Just like the 7 deadly sins in life, the world of personal finance also has its own seven deadly sins. Read the article to find out what they are and whether you are guilty of any of them.
The sin of sloth refers to excessive laziness. This refers to the failure to act and/or utilize one’s talents. When it comes to finances, neglecting to track your spending or to craft a strong financial plan, means you are in essence, being financially lazy. To achieve anything in life you need specific goals and a strategy to help get you to accomplish those goals, without these things, how can you expect to move forward? But, sloth doesn’t just refer to financial planning. It also can apply to what you do with your time. Spending hours in front of the tv, not doing anything productive means you are missing an opportunity to improve yourself. Think about it, if you are constantly growing and learning, then you are increasing your value or human capital which increases the likelihood of you earning more in the future.
Greed is the desire to own or control more resources than others. We have all experienced some form of greed at some point in our lives. Greed is not just about wanting more, but rather, wanting more than everyone else. Because we live in a world of excess, where we are constantly bombarded with things to buy and images of people having things we desire, it can be easy to accumulate debt. As the saying goes, “don’t go broke trying to look rich”.
Gluttony refers to overindulgence. Although this sin is normally associated with food, it can extend into the financial sphere as well. Gluttony in a financial sense revolves around wasting money. While society tells us we need more on a regular basis, most people struggle to understand how much is enough. We all want to have more, be more, look more successful, look more wealthy, which can be detrimental to our financial situation.
Envy is a feeling of discontentment or resentment, aroused by someone else’s possessions, qualities, or luck. Being envious and wanting what other people have can drive people to make financial errors and indiscretions resulting in long-term problems. It can also cause people to make bad business and/or financial decisions in an attempt to prevent other people from getting ahead or prevent people from getting what they want.
Although pride is an important attribute in life, too much of it can be a bad thing especially if it prevents you from making logical decisions. Pride is good if it means you standing tall in the face of adversity or if you own your identity or if you stand by the quality of your work etc. Pride is bad, especially in the financial sense, if you are unable to change, admit fault or even ask for help.
Lust refers to the uncontrollable urge or desire to acquire something. Financially, this can be dangerous because it can cause you to spend money you don’t have on something you don’t really need. This can lead to buyers remorse, which is a sense of regret after having made a purchase.
Experiencing wrath can put you in a negative headspace and drive you to make irrational, emotional decisions which could have financial implications. Such things could cause erratic spending, reactions that can affect professional relationships or poor performances affecting the quality of your work.
Related: The Expense Triangle Of Doom
No one is perfect, despite what their Instagram or Facebook may say. We have all made errors in judgement and at some point been reckless with our money, how we spend it and also, how we approach it. Being able to maturely recognise and curb bad financial behaviour is the first step in achieving financial freedom.
Article reposted with permission from SMB Financial Planning.