It’s no secret that I’m a bit of a personal finance nerd. I’m passionate about everything personal finance, and I could talk forever on the subject. I also realize that most people think I’m crazy when they hear that, because they would rather bury their head in the sand than understand their financial situation. The unfortunate part about letting fear, or any other emotion, govern the way you make personal finance decisions is that you could wind up sabotaging your financial future in the process. Here are some of the most common ways people’s emotions get in their way, and what to do instead.

Sabotage #1: Ignorance is Bliss

The most common thing I see people do to sabotage their financial situation is to ignore it. If you’ve ever said to yourself “If I don’t see it, it isn’t real,” I’m lookin’ at you here.

Letting bills and debts go unpaid and investments go unmeasured is a recipe for disaster. Failing to pay your bills on time can result in a damaging and long-lasting reduction of your credit score that can make it harder to qualify for loans and better interest rates in the future. Failing to pay off debt can lead to paying way more in interest than you originally signed up for. And not measuring your investments makes it impossible to know if you’re on track to get to where you want to go – you know, as in retirement and fun things like that.

What to do instead: First off, open your bills. Read them. Take a second to understand what you owe, and why. Then start making good on your obligations. Start by paying your monthly bills – things like rent, utilities, and your phone bill. Once those are taken care of, you can use the Snowball Method of paying off your debts, starting with the one with the highest interest rate.

As for your investments, it’s important to first know what you’re invested in. Are you in mutual funds? Stocks? Or did you get misled into putting your hard-earned money into an account that pays you 0.1% interest per year?

To improve your situation, you first need to know your situation. From there, you can decide if changes are necessary to meet your investment goals. Spoiler alert though: if your investments are making 0.1% interest, IT IS TIME TO CHANGE THINGS UP. Nobody ever got rich on 0.1% interest. Do you know what rate you’re getting? No? Then get out there and figure it out; this is what I’m talking about here!!

Sabotage #2: Procrastination

Worse than investing your hard-earned money in poorly-performing assets is not getting started at all because “it’s too scary and hard.” I’m sorry, but I have to offer up a little tough love here… I have such a hard time being patient with people on this one, because it comes up most often with people whose companies offer some sort of matching contributions on investments.

Do you realize how much money you are leaving on the table by not taking advantage of those matching contributions? Gahhhh!! Stop that! And even if you don’t get matching contributions, the best time to plant a tree was 20 years ago; the second-best time is right freaking now. You don’t need to be fancy with your investments, and you don’t need to invest a lot either. Any step to make progress will give you that dopamine rush you need to keep building momentum.

What to do instead: As much as you may want to believe it because it absolves you of any responsibility, it’s never too late to start improving your financial situation… but the only person who can actually make it happen is you. Don’t put it off! Make a budget, carve out some funds each month that you can commit to squirrelling away, then start saving.

Start by putting $20 a month into a savings account if you must; it’s way better than doing nothing at all. Before you know it, you’ll be bumping that up to $50, then $100 and maybe even more… but you won’t do any of that unless you start.

Sabotage #3: Buying High & Selling Low

When markets are on the rise, you’ll hear all sorts of people come out of the woodworks and talk about how they’re making sooooo much money, and everything is rainbows and kittens and unicorns. Fair enough, but if you jump on the bandwagon when you start hearing those sorts of things, realize that you may well be buying when the market is on the high end of the spectrum.

When you buy on the high end, your investments have further to fall when the market eventually (and inevitably) tanks. Watching that decline happen is enough to cause many people to panic and sell off their investments, which makes those losses real. Congrats, you just bought high and sold low, which is exactly the opposite of what you should be doing.

What to do instead: One of the best things you can do is take what’s called a contrarian mentality to investing: buy when everyone else is panicking and selling, and sell when everyone else is buying and bragging about how much money they’ve made. Now you’re buying low and selling high, which surprisingly few people do.

Don’t let emotion guide decisions you make about when and what to invest in. Don’t sabotage yourself by panicking and selling when markets drop, and be cautious of giving in to greed when you see markets rise dramatically. It’s human nature to want a piece of the action, but it’s often the wrong thing to do.

Wrapping it Up

It sounds simple, but the best things you can do for yourself financially are to start investing now, track your financial situation to make sure your bills are paid and you’re working to pay down expensive debt, and remove as much emotion from your investing as possible. If you do these things, you’ll be ahead of 90% of Canadians, and I can almost guarantee you’ll sleep better at night, too 🙂