What is your financial comfort zone?

What is your financial comfort zone?

Mr. Usiere Uko is the author of ‘Practical Steps to Financial Freedom and Independence’. He talks about why people need to control their spending habit and learn to save.

As in every area of our lives, we all have a comfort zone when it comes to our money. This is the place where we are most at home, or most used to. This is where we spend most of our time. Anytime we step out of this place, we always find our way back. This is where we live financially. This is the dominant state of our finances. This is the place we are most used to.

To illustrate, let’s think about our wallets or purses for a moment – where we keep money. What is the dominant state of our wallets or purses? – full, half full or empty alias broke? Is your wallet always empty a week or so after pay day or do you have enough money to take you till the end of the month? What is the state of your wallet when the month crosses the 20th? Do you panic when your salary is delayed for whatever reason?

Reality check

This brings to mind my dad’s wallet. One thing I will never forget about him is his fat wallet. Although I grew to meet him as a school teacher and later a principal till he retired, his wallet was always bulging with naira notes. I always looked on with envy and admiration anytime my dad brought out his wallet to make a payment. It was always brimming with naira notes neatly stacked according to denomination. He would leaf through the higher denominations to find the particular denomination he is looking for. I had always wondered why his wallet was always full, no matter what day of the month it was.

Unlike my dad, that has not been my experience until recently. My wallet was almost always empty. It will be full by pay day but a week later, all that would be left would be a few lower denomination notes and the usual suspect – my driver’s license, complementary card, some receipts and bits and pieces of paper. That was its steady or normal state. It reminds me of Bansir from the ‘Richest Man in Babylon’ by George Clason. Our wallets had a lot in common. I became the butt of jokes from my wife and kids. Daddy does not have money. It took a while for my kids to believe I actually provided the money that Mummy spends. Mummy was the rich one. My wallet would be full a few days or a week after pay day, and then moves back to its empty state.

Controlled by habit?

Anytime money comes into our hands (or bank accounts), our money reflex kicks in (our reflex when it comes to money).  You act automatically without thinking, propelled by the force of habit. We have a way we deal with money the moment it gets into our hands. For many, until everything is gone, we are not at peace. We spend till it’s all gone, for others, it is to save or invest, for some it is a combination. It is different strokes for different folks. After all is said and done, after you have done what it is you normally do when money gets into your hands, you are back to your comfort zone. Now, what is that place? Is it an empty wallet or bank account? Are you perpetually broke, buoyant or in-between? What is your normal financial state? Before the advent of cashless Lagos, many of us were already cashless.

If you normally run with an empty wallet, something will always come up anytime money enters your wallet. If you spend first before saving, there will always be something to spend on and good reasons why there is nothing left to save or to keep. If you pay yourself first, you will find a way to make do with what is left. You find a way to make your savings work for you to increase your cash flow.

Changing your mindset

Your normal financial state or financial comfort zone has everything to do with your mindset when it comes to money rather than how much money comes into your hands. You may drive a Range Rover and be perpetually broke while your neighbour who drives a Picanto always has enough and to spare. It depends on your financial set point or comfort zone.  I used to have an acquaintance who looks very affluent on the outside, but often shakes out his pockets and combs the house for money to give the wife to buy bare necessities, including fuelling his car. All that glitters is not gold.

Your financial comfort zone is determined by your mindset – which governs what you do when money comes into your hands. To move from broke to buoyant, you have to change the way you look at money, interact with money and ultimately handle money. If you make the decision that your wallet and savings account will no longer become empty, and start getting used to keeping some of the money that comes into your hands to yourself (rather than giving it all away), your wallet and your savings account will start holding money. The mysterious hole in your pocket will get sealed and money will stay for real. Ultimately, your normal financial state is your choice, brought about by the way you handle money that comes into your hands. If you are not satisfied with your financial situation, you can change it. Nobody will do it for you.