Your Money
On the list of things that stress you out the most, how high is money? For many people, money is one of the primary causes of daily stress, usually because we don't think we have enough of it, and sometimes because we have enough but are worried about how we are managing it.
There is a lot more to managing your money than getting the bills paid with a little left over or maintaining a productive portfolio. As humans, we have lived with money in one form or another for thousands of years, and it has become deeply ingrained in our psyches. We have all kinds of hidden and not-so-hidden feelings about money, emotional blocks, obsessions, and pretty strange ideas. The phrase “It's only money” might be something you say sometimes, perhaps to justify an extravagant expense or to make yourself feel better when you don't have any of it, but very few of us really believe that the green stuff is “only” anything.
Studies show that income level has no apparent link with reported happiness or life satisfaction.
Money is important to us. It is important to our culture. Some might even say it rules the world. But it shouldn't rule you.
In
Maybe you grew up knowing a family with a lot of money whose members weren't very kind to you. Did you learn to look askance at people with a lot of money, thinking they surely didn't understand about the important things in life such as love and family? Or, maybe you grew up in a family that didn't have to struggle with money and had contact with a less fortunate family whose members weren't trustworthy. Did you learn to be suspicious of people with low incomes?
Maybe money was highly valued in your family, or not valued much at all. Maybe you were taught to manage it, but many of us weren't given those skills and, as adults, don't have the slightest clue what to do with the money we earn beyond paying the bills and buying the groceries.
Added to our personal experiences are cultural stereotypes galore. Television shows, movies, and books often represent rich people as heartless snobs, poor people as slovenly thieves. Old misers who hoard their riches must be a little crazy. Generous souls who give all their money away must be angelic. Sometimes, it seems like a sin to have or try to get money. Yet, it also seems to be a crime if you don't have enough.
One place to look for wasted money is right in your own kitchen. How much food do you buy every week that goes uneaten? How much rotten produce do you toss out? How many plastic containers filled with unidentifiable leftovers are there? How many food items sit in your cupboard month after month, things you bought on a whim but can never quite get yourself to eat? Planning your meals, avoiding impulse buys, and learning to cook an appropriate amount of food can save you hundreds of dollars each year.
In America, the “middle class” has been consistently held up as the ideal and has grown to be such a broad category that most people now consider themselves to be part of it. Most of us aren't in poverty, but wouldn't call ourselves rich, either. And isn't that what makes us comfortable? Yet, we remain obsessed with money … with wealth, with the fear of poverty, with the material objects it can buy. Isn't that what capitalism is all about?
If it's “only money,” why does it obsess us so? Money is no simple matter. But that doesn't mean it has to be complicated for you. To de-stress your financial life, you need to do several things:
Understand
Continue to recognize with vigilance your financial preconceptions so that they don't control you.
Have very specific financial goals, for both present and future.
Have a very specific plan to meet your financial goals.
Know
Start by building a financial cushion.
Many excellent books are devoted solely to this subject and are worth reading. However, this book covers the subject only with stress relief in mind. I hope you'll start here, then be inspired to learn more from other sources. Let's start by looking at these steps one by one.
How Do You Really Feel about Money?To get you thinking about how you
1. How do you feel, emotionally, when you think about your financial situation right now?
2. Examine any negative feelings about your financial situation. Why do you think you have these negative feelings?
3. How do your parents feel about money?
4. When you were a child, what was your family's attitude toward people who had more money than you did?
5. When you were a child, what was your family's attitude toward people who had less money than you did?
6. Describe an incident from your childhood that revealed your family's attitude about money.
7. Describe a specific book, movie, television show, or other source that you think could possibly have affected your feelings about money in some way.
8. If you had all the money you could possibly ever spend and you knew you would continue to be wealthy for the rest of your life, how would it make you feel?
9. List the things in life that you honestly believe are more important than money.
10. What, specifically, has to change in your life so that money no longer causes you stress?
Continue to Recognize Your Financial PreconceptionsLook back at your answers now, for clues to some of your financial preconceptions. Keep those in mind as you work on simplifying your financial life. If you have the preconception that there is something wrong with having money, you may have been sabotaging yourself your entire life, subconsciously keeping yourself from financial security. Maybe you strongly believe that money shouldn't be important, but the lack of it in your life is controlling you, and now, in its absence, money has become the most important thing in your life. Maybe you believe that self-worth is related to financial worth and you feel like, apart from money, you aren't worth much. Maybe you believe that money can, indeed, buy happiness, or that it is, indeed, the root of all evil.
Whatever you believe, know that you believe it, and continue to question your preconceptions so that they don't sabotage your financial life. Your relationship with money should be completely clear and unimpeded by prejudice. Otherwise, your financial life will probably always be at least a minor source of stress.
Many people don't realize they are afraid to earn more money than their parents earned. This is natural but something to be overcome. The fact that wealth is uncharted territory in your family doesn't mean you can't be a trailblazer.
If you don't know exactly what you want your money to do for you, it won't do much for you. No matter how much money you make, whether you dabble in stocks or can't make your monthly rent, you must have specific financial goals. If you know where you are headed, financially, your life will be less stressful. You'll know where you are going, even if it will take a long time to get there.
How much money do you need to be able to spend each month? (Most people underestimate this number.) How much do you want to have saved by retirement? Do you need college funds for the kids? A down payment for a house? Would you like to be able to have extra money for investing? How much do you need in savings to cover your expenses for six months if you should become unable to work?
Make a list of your financial goals, no matter how impossible they seem, either on your own or with the help of a good financial planner.
Every car, the second it is owned, becomes a used car, and it is said that a new car drops about 30 percent in value as soon as it is driven off the lot. Used cars can save you money and, in many cases, eliminate the need for a monthly payment and extra interest charges. Many dealerships even include warranties with used cars. Make sure to have your car checked out by a reliable mechanic to ensure it doesn't have a major problem, and enjoy your savings!
