What’s your relationship with money?
Do you have a golden key?
You might need a glass of wine and a quiet hour to think it through.
A lot of how you feel about money stems from beliefs developed in childhood.
- Was money a topic of conversation at home?
- Were there regular arguments about money?
- Were you told there wasn’t enough?
- Were you spoiled?
- Did you have a sense that money had to be earned?
- As a child did you help at home in exchange for a weekly allowance?
- Do you regularly buy Lotto tickets now?
- Does your employer pay you enough?
- Do you deserve more money?
If money management is an issue for you, the best way to start improving your relationship with money is to get clear on your income and your expenses.
Making a Budget to Manage Money
Write down your annual income: salary + anything you earn by way of dividends, interest, rent, bonus and profit shares. Divide the total by 12 to get the average monthly income. Put the annual and monthly amounts at the top of a sheet of paper.
Now calculate your expenses. This takes more discipline.
1. collect your regular monthly bills in one place and make a list: mortgage, utilities, insurance, transport, phone, school, business and health club memberships, etc.
2. estimate weekly expenditure on food, transport, clothing, personal care. Multiply the totals by 4 to get a monthly estimate.
3. include a weekly allowance for regular indulgences: coffees, drinks, snacks, music and movie downloads, taxis etc. Multiply each item by 4 to see what this amounts to each month.
4. estimate what you spend every year for holidays. If you have records of flights and hotels use them to get a picture of what the last holidays might have cost. Divide the total by 12 to arrive at a rough monthly figure.
Check that you didn’t leave out items because you don’t feel comfortable with those expenses.
Now that you can see your average monthly income and your average monthly expenditure you will have a clearer picture of your money management.
Are you spending more that you are earning?
Retirement and Pensions
As we approach retirement age, the worry sets in that we might not have enough. But what’s enough?
How long do we think we’ve got to spend what’s in the bank?
There might be a belief that we can’t continue to work and earn. Sometimes that depends on health, but often it is more an attitude about ageing.
If you never needed to worry about money – you had enough to pay all your living costs plus luxuries – you would probably still continue to work.
Most very wealthy people do. We need a goal to get us out of bed in the morning. But we probably wouldn’t call it WORK, we would call it ‘doing what we love’.
Our brains are hard-wired to always be seeking more of everything.
If we stress about needing more money or hoping to win Lotto in order to live the ideal lifestyle, we can lose sight of our true wealth: health, relationships and happiness.
Money doesn’t create happiness, but as Mae West once said “I’ve been rich and I’ve been poor – and rich is better”.
If you need any help in getting started with budgeting please contact me to check if there is something I can help you with. I love helping people work through their money issues.