Money! Sometimes just speaking the word is enough to set your teeth on edge. Most people find that cash flow is the primary reason for the stress in their lives. Whether it is due to a lost job, inadequate pay, unexpected bills, or the recession's impact on your business, we are all experiencing the pinch of inadequate cash flow these days. How do you deal with the stress? What are some positive behaviors to keep you from curling into the fetal position as you look at the stack of bills on your desk, with no money to pay for them? Listed below are the three best habits you can start today to regain control over your money, rather than having an empty checkbook control you. One (or more) of these ideas may assist your particular situation.
Why don't I have more money?
This is a fair and honest question many people have. You work hard (when you have a job), and you can't seem to escape the paycheck-to-paycheck existence. You want more. Not a lot more, maybe, but enough cushion so you can breathe a bit. You'd like to be able to buy groceries without having to keep a running tally in your head so that you don't overspend. You'd like to be able to just buy what you need without having to decide, "This week I'll buy toothpaste and next week I'll buy light bulbs." Decisions on how we're going to spread our thin layer of money around are a daily crisis for all too many of us. So, what to do?
Best Habit No. 1: Track Your Expenses
Sounds so simple doesn't it? Well, it is. If you feel you don't have enough money in your life, is it because you really don't have it, or you just don't know what happens to it? Start recording all the purchases you make. And I mean all of them. From the soda and chips you picked up at the gas station to the thrift store handbag, record every expense you have for three months. You will be astonished to see where your money is going-and how often it leaves for items you didn't really want, let alone need. This exercise of tracking your pennies gives you a written record of your spending, which takes all the guess work out of the statement, "Where did it all go?"
I know, I know, you were looking for a quick fast, instant answer to the money issue. I wish in all honesty that there was one for us, but there isn't. The answer to money is in the active tracking and conscious utilization of it. Period. The only solution I've found for quickly gaining control over financial stress is to track expenses so that I can see what impulse items I can do without next time. I understand you have probably read this sort of advice again and again, but I have yet to meet a financially well-off individual who doesn't track her expenses. It is an essential trait in people who wish to control their money.
Money makes me cry/angry/run-screaming-from-the-room.
Know one thing about yourself and your relationship with money. It is very emotional. Unless you deal with the emotional issues you have regarding money, you'll never travel too far from the paycheck-to-paycheck existence. That is not what I want for you. I want you to have a healthy relationship with money not one that leaves you in fear, curled in the fetal position on your living room floor. (Am I the only one who does this when under extreme stress? I don't think so!) Anyhow,
Best Habit No. 2: Educate Yourself about Personal Finance
so that you can handle cash and talk about money without losing control of your calm.
How do you do this? Let go of the guilt you carry for the past financial mistakes you have made. Face the fact that not a single wealthy person has ever managed their finances without making some mistake. Many have lost huge sums of cash, but still managed to garner wealth. They did so by knowing, deep down, that mistakes are part of their education in money management. Don't allow your past errors or fear of future failure to keep you from learning all you can about money and how to handle it. Find a book today on personal finance and read the advice. Then, implement any "wisdom" that applies to your situation. There are many excellent books out there but the one that I like best regarding automating your finances is David Bach's, The Automatic Millionaire. This book has helped over 65% of my clients streamline their financial lives, even though they were all starting from scratch. If heavy debt load is the cause of the fights, crying fits and nightmares, read a book on debt management. My personal favorite is Mary Hunt's, The Complete Cheapskate: How to Get Out of Debt, Stay Out and Break Free from Money Worries Forever.
How did my money situation get to be such a mess?
This is a frequent lament my clients vent when they first ask for assistance with their personal finances. I want you to promise me right now that you won't give it a second thought. Seriously, stop the self recrimination and guilt about how you got here: instead, I want you to direct all your energies toward fixing your situation. Many of my students have told me that you have to know your past in order to fix a broken situation. In a way they are correct, but on this topic the best way out of the mess is simple. You don't need to go over all your past mistakes and issues in exhaustive detail to get to a better place. I want you to focus on where you wish to go. Whether the focus is to become debt-free, or to have enough money to contribute to your IRA or to start 529 college education plans for your children (or grandchildren),
Best Habit No. 3: Decide on Your Monetary Goals and Chart a Path
Stop hiding from your money troubles and face them head on. Yes, this takes courage. This takes a certain amount of will, but come on, you can DO THIS. It is ONLY money! It's not like its childbirth, dealing with the loss of a job (or worse, dealing with the loss of your spouse's job)! This is simply dealing with the here and now. Set a target date for when you will have your credit cards paid off or have a minimum balance in the 529 Plan for your granddaughter and then work daily at making that target a reality. You can do this. Hey, you lost those 15 pounds when you absolutely HAD to, so I know you can do this. Seriously, you can.
When it comes to personal finances, don't allow ignorance to make your situation seem hopeless. It isn't. No matter where you are struggling, you can dig yourself out(even if it is with a teaspoon at first!). Start with the simple things that you can do for free: track your expenses, start reading personal finance books to educate yourself (that helps shield you from fear), and set yourself some targets for 2010. By starting these three habits and following through with them on a regular basis, you'll watch your financial stress drop day-by-day as if you're lowering yourself into a wonderfully warm bubble bath.