It isn't enough just to have goals. You also have to have a workable plan to meet them. If this seems overwhelming to you, visit a good financial planner to help you. Anybody can work toward financial goals, and financial planners are trained to show you how. Or, if you aren't ready for that or feel you can figure it out on your own, start reading books on the subject.
According to feng shui, the ancient Chinese art of placement, the upper right-hand corner of any room, as you enter from the door, is the prosperity corner. Keeping this corner clear, clean, uncluttered, and decked in the prosperity colors of purple, red, green, or gold will help to direct financial energy your way. (There's more about feng shui a little later in this chapter.)
Part of meeting your financial goals might be focused on how to live on less rather than how to make more. Simplicity, frugal living, and other downscaling trends have been popular in the last decade as people realize they've been making lots of money and not getting much in return in the way of spiritual rewards. Books, Web sites, newsletters, and other sources are rich with information on this trend. Here are some tips for de-stressing your financial life by simplifying your financial needs:
Become aware of the way advertising works and how it tries to make you think you need things you don't really need.
Every time you are about to spend money, stop for a moment, take a deep breath, and ask yourself, “Do I really want this, or do I just think I want this in this moment?”
Before you spend money, stop for a moment, take a deep breath, and ask yourself, “Is this item worth the time out of my life I took to earn the money I'll pay for it?”
If you decide you really do want something, that it really is worth the money for you, even if it would be frivolous to someone else (dinner at a restaurant when you can't face cooking, that one special piece of Early American pottery you've been seeking for years, that pair of shoes that feels perfect), buying it will probably be less stressful than letting it go.
Make a list of things you can do with your family and/or friends that don't cost any money. Be creative. Then, use that list!
Slow down. You don't have to keep moving, going, spending. Why not relax at home with your family or friends and just do nothing for a change?
Drive less. Walk, bike, or take public transportation more.
Do you really need all those extra movie channels? Would basic cable satisfy you?
Cooking can be fun, and home-cooked meals are less expensive than frozen dinners.
How often do you go to your gym? Are you throwing away money when you'd rather just take a walk or a jog or a bike ride for free? For some people, the gym is really worth it. For others, it's a needless money drain.
Growing a garden has an initial investment (small or large, depending on how frugally you go about it), but it yields free food and the opportunity for exercise and fresh air all spring and summer.
Focus your energy on getting rid of the stuff you don't need rather than adding to it.
Learn the joy and freedom of simple living!
It isn't easy to keep track of every single penny that comes in and goes out, the way many books on financial planning would have you do. However, if you don't do this, at least for, say, a representative week or two out of each month, you will never know where your money is going. And boy, can it go when you aren't looking! Like anything else, keeping track of your money is a matter of
Plus, writing down every single penny you spend every single day has another surprising effect: major stress relief. Simply knowing where it is going is incredibly calming because even when you know you don't have any money left, at least you have a feeling of understanding about where it went. Have you ever spent an hour driving yourself crazy trying to figure out how that $20 bill you just took out of the ATM machine disappeared? Knowing is half the battle. When it comes to your money, knowledge really is power.
When you know how much you spend, you can also ferret out wasteful spending. Can you
Financial stress is largely a product of not knowing, wondering, hoping, fearing — all because you have no idea what your money is doing. You'd think money had a life of its own! But if you know, you are in control. You say where it goes and where it doesn't go. And even if there isn't much coming in, that control feels really good.
These days, many financial experts advise more conservative investing, such as in CDs and mutual funds rather than aggressive stocks. The days of letting your investments save for you may be temporarily over, so save, save, save. Don't depend on investment gains to make up your savings.
Financial stress is also largely a product of knowing that you don't have enough money in the bank if an emergency arises. What if you car breaks down, or you incur some major medical expenses, or the roof springs a leak, or Uncle Jerry needs bail and you don't have any backup cash? When events such as these occur, your stress level is likely to go soaring.
But if you have a cushion — many experts recommend six month's worth of monthly income stashed away in an easily accessible savings or money market account — then you will rest easier, even when you don't need the money, just because you know it's there. Whenever you have to tap your account, make paying yourself back your first priority.
How do you get a cushion? It can be tough if you think your paycheck barely covers your expenses, but successful savers say they put 10 percent or more of every single penny they make into savings before they ever have the chance to spend it. Setting up a system in which that 10 percent is automatically deducted from your paycheck, just like it is for taxes, is even easier. You don't ever have your hands on the money.
If you get used to doing this, you won't ever miss the money. You'll readjust to get by on just exactly what you are making, minus the 10 percent. Then, when things get really tight, you'll be okay for a while.
Make this your top priority — it's an easy way to give yourself financial peace of mind. Figure out what you need each month, then multiply that number by six. That's your cushion goal. Put 10 percent of your very next paycheck in that cushion fund.
If you put away just 10 percent each month, you'll reach a six-month cushion in five years, if you never use the money. To get there faster, put extra money in your cushion fund whenever it comes along — say, gifts for holidays, windfall money, and so on. Or, put away 10 percent this year, 20 percent next year … some people make it their goal to be able to live on 50 percent of their monthly income and save the rest. Now, that's smart savings! This may not be a realistic goal for you if your income doesn't permit it, but the more you adjust and learn to live more frugally, the more you'll be able to save, and the better and less stressed out you'll feel.
What about the stress that comes from never being able to splurge or be financially frivolous and always feeling as though you have to save and budget?
It isn't fair! That's understandable. Many people on a tight budget describe how, when under financial stress, all they want to do is go out and spend money — but if they do, they get further in the hole. Just remember: You can get in the habit of enjoyable rewards that don't cost money, and an occasional
