“Indifference and neglect often do much more damage than outright dislike.” – J.K. Rowling
I’ve read several personal finance books over the past few weeks and as I read each one it struck me time and time again that each author was on a mission to demonstrate to the reader that the basic principles of managing money are not complicated at all. I’m not entirely sure if the idea that money management is a hugely complicated and time consuming task is a myth perpetuated by financial institutions who like us to feel as if we don’t know enough, or if it’s a story that we’ve sold ourselves in order to avoid dealing with our money. Perhaps it’s a combination of the two. The reality is that, whether we want to deal with money or not, it’s a part of our everyday existence and, as consumer debt continues to rise, there is an increasingly big divide between those who have control of their money and finances and those who don’t.
This divide is only going to keep getting wider if we don’t make a real effort to narrow the gap. If we want to enjoy the kind of day to day lifestyle that does not involve financial stress; if we want to enjoy the kind of retirement lifestyle that we’re sold in glossy advertisements then we need to build a better relationship with money. Unlike every other type of relationship, there isn’t really any way that we can “break-up” with money. Like many relationships though, our attitude towards our money can make a huge difference. If we choose to be hostile and uninvolved, our money relationship is likely to be challenging. If we choose to spend a little time and attention, there’s a good chance our money relationship will improve dramatically. With Valentine’s Day on the horizon (and much of last year’s Holiday spending still on the credit cards), maybe this is the perfect time to put a little energy into building a better relationship with money. Here are some suggestions:
Learn a Little
Just as human experience, psychology and personality influences our personal relationships it also has an impact on our money relationships. There are lots of books available to help us understand and improve our romantic and family relationships and there are some great books available to help us do the same with our money relationships. If you’re not a reader then videos, audiobooks or a conversation with a mentor are other ways to access great information without picking up a book. Whatever you choose, focus less on learning strategies for managing money (those come later) and more on understanding why you currently handle money the way you do. Psychology is a powerful factor that’s often overlooked when it comes to managing money. If you know why you do the things that don’t serve you, you’ll have an idea of which habits to change in order to create the greatest improvement in your money relationship.
Give a Little
We’re told that patience is a virtue but having patience with ourselves and our circumstances can be hard to achieve. If your financial situation is less than ideal, give yourself a break and resist the temptation to beat yourself up about it; focus instead on simple action steps you can take to create change. If you’re on track towards your goals, take some time to give yourself a pat on the back for sticking to the path you charted. Habits take time to build and they also take time to break and recreate. Don’t give up on your money relationship; good things take time to reach their full strength.
Spend a Little
Time is one of the most precious resources we have to pour into our relationships and our relationship with money is no different. Spending a little time getting to know your cashflow is a key factor in building a strong relationship with your money. When you know how much is flowing in each month and you’ve given a clear purpose to every dollar you have much greater control over your spending and a clearer idea of how you can put your money to work to help you reach your financial goals. Managing money well doesn’t have to mean making a huge time commitment; it’s more about touching base with your money on a regular basis to make sure it’s ok.
Save a Little
There are very few natural savers amongst us. Most human beings are natural spenders and the idea of delayed gratification is distinctly unappealing. If you’re not a natural saver then the easiest way to stick to a regular saving scheme is to make it automatic. Whether you use automatic payroll deductions or set up a pre-authorized saving plan through your bank the trick is to “set it and forget it”. You’ll be surprised how quickly you adjust to having a little less to spend and how quickly those regular contributions add up. Saving a little something is better than saving a lot of nothing. The more of your money you can hold onto the better your money relationship will be.
Related article: Principles of saving money
The bottom line is that managing money well isn’t complicated, it’s not time consuming and it doesn’t require you to be good at math. It’s a necessary life skill that unfortunately isn’t taught in our schools and often isn’t taught at home. We are living in dangerous times; times where our ignorance and avoidance of basic money management is easily exploited to create huge profits for retailers and financial institutions who are willing to offer us a myriad of credit “solutions” to our “lack of money” problems. The gap between those who “have” and those who “have not” is wider than we realize because it’s so easy for those with nothing but access to credit to spend like those with “real” money. With an abundance of resources at our finger tips there’s no reason why we can’t all have a great relationship with money. If your money relationship is floundering, all it takes to improve it is a little time and a commitment to making things better. Like all great relationships though, the rewards are definitely worth the effort.