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6 Ways to Uncover and Change Your Worst Money Habits

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"Money usually is not all about money; it's about gaining freedom to live the life you want," says one executive life coach.

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Ever wonder why you can't seem to stick to a budget, while some people who make a similar income are able to religiously pay their credit card balances in full and contribute to savings and retirement? You probably haven't found the reason for-and solution to-the bad habits that are part of your financial personality, and you may not be aware of what motivates you when it comes to money. Here are six techniques that psychologists and money coaches recommend to help people understand and redesign their financial lives.

1. Recognize the problem isn't money. Money gets the blame for so many problems: We don't make enough of it to satisfy our obligations; it makes us feel unequal in relationships or breaks them altogether. But, attaching such incredible power to an inanimate object is a way of deflecting one's responsibility. Dr. Ramani Durvasula, a licensed clinical psychologist, author of You Are WHY You Eat, and co-host of the Oxygen series "My Shopping Addiction" says that just like overeating and anger responses, overspending and oversaving (out of fear) are highly charged emotional behaviors that often stem from something much deeper than what appears on the surface. Take, for example, shopping addicts: Though the problem appears to be an inability to stop spending money and buying things, money and spending are different issues. "The shopping 'addicts' I work with often have little money and lots of debt, but it is the items, the shopping, and the meaning of those items that drive the train," says Dr. Ramani. Their real problem isn't money, but rather "the pursuit of filling emptiness, addressing sadness, and an attempt to address shortfalls in finding meaning and purpose in life." To counteract such internal issues, she suggests cognitive behavioral techniques. For example, instead of focusing on money, address the thoughts and feelings behind the financial impulse -- whether it's spending to fill a void, or hyper-saving to address a fear -- with the goal of creating behavioral change. When irrational beliefs are addressed over money behaviors, more moderated habits can begin to unfold.

2. Stop expecting money to solve what it can't. Beyond behaviors related to money, Dr. Ramani explains that many people simply place too much value on money, relying on it to solve a problem it inherently cannot: "We tend to eat for emotional reasons, and it can make us overweight -- because food isn't intended to nourish emotions. Likewise, we tend to spend for emotional reasons, which can make us broke -- because money isn't meant to create happiness." Instead of expecting money to make your life better, shift your attention to your authentic passions, and how money can be one of many tools that makes those dreams a real part of your daily existence. When money is seen less as a commentary on status and worth, and more a tool to achieve a fulfilling life, you reclaim your power, versus relying on money as the be all and end all to your satisfaction.

3. Stop setting generic money goals. Before you set any financial goal, ask this question: What motivates me? Contrary to what you might think, your answer will probably have very little to do with money. Dr. Anne Dranitsaris, Ph.D., is a clinical psychotherapist and co-creator of the Striving Styles Personality System, a neuro-psychological framework that identifies the needs that drive behavior. She explains that even though we may think we're motivated by money, we're really driven by instinctual, emotional patterns that exist in our brain. You may believe you're motivated to make money for the sake of money alone, for example, but you actually have a need to be recognized, or a need to have power and authority. "When we focus on financial goals, we neglect these ingrained patterns and beliefs, and end up doing what we have always done," she explains. In order to change your patterns of behavior, you first have to recognize what they are, and redirect that motivation into a new action. When you do, your goal will automatically seem more compelling and more achievable.

4. Honor your own personality. Changing any aspect of your personality is hard, and money behaviors are no different. Instead of setting about to do a total "180" on your money patterns, Dr. Ramani suggests striving for balance. A person who has lived without any mindfulness toward money for most of his or her life probably will fail repeatedly in the process of changing financial behavior. Instead of aiming to squirrel away loads of cash each month, simply strive to know where all your money went at the end of each day. Once that becomes more natural, keep moving forward until you achieve the balance that puts you in control of your money.

5. Keep your eye on the plan. Before you establish your game plan, Dr. Dranitsaris suggests answering the question: What underlying beliefs about myself do I have that will challenge my goal? She says most of the time, our beliefs and conclusions come from our childhood, and we accept them out of habit. When you consider your worries and make a plan for what you'll do to counter the instincts that will arise when your fears are triggered, you can learn how to stay focused on goals in the face of challenges. For example, if you tend to splurge on outfits to handle anxiety over new client meetings, acknowledge that you will feel the urge to do some retail therapy at those times. Then create a proactive plan to fight it; for example, you could make sure that you don't cross paths with tempting shopping areas, and manage your emotions with a healthier outlet, like a trip to the gym or a girls' night with trusted pals. Make a list of the specific actions you'll do to achieve success and keep it visible (consider hanging it on your refrigerator or in your car), and monitor how you are progressing against your plan each day.

6. Consider it a game. Though money is very much a part of reality, we make it a daunting aspect of life. Instead of viewing money as a stressful hindrance, use it as an avenue to dream big. By taking such a lighthearted approach, you may find a newfound excitement for managing money beyond a boring budget. Executive life coach Amber Hurdle puts her clients to the challenge of making a game out of the way they spend or save money. The first step is to set a goal, whether it's to change your behaviour for a certain number of weeks or to hit a monetary target. When delayed gratification becomes painful, Hurdle explains, this approach can help you deal with the push-pull of turning away from what you want now and toward what you want the most. "Money usually is not at all about money," says Hurdle; "it's about gaining freedom to live the life you want." When you change your perception of saving from sacrifice to an investment, every lunch packed, dinner out skipped, and shirt not purchased is no longer a punishment. When you dream about possibilities -- finally having the freedom to change careers, for instance, or moving to a city you've always dreamed of living in -- versus simple dollars and cents, financial goals become just one way to win in the game of life.

(See also: 12 Cognitive Biases That Endanger Investors.)

Twitter: @WellnessOnLess
No positions in stocks mentioned.
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