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Cheating on Your Financial Diet

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If you’ve ever been on a diet, especially one of those fad diets, you know all about cheat days.  These are the days where you deviate from your regular diet and eat pretty much whatever you want.  If you are really disciplined, you can have these moments where your choices aren’t the healthiest and then immediately revert to your plan.  Unfortunately this isn’t always the case and weeks or months of hard work can be erased.  It can happen fairly quickly with a weekend of going to town on junk food.  The same goes for a budget, which can be a sort of financial diet.  Just like a diet, there is a potential to cheat on it.

 

A Budget is a Financial Diet

There are many comparisons to be made between eating and budgeting.  Just like diets, there are many “fad budgets” out there.  There are some that are designed for a short-term savings goal, and others are more about lifestyle changes.  Just like your diet, habits can be very difficult to change and the impulse to spend can be an addiction.  So when you sit down and figure out how you are going to manage your money, really you are creating a financial diet plan.

Giving Yourself an Excuse

There is a common phrase that gets tossed around when some people try to justify making a decision they know isn’t the best. “I’ve earned it.”  Yes, this is rewarding yourself for doing something that is good for you already.  Another comparison to diets.  I’ve eaten so well this week so I can afford to eat this entire bag of chips in one sitting.  Just like, look at how much money I’ve saved so I can afford to treat myself.  What if you never get ahead though?  If you slash your spending by $10.00 per day during the week and then “treat” yourself to spending an extra $50.00 on the weekend you have just shifted all your spending into a single rush.  This rush can actually do more harm than good.

Spending as an Addiction

I’m not saying spending is wrong – but it can become out of hand very quickly.  Having money is much more fun than being completely broke, but spending money is usually more fun than saving it.  Buying something acts as a reward. The excitement of getting an award is actually a chemical reaction in the brain that makes us happy.  The problem is that the peak level of this excitement is just before the reward is received, not actually having the reward.  The desire to duplicate this excitement can be overwhelming, and cause you to continue to make counterproductive budget choices in search for your next high.

The obvious comparison is drugs, but this can also apply to your diet.  When you have a dessert for example, the first bite provides a rush of wonderful sensations.  It can be the refreshing blast of cold from an ice cream, the decadent sweetness of a chocolate or the warming sensation of a freshly baked apple pie.  Every bite after that first one actually reduces the average enjoyment per bite, yet it is almost impossible to stop “chasing the dragon” of that first bite of pleasure.

Spending is NOT a Drug

While spending can be an addiction, it is not a drug.  Drugs are addictive because they replace naturally occurring chemicals in the body and either make them overactive (uppers) or nullify them (downers).  When the drugs wear off, the body actually requires that the gap be filled to continue to function.  Spending on the other hand releases chemicals in the body that are already there.  That means that the break the spending habit you can find other methods of releasing the same chemicals.  Easier said than done but it is important to have more things than money in your life to make you happy.

Rather than cheating on your budget, it is much healthier to revise your budget to provide some flexibility to give yourself small rewards on a regular basis.  Many of the fad diets fail because they deprive you completely of the things you enjoy the most.  The more successful diets are those that balance off responsible eating while still using the foods you really enjoy.  The addition of exercise (aka additional income sources) can provide even more flexibility in your diet.

Do you struggle with sticking to your financial diet?  How do you manage the spending cravings?

Scott

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