 OVERCOMING THE PSYCHOLOGICAL BARRIERS TO SAVING --By Ginita Wall, CPA, CFP Money is powerful. With money we can realize our full potential, acquire the tools we need to become more productive, and be free from anxiety about our future needs. But money can also destroy. Greedy King Midas, who wished that everything he touched would turn to gold, quickly discovered that the power to create wealth is devastating when misused.. We both desire and fear the power of money, and most of us have problems harnessing the positive power of money through regular saving and investing. Some people are financially careless, while others develop profound spending disorders. Most of us have a few deep-rooted psychological barriers that interfere with wise money management. Here are the ten most common psychological barriers to saving, and how to overcome them. Barrier #1. The fantasy of financial rescue.Most children learn about Cinderella, Snow White, and Sleeping Beauty, who were saved from peril by their charming princes and lived happily ever after. For some people, these rescue fantasies affect their pursuit of financial independence as adults. We all entertain the fantasy of financial rescue at some point in our lives. What about that lottery ticket your purchased, or your reckless investment in a start-up company? What about your dreams of sudden fame? Though the fantasy of financial rescue is entertaining, it can become a barrier to accomplishment. Take serious steps toward providing for your own financial future, beginning right now to create goals based on your current income and financial situation. If your fantasy comes true, so much the better, but if it doesn't, you will have done what was needed to take care of yourself financially. Barrier #2. Fear of the futureIf you are afraid of the future, you probably live from day to day, trying not to think about it. Unfortunately, people unable to face the future also spend from day to day and build no financial nest egg to see them through. Granted, if you just stand still, you may avoid stubbing your toes, but you won't make much progress. Your fear of the future becomes a self-fulfilling prophecy: Without financial security, the future does become a frightening specter. To overcome this ostrich-like stance, approach the future one step at a time. Start by establishing some short-term financial goals, such as amassing the funds for a vacation next summer or a new car the year after that. A desirable short-term goal can be the carrot-on-a-stick encouragement you need to start a savings plan and take additional steps toward financial security. |