I was recently watching a ted talk the other day and the topic of discussion was financial abstraction. This term is used when money is not seen as real. When this happens it has less perceived value and is not treated the same way as real tangible money. Let’s talk about this.
There are so many cases of people who see money as having less value. It may be because we cannot feel it or touch it. Nowadays we develop a type of detached feeling to money and are more likely to spend indiscriminately. This feeling happens because we rarely hold hard cash anymore.
The credit card is a prime example of this financial dilemma. How many people do you know that find themselves trapped in credit card debt? and trust me that is one of the worst debts to be in because of the astronomical interest rates. In this modern age, it is so easy to get drawn into overspending. We use credit cards to buy stuff on Amazon, eBay, and many other e-commerce sites.
These sites often make the products so enticing, our brain just keeps telling us to spend more and more. So how do we deal with financial abstraction? You need to change your perception of how you see money and how you see a credit card.
People get credit cards without understanding how it works. This them to become buried in debt. One way to snap yourself out of financial abstraction is to think of debt as slavery. Now being a sensible individual would you willingly sell yourself into slavery? I don’t think so.
Understand that a credit card does not mean you have extra money. you still have to pay back everything when you buy things. Just think about it for a minute. Sure it will help you out in a tight spot, but what you are actually doing is spending next months pay if your working. now I’m not telling you to avoid credit cards that is up to you. A credit card may actually be a valuable asset if you use it properly and manage your expenses.
It can also become a dangerous liability and can drag you down into debt and despair. Financial abstraction holds a potential danger. It causes people to see money as mere numbers in a computer. We see numbers all the time and as a result we have grown to associate less value to it than if we were to hold money in our hands.
A perfect example of financial abstraction is when children buy stuff using parent’s credit cards. Because the money does not belong to them they have a detached feeling to it and they overspend.
Do you suffer from financial abstraction? what are you doing to get out of the habit? leave a comment below let me hear your thoughts and as always stay focused.