For a good deal of my life I lived under a dark cloud of worry that I would end up financially destitute—a bag lady.
A survey conducted by Harris Interactive for Allianz Insurance Group reveals that I’m not the only one. In fact, most of us have felt that way at some point in our lives, not because we’re broke, but because we don’t have confidence that we know how to hang onto our money. And that makes us timid, worried and financially insecure.
Financial confidence is a choice. It’s a matter of changing bad habits and choosing to learn simple financial principles. Then by consciously applying them over and over those principles will become automatic responses—financial habits.
Here are four simple things you can do starting today to improve your financial confidence—and take control of your money.
Money is the most difficult subject to discuss between two people in love. Why? Several reasons:
It’s personal. We’re taught as children to never ask how much people earn, what things cost or how much money people have. It’s rude, it’s poor manners and it is just not done.
We spend the first two decades of our lives keeping anything related to money hush-hush. We learn to skirt the truth in the interest of personal decorum.
We grow up, enter a relationship and find that it’s not easy to suddenly talk about such personal information.
It’s not flattering. We wear clothes that flatter our good points and downplay our flaws. We snap a “selfie,” then retake as many times as necessary to get it just right.
We take great pains to present ourselves in the very best light. And when forced to talk about financial issues, well, we do the same thing. We bend the truth or we omit certain details that don’t make us look that great.
One of the toughest things I battle in my life is procrastination. My natural response is I’ll do it later. And there’s a part of me that despises that procrastinator and wages a daily war to defeat it. That’s how I’ve come to rely on the power of habits and routines. If I can avoid having to make a decision, I lose the choice to put it off until later.
Habits are those things we do so often, they become automatic. Take my MacBook computer. You’d be shocked to know just how many hours a day I am on this thing. The keyboard is part of me. My muscles have totally memorized every stroke, the location of every key. Until something changes.
Due to a series of complications (Mavericks plus multiple monitors), I was forced to move my dock from the bottom of my screen to the left side. We’re talking about a 90-degree relocation from horizontal to vertical. And I’m ready to be committed.
Everything in me wants that dock at the bottom. Every muscle recalls exactly where each tool should be. For nearly three weeks I have battled this annoying change and it is driving me to the brink of insanity. My routines are disrupted, my old habit is screaming in torment. My brain, muscles and fingers are trained to reach effortlessly to get what I need. It was so automatic I didn’t have to think about it.
I’m sure I could lecture about frugality and living below your means until my face turned blue, write until my computer exploded in a fit of rebellion and still not achieve the impact of a success story like this one from Kelly D.
“Shortly after my husband and I were married, the first credit card application showed up. At first I was dead-set against filling it out but after a little coaxing from my husband I gave in. Of course others followed shortly.
“Each time we had an emergency–car repairs, unpaid taxes, a weekend getaway–we’d pull out a card. It all seemed so easy. Before I knew it we had three or four cards that were all nearly charged to the limit.
“We tried setting up a plan to pay off the debts. The money was always there on paper but somehow I didn’t ever see it in the account. My husband and I would tell each other things would be much better once the next raise, next promotion or next job came along. Somehow it didn’t ever work out that way. That was how things were our first five years together.
Try this: Add up your monthly expenses and deduct the total from your monthly income. Hey, not bad! You should have plenty of money with some left over. So why is there never enough? The answer is your selective amnesia. Most of us suffer from it.
We conveniently don’t remember expenses that don’t recur every month. It’s easy in March to forget about summer vacation, back-to-school clothes, wedding and shower gifts, new refrigerators or myriad other inevitable expenses. The solution is to make all of your expenses as predictable as the rent, phone and cable TV bill.
I call my solution a “Freedom Account.” It forces us to anticipate irregular expenses so we can finance our own emergencies.
If you remember Christmas Club Accounts, you’ll understand my Freedom Account. Basically you determined how much you would need for Christmas shopping. You authorized the bank to transfer 1/52 each week (or 1/12 if you did it monthly) from your checking account to your Christmas Club Account. It was painless because you didn’t miss money you didn’t see and the results were huge. You got a big fat check in the mail for holiday shopping.
Faithful readers may recall a series of columns, Mary’s Big Remodel, where I kept you up to date on my husband’s long and agonizing remodel of our home. What you may not know is that no sooner had the paint dried, we put the house on the market for sale. To our utter amazement it sold in about 3 hours. Yikes! We were only testing the water. But the offer was something we could not refuse.
And now for the rest of the story …
We had 30 days to pack up 27 years of our lives, which we put into storage pending a decision on where we would eventually relocate.
We kept out a few bare necessities and moved into a tiny apartment, where we will live for about 18 months. Did you get that … a “few”? Clearly, I was not in my right mind when I decided what I would need in this microscopic kitchen.
We’re talking a spatula, a wooden spoon, and a rubber scraper. That’s about it in my tiny utensil drawer. And that spatula? It’s 44 years old. I know because it was a wedding gift. It works better than ever and makes me laugh every single day.
But that’s not all. I had to put my slow cooker, pressure cooker, rice cooker and 99% of my kitchen into storage. That’s how small this place is.
Debit cards are by far my least favorite type of plastic. The fraud protection is, at best, shaky. But beyond that, there is the temptation to use a debit card with a certain level of abandon–to purchase everything under the sun by swiping instead of writing a check or paying with cash.
It becomes far too easy to empty your bank account using a debit card than if you actually had to write out the checks and think about what you’re doing.
I would rather see you use a credit card.
What if I told you there is a way you can have a fully functional debit card without any of the problems and hassles that come with running up a credit card balance you cannot pay off in a single month. You’d say, “Mary, this is brilliant!” Well, get ready because that’s exactly what I have for you.
Doing something about consumer debt is good for your finances—and just about every other area of your life, too.
Health. Experts say there’s no question that carrying a lot of debt can be stressful–causing all kinds of health issues. It can result in worry, sleeplessness, communication breakdown, depression and anxiety. Credit-card debt takes a terrible toll on human health. Our bodies bear the consequences of the heavy loads our minds carry when we place our lives in financial jeopardy. Do something about your debt and you’ll be doing something good for your health, too.
Job. Being in a job you hate is an awful place to be. Every time you think about leaving, you realize you can’t afford to right now because you have too much debt to pay off. Get started today doing something about your debt to get unstuck from your unhappy situation.