Your pride is keeping you from getting rich

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From Baby Boomers to Millenniums, most are attempting to spend less than they earn in hopes to one day become rich or at least live a comfortable lifestyle. However, the task is not as easy as one would like to imagine.  There are obstacles like emergencies, sales, impulsive shopping, special occasions, and lack of discipline that show ups in a person’s life.  Most have conditioned themselves to save what is leftover instead of saving before spending.

“Even after the financial crisis hit, in 2008, there was a little bit of a spike in the savings rate, from 5 percent to 5.5 percent, but most households have not fundamentally changed their behavior,” said Sheldon Garon, an author of Beyond Our Means: Why America Spends While the World Saves.

Most households are still living beyond their means although they have personally witnessed the effect of their decisions.  The slow shift of the economy has loosened the strap for most to once again stimulate the economy by any means necessary, which includes purchasing items for the sake of others.

Americans take on too much debt to finance a new home, an education, a car, or tapping out credit cards. Spend! Spend! Spend! You may wonder why it is such a problem for most to recognize their bad habit of spending. The answer is pride. Pride can get in the way of a promotion, relationship, and stability. Instead of addressing and changing one’s behavior, the person would much rather suffer in silence with very little money saved and discretionary funds.

Pride is defined as “an inwardly directed emotion that carries two common meanings. With a negative connotation pride refers to an inflated sense of one’s personal status or accomplishments. With a positive connotation, pride refers to a satisfied sense of attachment.”

Again, it is pride that keeps you from getting rich.

When pride is discussed in reference to economic psychology one can respectfully argue that the long-term financial decisions are affected by short-term illogical behavior. One would rather take pride in their lavish home, pictures of vacations and ivy league education than to initiate and stick with automate deposits toward saving and retirement. The thought of “setting and forgetting” is cringing for some because the money can be used toward instant gratification.

The following are examples of how one has boosted their pride instead of allocating funds toward retirement.

 

house

 

Housing, which includes principal, interest, taxes and insurance, should be 28% of your gross income.

 

major purchase

 

Making major purchases without giving yourself one day to think about the item.

 

audi-a1

 

Deciding to spend the annual raise and bonus on items that quickly depreciate.

As you can see, the previous items are seen by others, so it is easy for an individual to take pride in tangible items.

In Stop Acting Rich, Thomas Stanley digs into how your address affects your spending, “Nothing has a greater impact on your wealth and your consumption than your choices of house and neighborhood. If you live in a high-price home in an exclusive community, you will spend more than you should and your ability to save and build wealth will be compromised…People who live in million-dollar homes are not millionaires. They may be high-income producers but, by trying to emulate glittering rich millionaires, they are living a treadmill existence.”

 

 

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Bahiyah Shabazz is the President of Shabazz Management GroupFabulous & Money Savvy and BROWN GIRLS DO INVE$T. She has appeared and given financial advice on various media outlets, and is the author of Women Building Wealth.

About Bahiyah Shabazz 1003 Articles
Bahiyah Shabazz is one of the nation’s leading financial experts on the art of maximizing your growth. She's a wealth building expert, author, speaker, financial advocate, magazine and online columnist.

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