Our financial situation has the power to fuel or deplete our overall health and wellness which is why it is one the twelve areas in the IIN Circle of Life. For myself, I have always believed I had a healthy relationship with money because I had grown so much from where I had come from and that I never worry about not being able to provide for myself and my family. However, if I looked at any other area of my life that way such as my physical health, I realize what low standards I have been holding. In no other area of my life do I hold a "good enough" attitude. I am always seeking to grow, expand and learn more, so why have I allowed myself to take this naive stance with money?
When I took a deep dive and looked inward, I realized that even though I was doing alright financially, subconsciously, I didn't have a healthy relationship with money. There was a piece of me that had quite a bit of negative associations with money and financial wealth and what it meant about who I am as a person. There can be so many confusing emotions and beliefs attached to our financial situation and what it means or says about us. When we allow our financial situation to dictate our self-worth it can have a massive impact on our overall wellness and health. One of the best lessons I had was learning to "neutralize the numbers" and put myself through an unemotional and non-judgmental analyzation of where I came from, how I got where I am now and where I would like to see myself. While doing this, knowing that none of this has any bearing on who I am as a person on a soul level, it allowed me to be more honest and authentic about my situation exactly as it was.
What is my current relationship with money like?
Is it easy to take and honest look at where I am or do difficult feelings and judgmental opinions surface?
What feelings come up when I think about sitting down to take and honest look at the ebb and flow of my income and expenses?
Do I have a clear budget to keep me honest and on target?
Money psychology plays a huge role in our financial wellness and is often formed in childhood. What is holding you back from living the life of your dreams? Surprisingly, it often it has far more to do with our feelings and beliefs than facts. What our relationship is with money, the feelings it provokes when we think or talk about it, what we believe having it or not having it says about us. This journey is a blog post all in itself like all inner child and shadow work!!
Taking the time to look back on your spending patterns and then create a conscious spending plan can help you think about your money being more about where and how you are using your energy and what brings you joy in life. Let's have fun with this.
“Money is a terrible master but an excellent servant.”
~P.T. Barnum
The truth is that no matter how much we make, most of us live to the edge of our means. Many people making six or even seven figures are living paycheck to paycheck! Money management and how you allocate your income is almost more valuable than how much you actually make.
The three main dimensions when you begin analyzing your financial wellness are your monthly income, expenses, and savings. Learning about the 50-30-20 Rule changed how I approached my budgeting and forced me to get real with myself. I saw where I had room for improvement and where I was doing well. This simple spending ratio created by Manisha Thakor, MBA, CFA, is a quick and easy way to get on track.
She believes that your spending after taxes, should be broken down like this:
50% towards needs ~ food, housing, transportation, bills
30% towards wants ~ activities, restaurants, vacations, concerts
20% towards savings ~ 10-12% for retirement, 8-10% for an emergency fund (or debt paydown first)
A surprising statistic I learned is that 9 out of 10 Americans are over extended, not on their wants, but in their needs. Spending more on buying a house or car that fits their style but stretches them beyond their financial means. I was quite surprised that the area I was the most imbalanced in was overspending in my needs as well and I knew I was under contributing towards my savings. I was immediately determined to get my "needs" under budget but at the same time, happy to see that I didn't have to compromise my lifestyle and the things that bring me joy (wants). I was right on target there. Joy based spending is a lifestyle and technique I have subscribed to and have found that is has transformed my feelings, insecurities, and confidence with spending money.
Spend guilt free on the things you love and that make you, in your eyes, a better more authentic version of yourself and cut dramatically down on the things that don't align with your values. I will forgo the new outfit or the new couch because for me, it is all about vacations and life experiences! With my kids, my partner, girls' trips and even solo self-development adventures. I always feel that I return more grateful for the life I live, have a broadened perspective and I always say, "it takes a break from my routines to forget who I think I am and remember who I actually am."
Looking at every dollar in and out, in all areas of spending does require ruthless honesty and a bit of work but is so worth it! I recommend taking three months of income and expenses (one quarter) and categorizing them as Needs, wants, and savings (debt paydown first). Where do you most value spending your time and are you utilizing your resources so that you are living your most abundant life?
At the end of the day, the truth is that I don't think any of us really care about money. It is merely paper in our hands and numbers on a screen. What we really care about is the feeling it will give us whether we have that magic number or not. It's our own personal value based on what we have created in our head of what "doing well" or "being wealthy" looks like. I believe it's more about living the live we want to live! What is that feeling for you? If you were living your best financially wealthy life, what would that look like? What are you looking for your money to make you feel? Freedom? Adventure? Peace of mind?
All money is, is an energy exchange. Your time or energy reimbursed with the US dollar. What is your time worth? How do you most value spending your moments in the day? Maybe it's time for some time budgeting alongside creating a conscious spending plan? Make every day and dollar mean something!
All the love,
Pamela
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