My love-hate relationship with money and how I got over it

I’ve been receiving questions from several readers asking about how to move to money savvy land when the situation is dire, why is that the relationship with money is so complicated and how to get over it.

In this post I share how I learned to become money savvy and the hurdles that prompted that change.

Why is that we have such a difficult relationship with money?

Essentially our love-hate relationship with money derives from ignorance.

While money is the oil that keeps the world economy spinning, our money IQ is close to zero, which is odd because money is practically in everything we do. We work for money, pay taxes, do groceries, put money aside for a house, our children’s education or our golden years.  As kids we do house chores to get money for our piggy bank. Our parents awarded us with money when we graduated or got good grades. But we do not learn how to manage money.

For many, money is at the same level as happiness or love. At the same time, money is something we love to hate, especially when we do not have enough of it. We try to convince ourselves that money is overrated and fool ourselves with mantra-like affirmations. “Money is not important, love/happiness are,”  “I should be grateful for what I have as there are people who have it worse than me” or “It’s too greedy to say or admit I want to earn a lot of money” are some of the things we say ourselves.

Much of our beliefs about money come from the only example we have as we grow up: our parents. Like us, they were not taught to be financially savvy. I think more than having a difficult time forming positive relationships with money we have a difficult time forming a relationship with money. We first have to start building a relationship with money and then turn it into a positive one.

We learn by example, and when we do not have the right examples around us, it is very difficult to break the vicious circle once we become older. And the root lies in our beliefs and mindset around money. For instance, the symptoms of poor money beliefs and mindset are a lack of money, financial stress, and distress.

Money is a misunderstood concept and not given its rightful place.

If I ask you what’s more important to you: your right hand? Your leg? Your eyes? They are all important, but they all serve a different purpose. With money is the same thing. Once you give its right value, you can give it the right place in your life.

Money is a vehicle to help you. Money should serve you and not the other way around. When we start to see and accept money as our ally, we will also start to feel more at ease and can start building the right relationship with money.

What were the worst financial mistakes you’ve made? Why do you think you made them?

My biggest financial mistakes were spending money I did not have to buy things I thought I needed. Also not saving money and neither did I create a financial plan and stick to it.

In the past, whenever I wanted something, I’d buy it, without taking into account other fixed expenses I knew would come like taxes, etc. I’d say to myself, “I’ll put the money aside next month” and so forth. But I never did. And tax authorities, like other fixed expenses, do come and do not take excuses for you not to comply with your obligations. Not taking the time to think ahead brought me to the brink of bankruptcy.

The bottom line is I wasn’t in touch with my money. The money would come in, and go out. I was working (very hard), was barely at home and out of guilt I’d lavish my partner and kid, or the house with expensive gifts.

Then my accountant sent me my yearly overview; it was impressive. But when I saw my empty bank account I was flabbergasted. I had made so much money, and to prove it I only had an empty bank account and was incredibly tired. The question of what happened kept revolving in my head. I realized I had a love-hate thing with money. Worked very hard (love) then spent it almost recklessly (hate). As soon as money came in, I did not want to keep it. When I understood what was going on it was an eye opener for me. If I had managed my money better, I would not be in that situation.

What have you learned from these mistakes?

To value money for what it is and not judge me by the amount of money on my bank account. It is just an amount. I do not like it? Only I have to power and ability to change it.

Also the importance of a financial plan driven by a purpose that moves me.

The importance of savings! As soon as the money comes in, I safeguard an amount for savings, another for taxes and fixed expenses, in that order and these go all to specific accounts/jars. Keep it simple and clear.

Money is not the aim, is just a mean to achieve what we want.

I made a habit to look regularly at my finances and my financial plan, for which I read and educate myself about money. I regularly talk to people who earn serious money and learn from them. First, I wanted to be like them, forgetting that I can only be myself. Now I learn from them and have some as my mentors/coaches.

How did you reach that balance between money, work, and life? And was it easy?

Nowadays, society measures success by the amount of money you have. I let go of that concept and figured out what is my measure of success.

Finding my definition of success was very challenging as it also involved accepting and admitting that I made a big mess financially and felt ashamed. Money does not make me a better or worse person; it only amplifies the true values I stand for, the true person I am.

I realised that while I do have a lot of knowledge about how money works, it goes deeper than sole knowledge. You ought to have a relationship with money and a purpose for it. Wanting to spend quality time with my kids without sacrificing my standard of living and not necessarily have to put in more work hours or become totally dependent on my partner became my purpose. For this to happen I asked myself how could I do it, and how could money be my ally in this.

I included my partner in our financial planning. As a family, I think we should do this together. He is a completely different financial/money type than I am, so that is challenging at times.

It helped that I had people around me who have become financially free, so I knew that financial independence is possible.

What are your strategies for saving, budgeting, and investing

Have a clear purpose and financial plan to reach that [purpose! That is essential. Otherwise, you will be driving in the dark not knowing where you are headed. Once that is clear, you can start defining how you want to get there and what you need.

Saving is the second most important step towards financial independence. Once money comes in allocate an amount towards your savings –no matter how small, some money to treat yourself (I mean, you worked hard for the money, didn’t you?) then the funds for your fixed expenses including taxes.

What I see people doing is they first pay their expenses, and then if something is left they save. And in that fashion, the chance to save is very small.

I do not believe in spreading the costs, and prefer to pay all in once. On one hand, paying in installments is more expensive as you pay interests, and then if I do not have it now who says I will have it in the future? In other words, I do not spend money I do not have.  Same applies for credit cards.

As for investments,  since I am not a big risk taker, I take small steps. I read and educate myself about investing and then invest an amount with which I feel comfortable. Nowadays, for instance,  keeping my money in the bank is not going to make me rich, so I am educating myself in other ways to make my money grow. There are a lot of opportunities out there; you just need to set some time to educate yourself. The economy is changing, and this creates new opportunities to grow your money.

As for tracking your money, keep it simple. I keep all my costs, income and savings in an excel. Nothing complicated, and regularly check to make sure I am on track.

In brief: get a purpose for your money, make a plan to reach it, make savings a priority, regularly check your plan to see if you are on track or need to take measures, and last but not least, educate yourself about money.

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