#Badass Budgeting Tip of the Day: Understand the Basics of the Psychology of Money
We are taught to use credit cards from as early as I can remember. It's pushed by banks, parents and friends who also encourage us to shop and buy into consumerism which leads me to discussing the psychology of money. *Although let's also not gloss over the fact that having a credit card by the legal age of 19 does reap some benefits, such as the ability to build your credit score (in Canada) for if and when you're wanting to qualify for a car loan or mortgage for your first home.*
If only we could think more rationally, we would make better decisions with money but that's not what marketing, advertising and general society teach us. Many of us organically learn to purchase clothes, bags, shoes, makeup, home goods and the like via the whims of our emotions instead of our truest needs. It's a new season? Time to purchase the newest, trending home goods for fall! There's a special occasion? Better buy a new outfit! Something broke? Better buy new to replace it!
Whatever happened to mending our own clothes if something rips or tears? Whatever happened to fixing our own cars or lawnmowers when they break down? I'm not saying there's anything wrong with outsourcing these tasks. What I'm trying to say is that instead of listening to our emotions for the queue to purchase something, let's listen to our *needs* instead.
So how do we consistently make purchases based on our needs rather than our wants (or in this case, according to psychology, our *emotions*)? We must learn how to think and reflect: "is this something that I truly need"?
I've heard of some friends who give themselves a timeline to determine if something they want to purchase is based on a true need. They give themselves 24-48 hours (or think and reflect on the purchase over the course of a weekend) to determine if they truly need to make the purchase. Has your body changed and there are no more clothes that fit properly? It's most likely a need to have to buy some new basic, clothing staples. No more food in the fridge? Most likely time to buy more groceries...
Here it is: the psychology of money according to what marketers and advertisers teach us and how to determine if something is a true need before we make the purchase. I encourage all of you to share your tips and tricks in helping to determine what is a true need vs. emotion-based want. Let's learn how to manage our own psychology and ultimately, win with money management. Signed, Filipina Budget Girl.