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Is It Time for a Financial Wake Up Call? Are You Ready for the Financial Equivalent of an Ice Bucket Challenge?

Apr 30, 2018

Being honest drives us to improve and grow. Refusing to look at the truth keeps us stagnant and stuck in a rut. This is true for every area of life, and it's especially true for finances.

So why do we keep lying to ourselves? Why are we hell-bent on living in a dream state when it comes to our financial situations? The answer is simple: We're afraid of facing our feelings of inadequacy, self-judgment and the false (but powerful) belief "we can't succeed."

As you get more financially honest with yourself, these feelings will surface. I encourage you to proceed in spite of them.

Financial Honesty Doesn't Feel Good but It's Worth It

Financial honesty is the monetary equivalent of an ice bucket challenge, but the sting that it brings is worth the high-level success that follows.

Before we take the plunge into financial honesty, let's protect ourselves with the following statement: "I will look at my financial situation objectively without fear, judgment or shame. This is a process of improvement, one step at a time."

Be Honest: Are You Telling Yourself "Financial White Lies?"

Now that you've created your judgment-free zone, let's remove the cobwebs from your eyes. Have you been telling yourself the following "financial white lies?"

1. Taking Out Another Student Loan Is a Safe Bet

Education loans are a safe investment, right? Your $100,000 degree will pay you back in spades, right? Most believe that college loans are "healthy debt." However, the job market of today is an entirely different animal than it was 50 years ago.

The U.S. Secretary of Education Arne Duncan recently said that "our K-12 system largely still adheres to the century-old, industrial-age factory model of education. But the factory model of education is the wrong model for the 21st century."

In reality, the money game is not so much about intellect and education. A degree can open a lot of doors, but when it comes to real financial success, it's more about discipline and behavior. If you're having money problems, it's time to behave.

2. I Don't Make Enough Money to Pay Off My Debt

A six-figure income isn't required to pay off debt or save a nest egg. What's actually required is getting honest about your financial leaks and applying the discipline to stop them.

Take a look at your monthly bills. Can you cancel your expensive TV package? Can you close out your storage unit? As for credit cards, leave them at home and delete credit cards saved on internet-based accounts. Also, consider transferring your credit card debt to a zero-interest credit card to save on interest.

Celebrate the small successes. If you pay down your debt from $3,000 to $2,500, and if you put $300 in a savings account, you're making the right kind of progress.

3. I Took Money Out of Savings, but I'll Pay It Back, and I'll Pay Off My Credit Card When I Receive My Next Paycheck

If you don't have enough money to buy something now, chances are you won't have enough to replenish your savings or pay off your credit card later. The idea that you will pay this money back is almost always a "financial white lie."

4. I Only Live Once, I Deserve It, etc.

Do you have a go-to phrase you use before splurging on an unnecessary expense? Have you ever used the following?

• "I only live once."
• "What if I die tomorrow?"
• "I deserve it!"

Chances are, you will not die tomorrow. Chances are, you do not deserve it. If you're guilty of using these lines, it's time for a wake-up call. Try the following question instead: "I only live once. What if I have to live my life in a state of financial stress because I wasn't responsible with my wallet?" Or, "Do I really deserve what I can't afford?"

One Small Step for Your Wallet: A Giant Leap for Your Bank Account

When it comes to making financial changes, the little things add up fast. Imagine you skipped the Double-Venti Orange Mocha Frappuccino on Monday, and on Tuesday, you canceled a $10 monthly Internet membership. If you take one small step every day, it will add up to a giant leap for your bank account.

Write it down!To keep yourself accountable, take a moment at the end of each day to write down one step you took to get closer to your goals. Seeing your hard work come to life on paper will keep you inspired and allow you to keep track of the things you're working to change.

Most of us can save $6-$10 a day with a few lifestyle hacks. That's $180-$360 a month and $2,190-$3,650 a year to pay off your credit cards or save for a rainy day.

A Mentor Can Help You Stay on Track

There's zero shame in asking for help if it catapults your bank account to the moon. A skilled mentor will help you stay on track with your financial goals by holding your hand and providing the right kind of support -- exactly when you need it most. Just remember: The best mentors won't be afraid to playfully dump an ice bucket of financial honesty on your head. So get ready for a wake-up call!