Have you ever felt that, despite your best efforts, you cannot achieve the stability and abundance you desire in your finances? Do you find yourself in a vicious cycle where something seems to hold you back just when you go to improve your relationship with money?

You are not alone, and it’s not a rare thing. We've all been there. We know we should save more, budget, and invest wisely. Yet, month after month, we fall short of our financial goals, even though they are smart. It's easy to blame external factors –the government and inflation that are responsible for the high cost of living, unexpected expenses, or a salary that doesn’t seem to rise. While these can certainly play a role, often, the biggest obstacle to financial success isn't the market or the economy but ourselves. We sabotage our financial well-being through ingrained behaviors and thought patterns that keep us in a financial frustration cycle. Understanding these self-sabotaging tendencies is the first step towards leaving the bad financial decisions behind and achieving true financial freedom.

The psychology behind poor financial habits

Financial decisions aren't purely rational. They're deeply intertwined with our emotions, beliefs, and past experiences. This complex interplay can lead us down a path of self-sabotage, even when we consciously desire financial stability. The most common reasons behind our poor financial decisions are a mix of psychology along with modern consumerism.

One of the most prevalent reasons that sabotage us financially is the fear of scarcity. It stems from a deep-seated belief that resources are limited and that we'll never have enough. This fear can manifest as hoarding money (even when it's not being used effectively) or, paradoxically, as reckless spending, driven by the feeling that "it doesn't matter anyway." Aka, FOMO at its best. The fear of scarcity creates a self-fulfilling prophecy, preventing us from taking calculated risks that could improve our financial situation.

Another reason we sabotage ourselves is the instant gratification we get from a purchase.

Impulse buying can be incredibly alluring, especially in our consumer-driven society. However, impulse buying often masks deeper emotional needs, such as a desire for validation or a temporary escape from stress. However, while the momentary pleasure is undeniable, the long-term consequences –mounting debt and a depleted savings account– can devastate our finances. Similar to impulse buying, emotional spending is driven by our feelings. We might splurge after a bad day, reward ourselves for a minor accomplishment, or use shopping as a way to cope with anxiety or depression. This type of spending is rarely aligned with our financial goals and can quickly spiral out of control.

Even though I believe in education and all it has to offer for individuals and societies, school doesn’t prepare us for financial education and literacy. Many people avoid dealing with their finances simply because they don't understand the basics. Concepts like budgeting, investing, and compound interest can seem intimidating and difficult to understand, which often results in procrastination and avoidance of taking actual care of their finances. This lack of knowledge perpetuates the cycle of poor financial decisions, as individuals are not adequately equipped to make informed choices. The lack of financial education can make financial planning overwhelming, especially if you're starting from a place of debt or financial insecurity. Putting off tasks like creating a budget, reviewing your investments, or paying bills can lead to missed opportunities, late fees, and a growing sense of anxiety.

The result of this sabotage is engaging in negative self-talk. Thoughts like "I'm just not good with money" or "I'll never be able to save enough" can undermine our efforts and discourage us from even trying to restore and fix our financial situation.

Another psychological factor that leads to poor financial decisions is a sense of entitlement, which can lead to overspending and a disregard for financial responsibility. Some people with this mindset may feel they deserve certain things, regardless of their financial situation. And to cover their lifestyle choices, they accumulate significant amounts of debt, live beyond their means, and show a general lack of concern for the future.

How to avoid financial self-sabotage

If you feel like you are sabotaging your own finances, it’s important to acknowledge your weak spots and have the willingness to change, even if this means that you make some hard decisions and lifestyle choices. According to financial experts, the following strategies are proven to help as long as you stick with them and don’t give up the effort.

Educate yourself

Take the time to learn about personal finance. It may seem intimidating, but it is valuable for future financial decisions and choices. Since the educational system doesn’t yet support financial education, you need to start your own research. Read books and articles, or take a budgeting, investing, and debt management course. The internet is full of practical and well-structured sources that give you all the necessary knowledge for your personal finances. The more you know, the more confident you'll become in your financial decision-making. You can start here.

Identify your triggers

Pay attention to the situations, emotions, and thoughts that precede your poor financial decisions. Are you more likely to overspend when you're stressed? Do you tend to avoid looking at your bank statements when you're feeling anxious? Or do you feel the FOMO if you don’t have the latest designer bag? The first and most crucial step to managing your finances is identifying your triggers and what causes you to spend irrationally.

Organize and manage expectations

Knowing how to create a budget is probably the easiest to learn and the most essential tool for managing your finances. A well-organized and structured budget allows you to track your income and expenses, specify areas where you can cut back, and allocate funds toward your financial goals. For instance, if you track what goes in and out, you can understand where your money goes and decide how to stop overspending. Sometimes, when we don’t see it written, we cannot understand that we spent a significant amount of money to buy 3 extra foundations we don’t need. Also, saving money is more painless when you have a budget since you can allocate it accordingly every month. However, you need to manage your expectations when you start saving money. Don't try to change everything at once; start with small, achievable goals, such as saving a certain amount each month or paying off a small debt. This way, you won’t overwhelm yourself, and month by month, you'll build momentum and confidence to tackle more significant challenges as you achieve these goals.

Seek Professional Help

If you're struggling to overcome your self-sabotaging behaviors on your own, maybe it’s time you sought help from a financial advisor or therapist. According to psychologists, there is [a link between finances and mental health](https://www.mind.org.uk/information-support/tips-for-everyday-living/money-and-mental-health/the-link-between-money-and-mental-health/#:~:text=If%20you're%20feeling%20low,re%20experiencing%20mania%20or%20hypomania.), and you may spend your money as a response to a mental health issue. For this reason, maybe you should consider allocating some funds to an experienced financial advisor who can provide guidance on budgeting, investing, and debt management or a therapist who can help you address the underlying emotional issues that are contributing to your financial problems.

If you are reading this article, then you have made the first step to make your financial situation sustainable and plan your financial future ahead. You need time and effort, but the results are totally satisfying and rewarding.