How to Have a Healthy Relationship With Money
Money. Is it the root of all evil? Maybe. Probably. Either way, unless you're completely off the grid (which is pretty unlikely), everyone is dependent on money to live. So how do you have a healthy relationship with money when it touches so many aspects of our lives and can cause a lot of stress? Well I don't know if I have the perfect answer, but here are some tips that will definitely help.
Know your income and expenses well.
As simple as it sounds, many people don't know exactly what they take in each month versus what they spend. If you have this down pat, you will be in a much better position financially. You can either pinpoint and work on any shortfalls or you can use your budgeting knowledge to become more stable.
Save, save, save.
Create emergency and periodic savings accounts instead of trying to come up with a bunch of money at the last minute for unexpected bills or expenses. For some it's tough to save, but there are creative ways to build up savings. (Check out easy ways to increase financial wellness and How to go from 0 to $2000 in a year.) If you're ahead of the curve and already have 3-6 months' worth of expenses saved up, then focus on your future and building up retirement funds.
Don't spend it just because you have it.
The biggest mistake many people make is that when they get a cash windfall like a tax refund or a pay increase they have already spent the money in their head before they receive it. Avoiding this common error will help you avoid living from paycheck to paycheck because saving more can help you start building wealth. In the case of a raise, pretend you didn't even get one and put your increase toward some sort of savings as well.
Don't spend it when you don't have it.
Avoid another common habit which is buying something now and paying for it later. Instead, stick with the good ol' SNL skit title of 'Don't buy stuff you cannot afford'. Instead of burdening yourself with another monthly payment that will likely have added interest charges, set aside money each month or paycheck for whatever you want to purchase and buy it when you have enough saved up. Or, think about if you truly need the item at all. You might find that once you have the money saved up you don't even want it anymore or you might want to use the money for something else.
The key is balance. Avoid trying to keep up with the Kar... I mean Joneses and live your life for you. I'm not sure where it originated, but one of the best quotes I've read lately is:
No one is going to stand up at your funeral and say 'she had a really expensive couch and great shoes'. Don't make life about stuff."
So spend wisely and use your money for what you truly need while making sure you save, have some fun, and make lasting memories along the way. If you need to get rid of credit cards to improve your relationship with money, LSS can help. Give us a call at 888.577.2227 for a free financial counseling session or get started online. We will work with you to create an individualized action plan to conquer your debt.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.