Let's consider the Butterfly Effect — the theory that small, seemingly insignificant actions can have far-reaching consequences. In a similar fashion, small choices and habits made early on can add up to major financial consequences over time.

Here are five decisions you may be making right now than can seriously affect your finances for years to come.

1. How You Deal With Stress

There are two ways that this choice can affect your finances. First, depending on how you deal with stress, you could be priming yourself to reap serious financial rewards or consequences. For instance, if you unwind after a stressful day by smoking a cigarette while enjoying a bottle of beer, you are spending money on vices that could be better spent. For example, a pack-a-day cigarette habit costs a smoker ₦73,000 per year if calculated at ₦200 per pack. Poor food choices can cost up to ₦500,000 per year.

These numbers don't even factor in the health costs of these sorts of habits, which can lead to illness, lost productivity, high medical bills, and even death. No single cigarette or bottle of beer is such a horrendous decision, but forming the habit over a lifetime can seriously derail your finances.

In addition, the way you deal with stress can also affect your ability to make good decisions. Recent research has shown that people only have so much bandwidth for making decisions — which is why talking on a cell phone while driving makes you a worse driver. In particular, living with the constant stress of financial worry means that you have less cognitive ability to make decisions. The two problems are not unconnected.

2. Your Negotiation Skill

Your ability to negotiate can have a significant impact on your earning power over your lifetime. In particular, being able to negotiate a higher starting salary means that you will compound your annual raises to a big difference in your overall earnings.

Assuming a 5% annual pay increase and a 40-year career, the negotiator with a ₦55,000 starting salary would earn an additional ₦600,000+ over their career compared to their non-negotiating co-worker who accepted ₦50,000 to start.

However, it's clearly important to get over your discomfort with negotiation so you can reap the benefits.

3. Who You Fall in Love With


It sounds awfully mercenary to talk about money and love in the same breath, but it is important to consider the financial consequences of your choice of a life partner. Falling in love is easy, but staying in love and happily married is much harder. That means marrying couples ought to consider their long-term compatibility.

Incompatible money attitudes can limit your financial future. If you and your spouse are not on the same page regarding saving, investing, and spending, then you cannot commit to a shared plan for your finances. That makes it difficult (or impossible) to achieve your financial goals.

That doesn't mean you should be asking dates for their bank balances before considering a future with them, but it does mean you have to work on your communication skills early and often to ensure that money won't be the death of your love — and love won't be the death of your financial security.

4. What You Keep in Your Wallet


If all you've got is a ₦500 note, there's a limit to the hunger-induced purchases you can make at a restaurant as against if you had carried over ₦1,000 with you.

Research has shown that people tend to buy more, often things not needed, when they have more money with them than when their cash is limited to a few naira notes. If this were a one-time impulse, then no harm, no foul. However, what you habitually carry in your wallet will determine just how much and how often you decouple the pain of payment from the act of buying.

To escape this, you will have to think about what you truly need or want before making a purchase, and you will have to think about how much money you have and spend throughout the month before taking out cash. Better still, limit the cash you carry in your wallet.

5. How You Show Affection

I was once at a relative's Christmas celebration where the grandchildren were so overwhelmed with gifts that they actually started crying because they didn't want to open any more.

This family had fallen victim to a common emotional trap: showing affection by showering gifts on loved ones. After all, it feels great to buy gifts for someone you love and to see them enjoy the presents you picked out.

I recommend you make gifts or create experiences that you know your friends and family will appreciate. Not only will those types of gifts last longer than the gadgets you might buy, but you will also give yourself the gift of better finances.

Source

Nice! I totally identify with these points. #5 is all too real, and even newbie can relate with it.

I learnt the cash in the wallet lesson a long time ago...Now I don't carry a lot of cash around just for the fun of it.

Lol..........
Just this afternoon, I fell into the wallet mistake. I purchased something I actually doesn't need just because I was having and carrying a lot of cash with me. Right now,I feel like flogging myself for such an expensive mistake of mine.

Hehehe, guys are the worst offenders of the wallet issue.