Ever since I published the post about the biggest lie I ever told myself, I've been thinking a lot about the emotional aspect of personal finance.
The "one day" lie was full of denial, but that denial came from stress, pressure, wants, desires and a lack of control - and those feelings can turn into repetitive financial mistakes. Even though I'm debt-free now, I still find myself feeling emotional about certain aspects of my finances, including feeling guilty about spending money on myself. As I try to change my own views on money, I thought I'd share some of the insights that have helped me create a more positive relationship with it. In my experience so far, it can be as simple as switching your thought patterns, so you see the glass half-full rather than half-empty. Here are a few examples:
Instead of ignoring your finances, make time for it. It's easy to ignore your financial situation -- until it's so bad that you can't. To prevent that from happening, schedule an hour each week (preferably on the same day and time) to sit down and think about nothing but your finances. If it helps you relax, turn on some music and make a cup of tea or whip up a snack. After your first few sips and bites, log into all of your online bank accounts and pull out any receipts you kept, so you can write down where your money went that week.
For the first few weeks, I'd suggest writing down each of your purchases on paper, so you can really look at what you spent your hard-earned dollars on. As you look at the list of expenditures, ask yourself how you feel about each purchase. Were they all necessary? Were any dollars spent on impulse buys? Are you happy with any/all items you bought? Is there anything you would've done differently, after looking at an entire week's worth of purchases? When you're done with expenditures, write down any amounts you put towards debt repayment or your savings goals. If you're happy with those amounts, pat yourself on the back. If you're not, take the time to think about what you could've done better, what your financial goals are and how you can move towards them. Before your finance hour is up, make at least one financial goal for the next week. Then log off, put your notepad away and get back to living your life.
Rather than worry about your financial troubles, map out your financial goals. This one is still tough for me, but I'm really trying to change the way I think about my current financial situation. At any given moment, you could start thinking about how bad your finances may seem. You could be holding the weight of a massive debt on your shoulders, the stress of how to pay for school, or the lack of savings or even the thought of how you'll make it until your next payday.
It's easy to understand why people feel trapped by these financial burdens. However, with a little planning, it's also easy to switch those concerns into hopeful thoughts. For example, if you have $10,000 of debt to pay off and it stresses you out daily, you can do a simple calculation to turn that stress into a goal. Ask yourself how many months you'd like to pay off that debt within: 18 sound good? Divide $10,000 by 18 and you can see that it'll require a minimum debt repayment of $555/month* to turn that financial stress into an accomplished goal. Of course, you'll need to make sure that number fits into your monthly budget. If it does, then the next time you feel stressed about that debt, simply ask yourself if you've made your $555 payment that month. Yes? Good -- you're working on your goal and that's what counts. No matter what your financial goals are, I would also suggest celebrating small milestones along the way. Mini celebrations can be extremely motivating.
*Not including any interest that accumulates during that time.
Instead of worrying about looking/sounding stupid for asking "dumb" questions, get excited about learning something new. This one is probably the easiest for me to relate to, because I've shared all kinds of stupid mistakes, thoughts and questions here -- but I still worry about sounding dumb. (Seriously, I've been holding back on writing that post about my rewards card ordeal I mentioned a few weeks ago, because I'm scared it was my mistake!)
Unfortunately, the longer you live in the dark about something because you're too scared to ask a question, the more mistakes you could be making because you don't know the answer. For example, a couple months ago I had coffee with another personal finance blogger and I asked him some seriously basic questions about investing. And guess what? Not only did Steve not treat me like I was dumb, he educated me! His answers, and some tweets back and forth afterward, helped me decide on a new portfolio to move my RRSPs into -- and I was so excited to put in the paperwork and make that happen.
After that, I felt confident in my decision to open a self-directed TFSA, and now I'm reading up on stocks and ETFs. I'm nowhere near ready to touch those, but I'm inspired to learn -- and it started by asking a few questions. If you don't understand how a financial product works, ask someone who might. The chances of them judging you for not knowing are extremely slim, because they didn't understand it once either. And I have yet to meet someone who doesn't want to share what they know about personal finance.
If you look at the words I underlined, you'll see that to create a positive relationship with your money, you need to: make time for it, map out your goals and be open to learning new things. Once you're in the routine of that, you just might find that you actually like thinking about money and all the different ways you can make it work for you.
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