Paradigms & Principles
#001: Behaviours & Money
TERMS TO KNOW:
Paradigms a set beliefs and thought patterns we hold about money (and other things) that inform our relationship with it. For instance, “Money is not for people like me”.
Principles are the counter measures we develop to tackle troublesome paradigms.
Learn what paradigms are and how to recognise them in your spending habits.
Understand that troublesome paradigms can be overcome once understood.
Our behaviours influence our relationship with money. Knowing this is key to better money management.
The makings of us
We start life almost empty, and overtime learn things, express innate abilities, all influenced by who and what we are around. This forms the basis for our beliefs, reinforced over time.
If you were raised in an environment where scarcity was the norm, then your money-habits tend to skew that way: you worry when you have less and overspend when you have more; your fear of lacking leads you to overcompensate because you still worry about the time when you will have less.
Scarcity mentality is a type of paradigm; a set belief/ thought pattern you hold about something that informs your reaction to it. These reactions, and the events to which they are attached play off each other, one reinforcing the other.
In the example above, if every-time you find yourself in a surplus you overspend and end up in a deficit, you reinforce the idea that you always have less without accounting for some of the behaviours that contribute to it.
Understanding YOU, is understanding the drivers behind certain behaviours, good or bad and what outcomes they eventually drive.
YOU and how you see yourself is a powerful tool. The people who sell things to us understand this well. Apple understands what holding an iPhone means to you, what it say about “someone like you”. So in addition to selling you the function, they play on your perception of what owning an iPhone means. The same for cars, and clothes, and coffee machines and postcodes.
Unless we understand these drives, it becomes difficult for us to begin to think about making changes/improvements i.e. name it to solve it.
Identifying your paradigms
It may or may not be obvious to you what the patterns in your life are. I learned my spending pattern by trying to understand why I always seemed to be living on the edge financially even though I was in a relatively decent job?
The process you go through to identify this does not have to be a complicated one. I started to document my spending and soon enough a pattern emerged: I tend to overspend when I feel low and have a need to feel safe. This comes from both the amount I was spending and what I was spending on (homeware, cookery etc. Things for a home I didn’t yet have). Knowing this means I can recognise and correct for those patterns.
You can do the same. Below I provide a list of prompts to help facilitate the conversation with yourself and/or family.
HOW TO USE THE CARDS
Pen • Paper • Prompt Cards
Each card comes with a scenario and a statement. There are 5 in total. Go through each one and ask yourself whether any of it resonates with you and if so why. You could also think of specific example of when and why some of these prompts have been true.
Finding the answers to these questions helps identify some paradigms that will need to change in order for you to better manage your finances.
The Shake Up
The idea of change is present in all major religions and philosophical schools of thought. Christians, for example, believe in Justification: the premise being that by going from old to new we become better people by shedding whatever was holding us back.
The key is not just to change but to change fundamentally: that is, the things at the root of the old way of doing things must change and be replaced with new rooting thoughts and actions.
Fundamental Change = Addressing the Root
A Paradigm Shift is anything but polite and orderly. Done right, it unearths known and hidden truths about yourself that are often very uncomfortable. So how do we go about shifting what we believe about money?
RIDE™ it out
This approach, scribbled in a notebook many moons ago has helped me change in incremental, meaningful ways. I am calling it RIDE™.
Recognise the need for change.
If we are lucky, recognising the need for change is something we decide on. In our experience however, an inflection point, some life event big or small is often the trigger that forces us to recognise the need for change.
The COVID 19 pandemic has been that for many people where it concerns their attitudes toward money, highlighting the precarious nature of jobs and the need for us to create the security we need. This is not to downplay the economic damage of the pandemic but to echo conversations recognising the need to change.
Identify specifically what needs to change.
Pinpointing the specific behaviours you wish to address is the first proactive step you ought to take. We started not by asking how we save more, but trying to understand how and WHY we spend. Just as identifying the root cause is important, so too is framing the question. The question in this context is new, not starting with the HOW-as in how do I save more, but the WHY-as in why do I spend the way I do. The how that follows is a corrective measure to whatever the root cause, the WHY, leads you to.
Develop a set of principles as a guide.
In manufacturing systems, processes are categorised as value-add, non-value add and essential non value add-the stuff you do because you are yet to come up with a better way of doing it. Process improvement will rigorously work to remove non-value add. This is call Line Balancing.
You can apply the same logic to your finances. Are you spending time and money on what truly matters? How do you decide what matters to you?
The principles you develop could be as simple as choosing to categorise each spend. It could be redefining what matters to you as a person or a family or oriented toward a goal.
Execute, through practice.
Whatever principles you settle on, reinforce it through practice and iterate if necessary- repeat steps 2 and 3 as many times as necessary.
Here we will emphasis practicalities: make it possible for you to succeed by starting small and keeping things simple.
Examples of my principles include:
Spend on quality so I reduce the quantity and frequency of purchase. The less I need to go into a store, the less the temptation.
One-in-one-out for clothes and shoes. The exception are books.
If possible, loan rather than borrow-for anything I only need to use occasionally.
Meal planning with variety to reduce the temptation to eat out.
The prompt cards above are helpful, but they don’t get you to the underlying root cause. The prompt provide a starting point (a conversation starter of sorts), the hope is that you’ll find one or two that resonate with you and use those to probe deeper.
e.g. CARD #4: “Money is not for people like me”
Where did I first hear this?
Why is that something I choose to believe now?
How does that statement ring true in your life today?
e.g. CARD #5: “Jonesing”
How much of what I do is based on what others think?
Why does that matter to me?
What am I afraid might happen if people think ill of me?
How do I think this shows up in the way I spend money?
The above process is iterative. I do then periodically to keep myself honest. If you are doing it as a cripple or family, you can do it together in one sitting or separately and then come back and share with the wider group.
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