Day 2 of challenge: Numbers Don't Lie

How are you feeling after yesterday's exercise?

Yesterday's exercise is a great exercise to help you train your brain to stop reacting emotionally to money.

Today we're going to look at the story that your bank account is telling you and we're going to do it by looking at the numbers.

According to Jay-Z, "Men lie, women lie, numbers don't."

In the same way - the numbers in your bank statement don't lie. You can rely on it to give you the truth straight, no chaser.

This is scary but it's also a good thing. In order to change your future, you need to understand your present so you can know what changes to make.

Before we can create a budget, we need to understand where our money is really going.

Your bank statement will tell you what your real budget is because it'll show you how you're currently using money.

This is very different to your budget, which is a guideline on how you want or hope to use your money.

If you want to understand your true relationship with money and how you really feel about money, look at your bank statement.

Most people fail at budgeting because they don't understand their current spending habits so they come up with unrealistic figures, put that into a budget and then they force their lives to fit into this unrealistic budget.

Instead of just working and accepting the truth of their expenses, they waste precious energy fighting it.

And it's almost impossible to change something that you cannot accept because what we resist persists.

Scientific research shows that human beings are hard wired to resist change and our brains prefer habits, hate thinking long term and prefer short term rewards.

And here's another crazy fact - the more afraid or emotional we are of the thing we want to change, the harder the brain fights against changing it.

And since money is an emotional topic, we fight against financial change even harder.

The amygdala, the emotional part of the brain, sees change as threatening because change takes us out of our comfort zone and triggers fear and anxiety, which our brain perceives as threatening.

In order to protect us from this discomfort, our brain triggers our old money stories, memories, spiritual beliefs and even vows we've made about money (will explain more on day 4 & 5).

When we try to instantly change our spending habits by forcing ourselves to accept a new budget, the mind rebels and the amygdala, goes into fight or flight mode and that's when we fail at budgeting.

This also explains why we self sabotage or find ourselves paying off debt only to create more debt (will explain more in day 4).

A 2010 study by Salzman & Fusi explains how different components of the brain interact with our emotions to influence our behaviour and how changing our emotions, memories or thoughts can lead to a change in behaviour.

So it's not enough to just take action, we have to be emotional intelligence and treat the root cause of our emotions as we change our financial behaviour.

And as we make this change, we need to ensure that we're thinking long term and making small incremental changes instead of big radical changes that are too scary for the brain to handle.

So lets take the next step and see what story your bank account is telling you so you can change it.


Today's Exercise

Step 1: Bond with your bank account (10 mins)

i. Go to your online banking profile

ii. Open up the transaction statement from last month

iii. Look at how you spent money in that month and write down the expenses and the amount. Download the day 2's challenge worksheet and complete number 1



Step 2: What story is your bank account telling you? (5 mins)

Answer question 2 - 5 on the worksheet and pay attention to your breath, the sensations in your body and how you feel emotionally


Step 3: Share your insights/ questions in the comments below