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While money experts seem to have their finances all figured out, we know by their own confessions that many of them were once like us — in debt and trying to get out, knowing that a budget is important, but not fully keeping to it.  But how exactly did they reach their financial goals, then?

Well first, have you noticed that your personal life is putting a crimp on your ability to reach your financial goals? To an even greater extent than we often realize, our finances are dependent upon our personal life — the things we do in our free time and the people we choose to hang out with.

While it is important to have goals, create a budget, and save money, those things are only one part of being financially successful. The other part is about actually locking good financial habits in place that will propel you to your goals in the long run.

And those habits must start with your personal life. Here is a guide to harmonizing your personal life and your finances in 2013.

What Do You Do In Your Free Time?

We all like to have fun. We like to go out and see new things, pamper ourselves, and buy things that catch our eye in the store window. It feels good to provide for ourselves, whether it’s enjoying a fancy meal at a restaurant or buying the latest fashions at a clothing store.

But what’s the cost? Sure, you have a moment of satisfaction when you bite into your delicious entree. And yes, you feel confident when you leave the house wearing a brand new outfit. However, these things are fleeting — they don’t last — and unfortunately what does last is the bill. Whether you put it on your credit card or paid for it in cash, it’s money that could have been saved to give you security later in life.

Now, doing nice things for yourself is fine as long as it’s within your budget and does not undermine your goals.

And that’s where you can take action right now. To start, evaluate your ideas surrounding “having fun” and think about whether you only consider something fun if it involves spending money. If that’s the case, you’ll need to reset your vision of what it means to have fun. The truth is, there are tons of fun things to do for free: having a picnic, taking a bike ride, reading a book, going to a meetup, etc.

You can do all those things for no cost (or very little cost). The trick is just to change your habits so you think of these types of activities on a Saturday morning or evening instead of those activities that cost lots of money. Which brings us to the next question…

What Are Your Friends Into?

There is no question that your financial behavior is greatly influenced by your friends. Scholars have actually studied this carefully and have found that we often tend to do things in a similar way to what we see our friends doing. That means if your friends are trying to lose weight, you will be more likely to try as well; if your friends start taking art classes, the odds are that you’ll start taking art classes.

So what does that mean for your finances? It means that having friends who are big spenders or who don’t care about long-term goals can spell disaster for your own finances.

To address this, take a moment to think about your own friends. Are they frugal? Cost conscious? Shop-a-holics? If you realize that your friends may be a bad financial influence on you, there are a few things you can do:

Tag along but don’t buy: When your friends go to the mall next weekend (or the bar after work) you can accompany them and enjoy spending time with them — but when they make a beeline for the cash register (or the bartender), that’s when you step off to the side and wait until they’re finished buying. The challenge with this approach is that your friends will not like it! They’ll want you to join them in whatever it is they’re spending money on. And you might not be able to resist their peer pressure!

Invite them to do non-spendy things: Invite your friends to do fun things that don’t cost money. You could host a board game night or have a potluck dinner at your house. Or look up some free events in your community and invite a few friends to go with you. This can be a very successful strategy — if your friends are willing to go along with it.

Find other friends: If the two options above do not work, then you might have to branch out and find some new people to have frugal fun with. Connect with local community groups (like dance troupes, choirs, volunteer organizations, etc.), take classes at a local community college, or use sites like Meetup to find groups that interest you. In the digital age, it’s not hard to make new friends! Of course, you don’t have to disown your old friends, you’ll just have to broaden your circle to ensure that you can have fun without spending lots of money.

There is one more factor to consider, and that’s your family and/or your significant other. We hope he or she shares your financial goals, but we understand that sometimes people come from different backgrounds or have different habits and that can make finances challenging within the relationship. Knowing how to discuss money and financial priorities with your significant other is so important in helping you move forward together toward your financial goals.

Image: George Doyle

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