Overcoming Savings and Debt Hurdles

In this blog post, based on chapter 5 of my book, Moneyology, we will discuss the importance of savings, the hurdles that prevent us from saving, and how to overcome them.

In our consumption-driven society, getting caught up in spending money on things we don't need is easy. We have access to zero-interest deals, extended payment plans, and credit cards, making it easy to buy now and pay later. With this conditioning, saving money seems unnecessary. However, not having savings and accumulating debt can have catastrophic consequences.

The Importance of Savings: 

An emergency fund is essential to cover unexpected expenses, such as car repairs or replacing a broken washing machine. Unfortunately, research shows that one in four adults in the UK and the US have no savings, which is a scary prospect. So it's crucial to start saving for emergencies, even if it's just a small monthly amount.

The Hurdles to Saving: 

Many people struggle to save because of their money personality traits and unconscious spending habits. For instance, some may have grown up in families where frugality was valued, making saving easier. Others may have learned to take financial risks rather than create security, making saving challenging. Unconscious spending habits, combined with the belief that savings aren't necessary, can also prevent us from saving.

Overcoming the Hurdles: 

The first step to overcoming the hurdles to saving is to identify the reason why you don't save. Is it because you don't like thinking about money matters, or do you prefer to spend money rather than save it? Whatever the reason, once you identify it, you can start taking practical action. You don't have to save large sums; starting with £10 to £50 per month is a great place to begin. Also, consider setting up automatic transfers from your current account to your savings accounts to establish the habit of saving.

Dealing with Debt: 

It's easy to get into debt, especially with the availability of credit facilities. However, managing debt can be stressful, leading to future financial decisions based on fear and panic. Separating your net worth from your self-worth is essential, as debt doesn't imply a loss of character. Instead of beating yourself up over having debt, take a deep breath and focus on the positive things you've accomplished. Remember that your debt does not determine your self-worth.

Savings and debt can be significant hurdles for many people, preventing them from achieving financial security. However, we can overcome these hurdles by identifying why we don't save, taking practical action, and separating our self-worth from our net worth. As Laurence Boldt said in his book, "Zen and the Art of Making a Living," "If we are to change our experience, we must deliberately cultivate new beliefs." Therefore, let's cultivate new beliefs and work towards financial security, one step at a time. And as we do so, let's remember to celebrate our accomplishments and remind ourselves of our self-worth.

To explore this concept further, read the entire chapter in Moneyology.