In today’s society, there are only a few topics which have become complete taboo for people to talk about. Some of these topics we talk about on Social Media, but just don’t bring them up with our friends because they are hot button topics (i.e. Religion, Politics, etc.). Other topics are completely personal; ones which make us feel ashamed or simply overwhelmed.
Very rarely do we even talk to our family about these kinds of topics, and these topics have been known to be a sore spot among a multitude of couples. A great example of this kind of topic is Money.
Most people have a Love/Hate relationship with money – we love money when we have it, and we hate money when we don’t have it. This is why we are going to discuss how you can have a more positive relationship with money, no matter your circumstance, and why it’s so important to have a positive relationship.
Create Your Cushion
In order to change your relationship with money, you first need to set the right foundation with where you are with your finances, and set your goals on where you want to be. You need to have a true and honest assessment of how much you earn each month, and then in contrast, how much you spend each month.
The amount leftover is what we’ll call your cushion, and typically, what you do with this cushion will determine where your relationship with money truly stands. If you don’t have a cushion each month, you will need to create a budget so you can live within your means. If your monthly budget ledger is negative, it’ll be very difficult to ever create a positive environment and relationship with money.
There is a myriad of financial advisors, all of which have different ideas on how to build wealth. We have sorted thru these ideas, and have come up with ways for you to allocate your cushion so you can meet your financial goals while cultivating your positive relationship with your finances. There is no reason to view money as an enemy, or allow it to control you.
If you are starting out, the first task is to create a fund in your savings account. It is recommended that you start with at least $1,500-$2,000. You need to have an account which you can draw upon if some emergency comes up (transmission goes out on your car, A/C or Furnace goes out and needs repaired, etc.).
A lot of people who live paycheck to paycheck have a high anxiety level in life, as they are always wondering if something is going to come up that they cannot afford. With this account created, you can eliminate this anxiety and take a step towards having a positive relationship with money.
If you ever have to use this account for an emergency, it shouldn’t create any worries, as that is what this is set up for. The only thing to keep in mind is you’ll need to replenish this account once again before moving forward.
Once you have created this fund, it’s important to focus on your goals. This does not mean to look at all the problems you have with bills, and stress out. By focusing on problems, you are allowing money to dictate your happiness; if you turn that thought process around, and focus on your goals (and celebrate when you meet them), you will start seeing more opportunities and more celebrations.
Let your cushion be your security, allowing your mind to release any anxiety that may be holding you back from money making opportunities. There will be a few times where you might spend more in a month than you intended, or spoil yourself – this is perfectly fine, as long as it’s the exception, rather than the rule. Discipline is the main key in reaching your goals and helping to create this positive relationship around money.
One of the best pieces of advice given when it comes to having a positive relationship with money is to continue to analyze where you are compared to your goals, and adjust your goals accordingly.
Remember, money is a tool that is supposed to be used to create happiness and fulfillment, which means you need to constantly spend time with your finances and ensure you are on the right path. If you go more than one month without looking at your checking account, you are going too long.
Once a month is the minimum you should check on your finances, with the recommended amount of time being twice a month. If you are going to change your relationship with your personal finances, you have to create clarity.
Clarity of knowing how much is in your account, how much you are spending and how much you are saving. Without this vigilant clarity, you won’t know where to adjust your behaviors. Once an established transparency is created,this all can be adjusted, based upon when you money comes in. By keeping a vigilant eye on your finances, you are creating a positive connection to what is going on, and are not surprised by anything unexpected.
As you spend more time with your money, one of the things you’ll notice is that your goals are going to vary, depending on where you are in life. What was a goal even five years ago may not be the same as what your goals are now.
For example, if one of your goals is to put $3,000 into your savings account each year, and you have already completed this by June, what should you then do with that extra cushion money each month?
Do you have a lot of credit cards that you can start paying down? Do you have a car payment? If you have already reached your savings goal, you should use that extra cushion each month to pay down all your bills, outside of your mortgage.
To start with, you should focus on the amounts that have the highest monthly payments, as that will have the biggest impact on your finances in the long run. If all of your extra bills are paid off, then you should start looking at long term goals.
For example, do you need to save money for a college fund for future children? What does your retirement look like? Money is a tool to help you in the present, and in the future, so make sure to use it as such.
Overall, the hidden truth about money is everyone has struggled with it at one point in their life. There is no need for this to be a topic that is off limits, and the more you talk about money with others, the more comfortable everyone will become, which will in turn help you foster the positive relationship you want.
By creating this positive relationship, you can overcome the sense of being overwhelmed or ashamed about money, which in turn will create an inner peace you may have never thought was possible.