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Encouraging Heroes. You can be one too.

(Editor’s note: please welcome Krisca’s post on budgeting today. Thanks, Krisca!)

Some of the world’s best-kept secrets about money are found in the unlikeliest media. If you have ever watched the cartoon series The Flintstones Family, you wouldn’t consider it the best place to pick up nuggets of wisdom about money.

But there’s something about Stone Age culture and the way the entire community lives that can provide helpful insights into how you can take better control of your spending habits today, millions of years and thousands of dollars later.

Not so new after all

If you’ve ever thought that your money problems were brought about as a necessary evil in modern living, you can now change your opinion. Limitless credit lines, aggressive marketing tactics and online shopping havens are not an exclusive feature of 21st century life.

A lot of our financial dilemmas are actually hard-wired into our DNA. Some things never change, and despite the passage of thousands of years we still cling to the same old habits that have become our undoing over and over again:

● If he has it, I want it.
● More is always better than less.
● Kill it and eat it before it runs off.

These three instincts guide most of our everyday decisions and thoughts about money. When handed a pamphlet for a downtown apartment for $1,200/month with renter’s insurance requirement and exclusive of utility charges, the average person don’t really go through the numbers and what they mean. Instead, he focuses on whether or not the apartment is near the subway station, his favourite coffee shop, the newest Italian trattoria in town and the park.

We tend to think in terms of superfluous comforts rather than the actual repercussions of our money decisions we make. So what if the apartment is near your favourite coffee shop? If you can’t afford it, don’t get it. That is the heart of the problem—we want it and we don’t always have the means to get it, but we do get it anyway.

Crunch those numbers

Our ancestors have been just as flummoxed by money as we are today. Instead of facing complex financial problems head-on and grabbing the nearest abacus to calculate things, we tend to look for primitive factors to back up our decisions and justify the problems away.

The fact is that the problems can’t be magicked into oblivion. If you’re in debt, you have to pay your monthly amortizations. If you have a limited income, you have to look for ways to augment it. If you need to bootstrap and stop making impulsive credit purchases, don’t wait for next month’s statement before you do something about it.

Watch what you spend

Rather than giving in to your ancient instincts about need, want and money, try to be a more rational decision-maker the next time you’re in a mall or boutique. Addiction to shopping is no longer just a weird habit but a genuine scientific phenomenon that experts are trying to analyze.

Dubbed the shopping momentum effect, experts say that people can lose their grip on their wallet (literally) if they let themselves get carried away in the act of shopping. There’s a significant shift in our attitude towards buying—from being deliberate shoppers who weigh the pros and cons of buying an item, we turn into implementative customers who don’t even bat an eyelash as we hand over our cash and plastic money.

That age-old pleasure of acquiring something that you need or want is what keeps us going, even after we’ve already maxed out every credit card in our wallet. The next time you go on a shopping spree, take a coffee break or watch a movie in between making purchases. This will stop the mad rush of shopping momentum in your blood and return you to your senses.

Believe in compounding

Another bad element that keeps humans from saving up enough money for tomorrow is the fact that we never really grasp the importance of putting money into a savings account. If you commit to save $100 every month for the next 10 years, you would have $12,000 in the bank, more than enough to go on an extended five-star holiday in your destination of choice.

And that’s just $100 a month— imagine if you can save a bigger amount and allow it to be compounded over a longer period of time.

Despite the obvious advantages of saving money, most of us still choose to buy today rather than save for tomorrow. This is called hyperbolic discounting, which is a screwed-up prehistoric mindset that tells us that we have now is worth more than what we don’t.

A Caribbean cruise holiday sounds good in the abstract, but you’d have to wait a couple of years before you can make it happen, so you choose to buy a sleek e-reader now. This is a great example of hyperbolic discounting at work. You can counter it by trying to plan for the long run instead of doing short-term budgets.

When not out building relationships with other bloggers, Krisca Te can be found reading blogs that tackle simple living. She is also a personal finance freak who is currently working with Australian Credit Cards, a personal finance blog based in Sydney, Australia, which wrote about 3 Stupid Things Smart People Do With Their Money.

Photo provided courtesy of COG LOG LAB via Creative Commons license, some rights reserved.

Earnest Parenting: tips for parents who want to budget.