MONEY

Seek­ing a grown-up re­la­tion­ship with money.

ELLE (Canada) - - Front Page - By Flan­nery Dean

When it comes to our fi­nances, some of us have a lit­tle grow­ing up to do.

I’ VE ONLY EVER known two states of fi­nan­cial be­ing: just paid and flat broke. I’ve long lived be­yond my means— pri­mar­ily be­cause I’ve never been en­tirely sure what my means are. I con­fess to act­ing like a drama-chas­ing teenager when it comes to money—the first flush of hav­ing it, any­way. I could do without the in­evitable heart­break of an over­draft. But as I’ve watched my friends make rite-of-pas­sage pur­chases (homes, cars, Max Mara camel coats), at the age of 40 I’ve had to face the fact that my ado­les­cent re­la­tion­ship with money has had grown-up con­se­quences.

Af­ter nearly two decades of hus­tling, I’ve got noth­ing to show for my work. No RRSPs, no sig­nif­i­cant sav­ings, no house, no condo, no as­sets that will ac­crue in value. Noth­ing but $4,000 of credit-card debt and a state­ment bag I bought years ago in NYC. (State­ment: Visa; sta­tus: still paying it off.) In tough times, I imag­ine Til Debt Do Us Part’s Gail Vaz-Oxlade shak­ing a Ma­son jar of coins at me and shout­ing “You did this all your­self!”

Of course, she’d be right. But fin­ger wag­ging is never go­ing to work for me in the long term be­cause shame doesn’t mo­ti­vate me; it par­a­lyzes me. It also sends me

back into the arms of my old friend de­nial, which only per­pet­u­ates the cy­cle of re­gret, anx­i­ety and wil­ful blind­ness. In des­per­ate times, I’ve tried boot- camp- style ap­proaches to bud­get­ing and found them as suc­cess­ful as ex­treme di­ets—which is to say, not at all. (I did the Master Cleanse once. Gained 10 pounds.) And I’m not alone. Toronto-based cer­ti­fied fi­nan­cial plan­ner Shan­non Lee Sim­mons hears the bud­get­ingdiet com­par­i­son all the time. Tra­di­tional bud­get­ing of­ten takes an ag­gres­sive ap­proach to cut­ting the fat from spend­ing, one that makes ad­her­ence tricky: We im­me­di­ately want what we can­not have. “It’s like be­ing on a let­tuce diet and then you see a pizza and binge,” she says. I don’t want to have a puni­tive re­la­tion­ship with money fol­lowed by an ex­ces­sive, ir­re­spon­si­ble one. I want a pos­i­tive, bal­anced re­la­tion­ship with my in­come, one that sat­is­fies me without filling me with guilt or shame.

To move from re­stric­tion or ex­cess to bal­ance, you first have to cut your­self some slack, says Sim­mons. In her new book, Liv­ing Debt-Free: The No-Shame, No-Blame Guide to Get­ting Rid of Your Debt, she en­cour­ages peo­ple to be­gin their fi­nan­cial plan­ning by “re­fram­ing” their debt story without sham­ing or neg­a­tive self-talk. (You know, all those “I’m such an idiot with money” thoughts that keep you in a state of em­bar­rassed paral­y­sis and per­pet­ual broke-ness.) “Your self-talk be­comes re­al­ity, so the more you think you’re bad with money, the more you will be,” says Sim­mons. “You ba­si­cally as­sume ‘I’m a per­son who has debt or is in debt.’” So why even bother try­ing to make your way out of it?

Em­pha­siz­ing the neg­a­tive isn’t al­ways ac­cu­rate ei­ther. As Sim­mons points out, it’s not just our vices that get us in trou­ble; our virtues do too. Re­search sug­gests that peo­ple who strug­gle with money are of­ten more gen­er­ous in shar­ing what they do have with oth­ers. When I look at my bank state­ments, I can clearly map my weak­nesses. I eat out when I’m too tired to cook, buy clothes when I want to im­press, buy more when I’ve been dumped (ditto get­ting my hair done). More of­ten than not, I’ve just wanted to es­cape the re­stric­tion of my lim­ited in­come by prov­ing my value with a ran­dom pricey pur­chase. (Hello, goop.com.) But I can trace some of my virtues in those trans­ac­tions too. †

I like to spoil loved ones, I love to buy din­ner or brunch for friends and I’ve helped my fam­ily out in times of need (as they’ve helped me).

These things bring me joy, but un­der­stand­ing what re­ally makes us happy ver­sus what only pro­vides mo­men­tary ela­tion is a key com­po­nent in cut­ting back on spend­ing. “Money is just a tool, and peo­ple use this tool to be happy,” says Melissa Leong, au­thor of Happy Go Money: Spend Smart, Save Right & En­joy Life. “You can teach peo­ple about money and bud­gets, but if you don’t un­der­stand why they’re spend­ing the way they’re spend­ing, then you’re not go­ing to help them.”

