In this month of X-press, we explore financial triggers and how to manage them, so they do not derail your financial planning. It’s a great introduction that can spur introspection on the reason behind some of the behaviours that impact financial decisions, provided by our strategic partner, Interface Employee Financial Solutions.

What are financial triggers?

We all have financial or spending triggers, activated by deeply rooted emotions in us and often resulting in unwise financial decisions. Fortunately, we are not at the mercy of these triggers that may result in overspending, creating more debt and depleted savings, all of which jeopardise our financial success.

Since financial triggers can have a significant impact on your financial well-being, it is important to identify your triggers.

How to identify your financial triggers

Some of the most common emotions that lead to poor financial decisions include stress, excitement, boredom, sadness and peer pressure.

When stressed or sad, many people turn to ‘retail therapy’ splurging on a new outfit or buying luxuries they can’t afford to make them feel better. Others overspend on their family to ease the guilt of not spending enough time with them. Some are simply bored, just browsing through a shopping mall or online store – and end up with bags full of shopping they don’t need and can’t afford.

Maybe peer pressure or FOMO (Fear of Missing Out) is your trigger – making you spend money you don’t have on meals, drinks or entertainment, to keep up with friends. Or perhaps you feel celebratory on a birthday or after a promotion, or maybe, after a long hard week, you feel that you deserve a special treat.

Think about the times and the situations in which you made unplanned purchases, overspent, increased your debt or dipped into your savings. It will help you identify some of your most significant or most consistent financial triggers.

How to manage your financial triggers

When you know your triggers, you can manage them.

This means you can recognise an emotional state that triggers you, then take steps to change the emotion or your response to it by having a set of alternative positive responses.

Let’s say you often want to sit down and enjoy a meal without the cooking and cleaning after a long tiring day, and you readily give in to the temptation to eat out or get take-aways. To counter this trigger, you could indulge in other ways to relax; stock up on prepared dinners that are ready in minutes, and look out for specials so you can dine out for less on occasion.

Simple ways to avoid over-spending

• Stay disciplined.
• Avoid making financial decisions when in a ‘good mood’ or ‘bad mood.’
• Identify spending patterns and the financial triggers linked to them.
• Budgeting is a key factor to financial discipline, set yourself a limit, for example, if boredom is a trigger for you, you may want to set a limit for ‘fun money.’
• Learn to say ‘No’ to yourself.

As we approach the festive season amid a strained economy, and in a period that has caused a multitude of emotions, lets practice making informed financial choices.

Warm regards,
Trevor