A Washington Post blog declared, “Stressing about money is making you poor.” The title may be a little misleading: while stress over money can cause you to lose focus and make unwise decisions, never thinking about money and not doing any financial planning can lead to the same unhappy results.
After working with people in six countries, psychologist Philip Zimbardo found that “financial decisions are strongly influenced by the way people view time.” The events that took place during your formative years may color your perspective—some people focus on the present; others on the past; and still others seem to live in future. If you have met people who grew up during the Great Depression, you know that some of them still cling to habits they developed during that time. The article suggests that graduates who started their careers during the recent Great Recession tend to be more conservative with their money than Baby Boomers.
Researchers found that people who are focused on the future may spend too much money on insurance and financial products they think will ensure security. People who concentrate on the present tend to spend more money than they earn and should stay away from credit lines. And while we may be critical of people we see as ‘stuck in the past,’ it is those people who tend to be the best at money management: they spend conservatively and take on less debt.
If you’re curious about where you fall in the spectrum, there is a quiz at the end of the article.
If you’re concerned about how your concept of time may blind you to financial missteps, consulting a Fee-Only financial planner for help with money management can make a difference. When you follow advice you read or hear about from someone who has never met you, you may err because that person doesn’t know your individual situation. Sitting down and talking with an independent advisor who can get a big-picture perspective on your financial habits is an opportunity to get personal guidance.