As I was looking for inspiration for my next blog, I was slightly lost until I realised that today, 17Feb2021, marks the first day of Lent. I would imagine most of you would be familiar with the concept, with one of its key aspects being the focus on making a sacrifice, giving up something for 40 days. There, I thought, what if we sort of loosely applied this concept to financial matters? I say loosely, because I don’t want it to be a religious approach or a temporary, 40-day event, but more a realisation that there might just be some financial behaviours that we can change in ourselves and become more apt at managing our relationship with money. 

How we see and use money is extremely diverse, differing from person to person and rooted in many different aspects such as age, cultural heritage, parental upbringing, education etc. What I think is uniform though, is that once we reach adulthood we can make our own choices and decisions whether to continue our inherited, ingrained behaviours or if we want to conduct ourselves differently, taking more personal responsibility. This is not necessarily the path of least resistance but I find it is the most rewarding. The beauty of it is that there is no single, ‘cookie cutter’ solution that suits everyone equally but there are general themes people can recognise and take it from there. 

So what would be a ‘financial vice’ that might be worth giving up, not just for 40 days but, ideally, much, much longer? 

First up, I would put ignorance. Not knowing how money works and, more accurately, not wanting to know, can be very detrimental. If you give it some thought, it is not very complicated: most of us need to work to earn money, things have a price/value, some things are immediately achievable, some are not, there are basic financial categories like budgets, income, spending, saving, investing, insurance. What is constant in your life is that most things will have a monetary value, whether you like it or not. Ignore it if you like but that attitude will certainly come back and hurt you if you do. Giving up ignorance will be a huge positive step in your financial wellbeing.

Next, some negative emotions and attitudes. Shame, guilt or regret, for example. Mixing these with money can be very damaging. Moral values are important, of course, but let’s keep things in perspective: money in itself doesn’t deserve any of these attributes. What you do with money can be perceived in a myriad of ways by others, which you cannot control. What you can control is your own actions and motivations. If you can afford something, there is no shame in enjoying it. If you cannot afford it, there is no guilt, you just have to decide whether this is something you wish you save for or not. Regret is a post-factum emotion, which means that you can avoid it by having a think, making a conscious decision and then sticking to it. It’s easy to fall into these – and countless other – emotional traps about money but just think about it: money is the ultimate expression of rationality (however irrational our actions might be), so wouldn’t it be better to let the head rule the heart over this one?

Lastly, some behaviours, which can change either way, depending on where you are on the spectrum. 

Let’s take overspending: you know (in your rational mind, which you overrule with your emotional attachment to the latest shopping item that captures your imagination) that this is not going to end well. The credit card bill arrives, you are overdrawn and your savings are down. You are effectively borrowing from your future self and taking money away from them. Alternatively, you are very, very tight with money, so much so that you have forgotten in the process how to have some fun and treat or reward yourself or your loved ones. 

In another example, you might be highly risk-averse, so you hold all sorts of insurance products, constantly worrying about what can (and you think will!!) go wrong and, as a result, have way too much protection and most of these will never pay you a penny. Or you might be overly cautious about the risk of loss of capital and keep your savings in cash…which means you would have received next to nothing in interest over the past years and missed out on long-term investments. 

Alternatively, if you are young or are on low income, you might think there is no way you can aspire to anything, so you spend everything you have, focusing on the here and now. You don’t even allow yourself the possibility of change with long-term, constant hard work, meeting someone and partnering up with them or pure luck or inheritance.  

My main point is that none of the extremes are particularly useful when managing your relationship with money and you might benefit from giving up or modifying some of these attitudes for Financial Lent. Life is long and it contains a lot of unknowns. It’s better to be prepared through knowledge and conscious decisions. I hear a lot of people saying financial literacy is one of the main things they feel they were never taught either in school or by their parents. It’s never too late. Giving up or changing something about how you see and use money might just be the first step towards it.