spending, we can take steps to defeat those impulses that lead us astray. Lakeisha Smith, one of the participants in CommunityAmerica’s Financial Makeover, wanted to keep a credit card for emergencies but avoid the temptation to use it for impulse purchases. In her blog, she described how she froze it in a block of ice and now keeps it in her freezer, not her purse.

Having trouble deciding whether something is really a need, or just a want? The easiest solution is to avoid shops — and temptation — altogether. But when that’s not possible, try enforcing a 24-hour cooling-off period on impulse purchases. If it still seems like a must-buy after a night’s sleep and some cool reflection, it’s more likely to be a worthwhile purchase.

Saying “no” to those little indulgences – like a $4 mocha latte – may be the hardest change of all, but those little expenses add up. Use a goal-setting technique: Start a savings account for something special, such as a nice vacation. Every time you feel the urge for one of those indulgences, stash that money instead in a place reserved especially for that, such as a compartment in your purse or an envelope in your desk drawer (with contents transferred regularly to an actual savings account to earn interest, of course).

Because those little savings add up too! That way, you’re not saying “no” to the latte, you’re saying “yes” to Hawaii, and aloha to those bad spending habits. And isn’t that a good feeling?

When Kat's not posting her regular Tuesday blog on Dollars & Sense, she's working as a manager with CommunityAmerica Credit Union.