Distractions are ever present in our daily lives. This may be more so the case than any other point in our history due to the emergence and development of the digital information age.
Distractions can take many forms and arise from a diverse range of sources; however, there is often a common thread. A distraction, when acknowledged and pursued, can take away our attention and concentration from an intended area of focus and redirect it either partially or fully to another.
Unfortunately, depending on the context, this redirection of attention and concentration, even if momentary, can sometimes have serious short, medium and long-term implications.
This is especially relevant when considering your personal finances and staying on the path towards the achievement of your financial goals and objectives.
In the driver’s seat
To flesh out the abovementioned overview on distractions and its relevance to your personal finances, it may be beneficial to explore its application by getting behind the steering wheel of an interesting, albeit somewhat unrelated example i.e. driving a car:
On the surface, the above example may seem somewhat unrelated to your personal finances; however, it does serve to illustrate an important and relevant point. Namely, distractions, if acknowledged and pursued, can take away our attention and concentration from an intended area of focus and redirect it to another – sometimes with serious short, medium and long-term implications.
The personal finance perspective
The current digital information age, coupled with more traditional physical mediums of communication and marketing, has led to us being constantly confronted in our daily lives with increasingly pervasive and persuasive consumer-based distractions of a predominantly want purchase nature – all of which are vying for our attention, concentration and money (surplus or otherwise).
What’s more, these consumer-based distractions are now being offered in progressively more easily accessible ways than ever before (e.g. purchasing options, such as online, in-store ‘tap and pay’, Afterpay, combined with marketing strategies, such as flash and EOFY sales etc.).
Given cashflow considerations (i.e. not skewed by the disproportionate use of credit cards or other forms of financing), these consumer-based distractions can broadly be categorised into the following two classes:
With each of these classes, when a consumer-based distraction is acknowledged (e.g. through a source, such as an email or social media ad campaign, digital/physical shopfront display etc.), a decision is often made as to whether to spend (pursue) or save money (not pursue). This decision can be influenced by a variety of things. For example, what that consumer-based distraction means to you, as well as your:
Notably, excessive and ongoing pursue-related decisions can have short, medium, and long-term implications for your personal finances and staying on the path to achieving your financial goals and objectives. For example:
Overall, this means less money is available in the short-term to direct towards an intended area of focus, such as extra debt repayments and/or saving and investing for the future; however, the impact of this over a prolonged period, medium to long-term, becomes more and more pronounced with the passage of time. For an example of this, from an opportunity cost point of view, please read our article, “What is that cup of coffee really costing you?” and then consider applying this to something relevant to you.
Importantly, we recognise that spending a portion of your money on things that bring you happiness can be a vital part of enjoying life in the now and in some instances can help to keep you motivated whilst on the path to making your financial goals and objectives a reality.
Furthermore, as our society progresses, certain want purchases may become need purchases from a personal and/or work-related point of view. A prime example of this is the place that mobile phones, computers/laptops, and internet/phone plans now hold.
Ultimately, how you spend your money is entirely up to you; however, each time you do make a purse-related decision, take the time to consider the following: