There are many personal finance books, seminars, online resources and even gurus out there. Everybody seems to have a clear idea regarding saving money. The problem with all these approaches is that they tend to focus solely on saving money. They look at personal finance as the sole solution to a problem. In a sense, it may be a technical problem. But if you really think about it, the ability to save money has less to do with technicalities of having a plan, enrolling in the right system, employing a particular system and managing finances in a methodical way. It goes deeper than that.
In fact, the ability to save money is really a reflection of your character. It is a manifestation of personal values. This is the reason why personal finance programs fail to yield results in the lives of the people who adapt them. They look at these personal finance programs just like how overweight people would look at the latest diet. They try on a diet plan and fail and then they try the next hot diet book that comes around.
This is the reason why diet is a multibillion dollar industry. And so is the personal finance industry. So if you want to get off that treadmill of trying out a new system, looking at your inability to save money as a technical problem and then trying the solution and failing, you might want to look at your character.
Character-based money management system is an approach that focuses less on what you do, but focuses on who you are. Who are you in terms of your values? What do you find important? In other words, it looks at the mental furniture you have in your head which everybody possesses. These are mental and emotional components in our heads. When you look at people who are able to save money regularly and invest it in an effective way that it produces a lot of money in return and improve their lives over the long haul, you can see that they have rearranged their mental furniture in a certain way.
Moreover, the great thing about a character-based money management approach is that anybody can do it because it is all about each person’s perception of the world. So, the ability to manage money properly is a learned behavior. Now, here are the top 5 reasons why a character-based money management program works better than other approaches.
You are emotionally engaged
When most people think of saving money, they look at it as a technical problem that is separate from them. As a result, they tend to compartmentalize and not give it as much importance as “personal issues”. In the end, when the personal issues come up against money issues, the latter always loses. Character-based system involves personalizing the way you handle money because it is a reflection of your values and character. As a result, you are more emotionally engaged that it changes the actual results you produce in dealing with money.
You use guilt and shame to your advantage
Character-based system is all about living up to your full potential. Failing to live up to your highest values can result in certain consequences which are guilt and shame. Many people try to run away from these emotions because nobody likes to feel ashamed and guilty but actually, these emotions exist to help us because in actuality, there is an underlying reason why they existed in the first place. For instance, when you make a wrong decision, you feel guilty and ashamed. So the underlying problem is the wrong decision and not these feelings. Therefore, use them to your advantage instead of avoiding them so you can actively reshape your character. By this, you can handle your money and the many different parts of your life better.
Discipline and sacrifice builds up other parts of your life
There are two key elements among many in character building that are very crucial. Sadly, they are also very unpopular. These elements are discipline and sacrifice. When you are disciplined, you tend to focus on what should be done. It enables you to do what you should be doing and leaving off pleasurable things for later. The same goes with sacrifice. It is the ability to replace things that are enjoyable with things that are more essential. However, most people would rather spend their money than save. They would rather go on a world vacation than work 60 hours a week to build their retirement. They don’t realize that sacrifice and discipline enables people to build a cornerstone of financial independence in the future. These elements go hand in hand. So if you polish these parts in your personal character, they can benefit other parts of your life that you might find yourself getting promoted and making more money.
It is more sustainable over the long haul
The problem with looking at saving and investing money as purely technical is that we tend to look at them as temporary fixes. They are like tools that we use and then put them in the shed afterwards. However, the problem is that they don’t become sustainable. The less you use them, the less their effect will be. But by incorporating personal financial management into the core of our being, you actually enable them to become more sustainable over the long haul. As a result, they will produce rewards in the future.
You get higher rewards
If you just look at personal money management as something technical, the reward is just some financial security. While this may be a great reward, there are also other rewards when you look towards building your character. These are contentment, piece of mind, sense of accomplishment and living up to your highest ideals. In other words, you get a whole set of rewards that it is self-reinforcing and produces more benefits in all aspects of your life other than just the financial part. So if you focus on building up your character through discipline, sacrifice and by investing money as a way to keep score, you might reap a very healthy dividend that will impact the quality of your relationships and your enjoyment of life both on the physical and psychological level.