For me, part of this chal­lenge has been think­ing about the rea­sons why I’ve cho­sen the “In­terac and run” ap­proach to my bank ac­count. Some­thing Leong says dur­ing our con­ver­sa­tion about the con­nec­tion be­tween im­pulse spend­ing and our state of mind sticks with me: “When you are in a state of stress, the part of your brain that reg­u­lates longterm reper­cus­sions of your ac­tions is turned off.” In­stead of push­ing for­ward, she says, take a minute for some self-aware­ness rather than self-in­dul­gence. “Ask ‘Is this a good use of my money? Is this pur­chase in line with my val­ues?’”

I de­cided to use that tac­tic as the first step in align­ing my spend­ing with both my per­sonal val­ues (gen­eros­ity and spon­tane­ity) and my goals (fi­nan­cial sta­bil­ity and ma­tu­rity). With that in mind, I’ve since crunched the num­bers, sep­a­rat­ing my fixed ex­penses from the money I can de­vote to debt, sav­ings and spend­ing. I’ve also come round to the idea that bud­get­ing doesn’t have to be about liv­ing in what Sim­mons calls “scarcity” mode.

It’s not a spend­ing free-for-all, but it can be flex­i­ble, al­low­ing space for both plan­ning and spon­tane­ity. In­stead of mi­cro­manag­ing my dis­cre­tionary spend­ing into im­pos­si­ble-to-con­trol cat­e­gories, like “cof­fee,” “magazines” and “beauty prod­ucts,” I’ve taken both Leong’s and Sim­mons’ ad­vice and opened a “spend­ing ac­count.” This is where any dis­cre­tionary in­come goes (a lot less than I imag­ined, as it turns out). It’s an amount I’ll use to sen­si­bly in­dulge my af­fec­tion for fancy sham­poo and brunch with friends—the ma­jor dif­fer­ence is that the amount is fixed rather than im­pro­vised.

To­day I have firm knowl­edge of my fi­nan­cial virtues and vices, greater self-aware­ness and a bank­ing plan with a lit­tle room to play. I al­most feel like a grown-up. Any­body want to buy a slightly used state­ment bag? ® sav­ings from rent­ing ver­sus hav­ing a gi­ant mort­gage, you could come out ahead in the long run. If you’re stuck on that white picket fence, you may need to ex­pand your search out­side your dream neigh­bour­hood.

“I NEED MY VA­CA­TIONS, MY MANICURES, MY DIN­NERS OUT, MY GUCCI SLIDES.”

Hi, we work at a fash­ion mag­a­zine, and we want all the things too. Un­for­tu­nately, un­less you’re a se­cret heiress, you’re go­ing to have to pick and choose your in­dul­gences. “As­sess what your per­sonal val­ues are: Where do you want to spend your money?” says Jes­sica Moor­house, a Toronto-based ac­cred­ited fi­nan­cial coun­sel­lor and host of the Mo’ Money pod­cast. If it’s on a col­lec­tion of Louboutins, then you may have to cut back some­where else. Be­fore you fill up and click “check out” on your on­line-shop­ping cart, con­sider this: Re­search sug­gests that peo­ple are less likely to re­gret spend­ing money on ex­pe­ri­ences than on things.

“I WANT TO IN­VEST, BUT I HAVE NO CLUE WHERE TO START.”

Women need to be es­pe­cially savvy with our in­vest­ments—we gen­er­ally live longer than men, we make less money (the gen­der pay gap is still so real, friends) and if we take time off work to have chil­dren, we can fall even lower on the pay scale. Since these so­ci­etal im­bal­ances won’t cor­rect them­selves overnight, it’s best to set up a con­sul­ta­tion with a cer­ti­fied fi­nan­cial plan­ner to talk strat­egy. If the thought of dis­cussing your spend­ing with an­other hu­man is ter­ri­fy­ing, non-judgy robo-in­vestors like Wealth­sim­ple are ideal al­ter­na­tives. Ad­vis­ers, both real and vir­tual, should re­quire you to fill out an in­vestor ques­tion­naire to de­ter­mine your risk tol­er­ance. You should also be do­ing your home­work by read­ing up on this stuff. We love Wealth­ing

Like Rab­bits by Robert R. Brown. This oldie but goodie takes con­cepts like com­pound in­ter­est and re­lates them to things you’ll ac­tu­ally un­der­stand, like zom­bies. ­CARLI WHITWELL

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