- Living a fantasy life with your finances can have negative consequences on your financial well-being.
- Signs of living a financial fantasy include believing debt will be forgiven, not following through on saving goals, not adhering to a budget, relying on unrealistic means of building wealth, and expecting external sources to solve your financial problems.
- To address these behaviors, it is important to face your financial reality, set clear goals and plans, and make responsible financial decisions consistently.
We all have the desire to live in an ideal world where we have complete control over the details of our stories, and it would undoubtedly be blissful and joyful.
However, living a fantasy life may hurt your finances. If you want to be successful with money, it’s critical to look at your finances realistically. You may be living in a financial illusion if you find yourself thinking, “I am broke” and struggling to grasp your financial situation, even while overspending.
When you live a fantasy existence, you ignore what’s happening in the world.
Although it would be wonderful to escape reality and experience eternal joy, this is not possible. For example, when you’re engrossed in a good book or movie, you may want to ignore the outside world for an hour or two.
But living this way for the rest of the time is not advisable. It leads you to make poor financial decisions in the actual world without considering their effects. You start to expect unrealistic outcomes and frequently find yourself in a worse situation than when you started.
Each of us has experienced moments when we visualized our ideal selves in ideal circumstances, and everything just came together. However, the reality is different. Every choice we make has an impact, particularly when it comes to our finances.
Six ways you may be living a fantasy life when it comes to your finances
You don’t want to live in a fantasy world when it comes to your finances, even if you are just daydreaming about it without realizing it. Here are a few indications that your financial life may be a fantasy:
Believing your debt will be miraculously forgiven
While loan forgiveness is possible, it is the exception rather than the rule. So, not paying off your debt is more of a pipe dream than a reality. You must have a strategy in place to repay your debts.
Unfortunately, creditors don’t simply ignore your debt and let it go unnoticed. Avoiding your financial duties has repercussions. If you choose not to make your payments in the hopes that your debt will be forgiven, your credit score will be badly impacted. This can cause problems if you need to access future financial capital, buy or rent a property, or find new employment. Take things slowly and tackle your debt one step at a time, as it can feel daunting.
Saying you’ll save money but living paycheck to paycheck
Setting financial goals is usually a good idea. After all, you want to be prepared with cash on hand for major expenditures as well as an emergency reserve. However, promising to save money without having a strategy for doing so is living in fiction.
When developing a savings strategy, consider the following questions: What is the purpose of your savings? Where will you keep your cash? How much should you save each month?
Planning to save money is just the beginning. Once you have a plan, put it into action. Start using the savings accounts you’ve specified in your strategy and automatically deposit money into your accounts, so you don’t have to worry about it. This is how you achieve your savings objectives.
Saying you are “on a budget” but never making one
Another financial fiction you may be experiencing is claiming to be on a budget but not adhering to one. A budget allows you to organize your finances in advance.
Therefore, if you don’t have a plan, you are not genuinely budgeting. To be on a budget, you’ll need to have a written plan for how you’re going to allocate your funds. Remember, a budget doesn’t mean that you don’t spend money. It means that you have a plan for where it will go.
Wanting to build wealth through investing
For many individuals, the primary financial objective is wealth accumulation, not just for immediate enjoyment but also for the future of their families. While it is possible to accumulate wealth without investing, it significantly limits your ability to grow your money.
Investing is the key to building wealth as it allows your money to work for you. Through investments, you can generate income without solely relying on exchanging your time for money through active work. There are various ways to invest, such as purchasing shares or real estate.
Even if you don’t have a large sum of money, you can learn how to start investing. Begin with small investments and gradually expand your investment portfolio.
Believing that marrying rich or winning the lottery leads to financial freedom
While many people fantasize about winning the jackpot or marrying a wealthy person as their ticket to financial freedom, it is not a realistic financial strategy. In reality, your chances of being struck by lightning are higher than winning the lottery.
Instead of spending time hoping for a financial saviour, it is important to take control of your financial freedom. This includes learning the best ways to manage debt, investing wisely, and becoming a better steward of your money overall. Don’t let your fantasy self dictate your financial situation.
In summary, having unrealistic expectations about your financial situation can lead to frustration. However, now that you are aware of the warning signals of living a fantasy life with your money, you can take action to change your perspective.
To curb this behaviour, it is important, to be honest with yourself about your debt and budget, establish clear goals and a solid plan, and consistently make responsible financial decisions.