Lots of people will say that there’s no real formula for personal finance, because it’s personal. Everyone has different circumstances to take into account, whether it’s their family structure, personal situation, luck (or lack thereof), and their values.
That being said, there are some guiding principles that apply to everyone. How they are applied will differ from individual to individual, but the principles are there. Too much of any of these following behaviours will kill anybody’s finances, and, not only that but may lead to poor behaviours in other areas as well.
It’s interesting because success in one area of your life usually leads to success in other areas; the same is true for failure. If you let yourself turn to consumerism excessively, you’ll likely become indebted. This can breed short sightedness as you struggle to deal with your debt. The struggle can lead you to deal with the emotions and difficult times by turning to impulsive spending.
Here are, in my opinion, the deadly sins of personal finance for everybody:
Being impulsive with your money can be very detrimental to your financial health. We all know how powerful debt snowballing can be, with small amounts adding up over time to pay off a big portion of debt, and the reverse is true with small portions of spending adding up overtime to wreak havoc on your finances.
Whether you’re being impulsive with a magazine in the checkout line at the superstore, or impulsively calling in to buy a $300 blender from a 3:00 AM infomercial, nothing good can come of financial impulsiveness.
Of course consumerism is a deadly sin of finance. Collecting items not only costs money in the amount it takes to purchase the items, but it makes us feel as if what we have isn’t good enough.
Consumerism stems from many places but can start from when we are young children if we are exposed to television and radio ads. We’ll be much better off financially if we turn our backs on consumerism.
In my opinion, laziness can be the worst sin of personal finance because laziness is the gateway sin to many of the other ones.
Laziness limits our earning potential, our saving potential and our ability to meet important goals. People who are lazy with their finances are those who don’t negotiate, don’t strive to earn more or save more, and don’t bother to learn about investing, saving, and debt payoff.
Being short sighted can cost you a lot in the long run. If you are only focusing on what you’re doing right now, or within the next month, instead of what you’ll be doing in 10, 20, and even 30 years from now, you could be missing out on a lot of interest. You’ll also be missing out on goals that you could be meeting that will improve your life and your happiness.
Short sighted people are the type that don’t save emergency funds, because they’re too busy putting out the fires of the moment. They don’t put more than the bare minimum into retirement savings because retirement seems just so far away. They don’t put money aside for their next vacation so they pay for it on credit.
Thriftiness and frugality are commandments of the personal finance sphere. On the flip side, wastefulness is terrible for your finances. Wastefulness is not just a bad thing for you, but your own wastefulness can have a negative effect on others as well.
Accepting debt as a way of life can be detrimental to your financial future. Being on the treadmill of debt can put you into financial ruin.
Avoiding debt or paying it off quickly is the only way to go.
We all commit some of these “sins” periodically. Which of these do you struggle with the most?
Shortsightedness is the biggest sin. Only thinking about today will leave any individual, regardless of their personality or circumstances, unable to properly plan their financial future therefore making them succumb to the other Deadly Sins of Personal Finance.
I definitely agree, Mike!
Impulsiveness is on top of my list. It’s better to give yourself time to think before spending money.
Definitely. You can make better decisions that way.
I struggle with a lot of these. Laziness will cost me money, and same with impulsiveness!
At least you have the self awareness to know that you struggle with some.
Daisy!! I was hoping you could manage 7 deadly financial sins, but 6 is damn good. We did all of them and did them well. In the end, debt proved to be the worst and most difficult to remedy. Great article, Daisy Flower!!!
Have a thrifty one!
Haha I couldn’t think of a seventh sin that was big enough to be a sin!
Hey Daisy. Great post 🙂
Thankfully I only fall into one of these sinful examples and that is Laziness. I do what I can to make a living but I could be doing a whole lot more. The good news is that I am working on this issue and making some progress…albeit in baby steps!
Thankfully the other sins don’t affect me so I think I may have passed this test 🙂
Take care and thanks for a very thoughtful post. All the best.
At least it’s only one, Lyle! And you recognize it, which is so important.
I definitely struggle with impulsiveness the most. I’m a natural spender and will be honest here…spending makes me feel good. I’ve learned to fight against my spending urges by being disciplined but it’s still a challenge.
Who doesn’t like to spend money once in awhile? I’m glad you fight them, and that you are disciplined – it’s hard to become disciplined!
Short-sightedness is my bugbear.
Despite my focus on the long term – financial freedom and eventual retirement from the rat race – it’s far too easy to get sucked into the little things right in front of my face. Then I spend too much time on the details that don’t have a big impact when I could investing my time much more wisely. It’s easy to get sucked into the distractions of day to day life.
I know what you mean. I sometimes get so lost in the shuffle, but that’s why automating my savings is such a life saver!
On your point on impulsiveness, here’s an article I started, but admittedly haven’t finished yet, on what controls self-control: http://www.cnn.com/2013/09/14/health/self-control-brain/index.html?hpt=hp_t3
Interesting! Thanks for sharing!
The only debt I have ever had was mortgages although they were sizable. When I had income property, the monthly payments were huge. I am very glad the tenants paid their rent.
Mortgages are a sizeable debt for sure. Like you, I have a tenant and I’m grateful that his rent is always paid on time.
I think consumerism is what kills most people. We live in such a consumer-driven world that it’s very hard to resist the urge to “keep up with the Joneses”. If people just stopped for a minute and actually thought about what’s important in life, they would realize they don’t need a new iPhone after all!
We definitely live in a consumer driven world – well, at least the continent.
Short-sightedness is one we all have to watch. You talked about how it can adversely affect our finances. Most of our own finances are on auto-pilot, and writing my blog keeps me thinking about the big picture. I am also thinking that short-sightedness is a sin with respect to work. There are milestones and deadlines for almost any large project. You don’t want to be short-sighted when it comes to starting and working on those projects. When you get a new project, get to work right away, and see the project as a whole. If you don’t, it could also adversely affect your finances.
You’re right. Short sightedness is bad in all aspects.
I struggle with laziness. I have done well and worked hard for it, now that I am more comfortable, it is a bit hard to keep going. Laziness can really set you back years with your goals.
It definitely can! You certainly don’t seem lazy, though!
Good one, Daisy! And I fully agree – most of the problems with our finances come from bad habits (sins?) we have developed; and naturally it can all be changed. Top ones in my book would be consumarism and short-termism.
Luckily we can all change and adapt.
Great post. For me it is impulsiveness. I am ashamed to say that sometimes I will splurge because it has been a while since I spent money on me. What I have been working in is to reward myself for achieving various financial goals in order to make the sacrificing and budgeting worth it.
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Impulsiveness can certainly be a damaging behaviour.