I got my mind on my money, money on my mind
I want to take a break from talking about investing and taxes and all of the other important personal finance stuff to talk about something equally important in this last week of Financial Literacy Month. Our mindset around money.
I touched on this in the very first episode of this podcast, and I’ve talked about talking about money, but now I want to dive into how we think about money. This isn’t going to turn into some, “money is fancy paper with imaginary value” rant, but more of a “let’s remember money is a tool!” speech.
Like I’ve said before – and many of my guests have said – money management is personal. As in, personal finance. What works for me might not be perfect for you, and a mother of 2 kids working a salaried job in Oregon is probably managing her money and filing her taxes differently than a freelancing bachelor in Kansas. Even my own money management has changed in the past couple of years, from focusing on paying off high-interest credit card debt, to increasing my income and putting more money towards savings and the tier 2 essentials I had put off before, like new glasses.
Here’s the thing about money…it’s so easy to have your money management be all or nothing. As in, you’re completely ignoring your bank account, paying the minimum loan amounts, you’re pretty sure you signed up for your company’s 401(k) plan, and otherwise you’ve just been winging it. Or, you’re that penny-pinching, writing down every single cent that you spend every day, you’ve been investing for years, somehow pay half the amount of rent that everyone else in your area does, and are on track to retire by age 37. We’ve talked about how lack of money can cause anxiety, but I feel like focusing on money so much can also get stressful! Unless you’re super into that, then. You do you.
I’ve seen some criticisms of the FIRE community – or the financial independence, retire early community – for being more like the penny pinchers overly obsessed with money, and we know that completely ignoring our finances also just leads to expensive problems later. For me, now that I’ve fought my way out of credit card debt, I want to aim for a happy medium. Not so anxious from lack of money, but also not anxious from obsessing over my money.
Because money is a tool and, like we discovered a few episodes ago, money can bring you happiness. Or at least, money can provide things like time to do the things you enjoy with the people you love. Money shouldn’t only bring us anxiety!
Don't forget that finance is PERSONAL! Money management should mean saving and spending money on what's important to you.
If you’ve been listening to this podcast for a while, you know that I went from living paycheck to paycheck with lots of credit card debt, to getting a full-time job, building up my freelance work, and doing whatever I could to pay off all of that debt in less than a year. Plus, you know, creating this podcast and increasing my financial intelligence. I was thinking about money a lot.
I’m definitely glad I did all of those things and put so much focus on my finances, and I think it would have been a lot harder if we weren’t in quarantine for a year. There would have been too many opportunities to go out to eat, even if I limited it as much as possible. Even little things like the money spent on makeup or gas money would have been higher without the pandemic. But now that we are (slowly…) emerging from quarantine-kinda-maybe and I’m not allocating every possible cent to paying off debt, I want to take a breather.
I’m not saying I’m going back to my old habits of ignoring my bank account and having no budget! I just mean, adjusting my budget as needed as my life continues to change. Maybe this means adjusting grocery spending vs restaurant spending and figuring out exactly what my longer term goals are. For so long, my goal was to just beat the credit card debt so now that I’m past that, I feel like I can finally actually use money as a way to get to my goals. I also want to make sure that, while sticking to my budget, I build in space for fun spending. I know I’ve compared money to food before, but I don’t want to be on a super restrictive diet that I either can’t stick to or will make me feel super guilty if I ever stray from it. Instead, I want to start building healthier habits so that I’m still being mindful about my money and continuing to make good money moves but…also…use that money towards what makes me happy!