Stop Your Wallet From Becoming Anorexic in 2012

This is a guest post by Ally. You can also write an article about how to save money.

Are you finally ready to take control of your finances in 2012? If so, then take these tips to heart. There are stark similarities between your health and wealth - particularly when it comes to anorexia (nervosa). So let’s use that as a metaphor.

1. Calories in = calories out. People who suffer from anorexia usually limit what they ate to less than what their body need - which in turn causes the extreme weight loss. Our finances is a little more complex but you have no idea how many people spend money well beyond their means, especially when they are allowed to (by the banks).
2. Anorexia is usually a psychological problem. The patient falsely believes that being thin is all that matters. Wikipedia defines it as “an obsessive fear of gaining weight” and that it is “usually coupled with a distorted self-image”. Many people also suffer from a “distorted self-image” when it comes to their finances.
   
   But instead of thinking the future will be worse than it will be (anorexics think eating a small amount of food will cause unseemly weight gain), people have a kind of positive delusion when it comes to the future of their finances. Let’s borrow now and I can pay it off slowly in the future.
3. A person can suffer from more than one eating disorder at any one time, unfortunately. Similarly, a person can also suffer from more than one bias when it comes to their finances. For example, have you ever seen a person justify a purchase they can’t afford? Yes, a Mercedes is more expensive, it’s only $10 more a day if I use the car for 10 years! And it’s safer than a Toyota...
   
   In psychology, this is called “cognitive dissonance” - something even the smartest people on earth fall prey on.
4. Anorexia, like frivolous spending, can be caused by environmental causes. Advertising, for example, are blamed for both promoting the “thin is beautiful” mantra     and making people buy more than they could afford.
   
   But it’s more than just advertising. Studies have shown that there’s one force that’s even stronger than ads: your friends. How your friends view these issues, be it how you spend your money or your weight, will probably how you view them too.
5. If you suffer from anorexia, you need professional help. If you suffer from uncontrollable debt, you too, need professional help. Both problems are complex and individuals who try to personally it usually fail, not because they didn’t have the intelligence but because they are too close to the “case”.
   
   Both are emotional problems. And when it comes to emotional problems, you need a fresh pair of eyes.

So there you go.

The 5 Simple Tips to Take Control of Your Money in 2012

1. Start budgeting so you know your income and your expenses.
2. Learn a bit about human behaviour and the irrationality of our mind so you can practice “conscious spending.”
3. Look out for not one, but multiple loopholes in your financial decision making.
4. Be very careful who make friends with and what ads you allow yourself to watch.
5. Seek professional help if you’re financially in trouble. You don’t lack the knowledge, you only lack the objectivity to deal with the problem.

Do you plan on making any changes to your spending in the new year?

Ally is part of the team that manages personal finance blogs that provide tips about Budgeting Planner and How to Save Money Fast. Before joining the team, she was a Media Planner in McCann Worldgroup Philippines, Inc., with award-winning executions, including the Levi’s 501 “Live Unbuttoned” global campaign.

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