Sometimes I don’t know why I write these types of blog posts. I don’t do it because I feel like I know more than other people. I don’t necessarily do it because of the copious amount of wine I may or may not be consuming. I think I do it because of the vast amount of financial situations I get to sift through on a regular basis. While I’m outwardly trying to assist people in making the best possible financial decisions, internally I’m asking myself very weird questions about the people I’m assisting. Don’t worry, I’m not wondering if they’d make a good skin suit or something. I’m wondering about what role money plays in their lives.
Over the years I’ve discovered there are four primary reasons why people need money. Sure, you can certainly take the boring, dumb view of this and say this is a stupid question. But we’re all better than that. Money is man-made. Mankind decided that we needed it, and we’ve decided they were right. Surprisingly enough though, we’ve evolved from this original decision, and individually, we need money for a few standard reasons.
1. To makeup for the past- You may currently have a very healthy, grounded view of money, but your past may not. Unfortunately, until your past obligations are satisfied, your past wins. These obligations come in many forms: debt, judgements, garnishments, collections, and even over-commitments to mortgages, student loans, and car loans. If you have ever said to yourself something like “I would never have paid this much for a house, if I had it to do all over again,” then you need money because of that past decision. As daunting as this realization is, it’s not the end of the world. Once you clear the past, then you can firmly form your money relationship with the present and the future. This should be your aim. Hell, it’s just how it works. It’s a process.
2. To fund a dream or lifestyle- I’m not hating the player, or the game. If you need money in order to fund a chosen lifestyle or dream, cool. You just need to make sure this doesn’t turn into funding your past. Have you always wanted to open a bakery? Awesome, use money to do this. And make me some donuts. Have you always wanted to live in NYC? Cool. Do it. Have you always wanted to send your kids to private school? Cool. Public schools are better, but cool. Half-kidding.
3. To fund a habit- Financially speaking, is a shopping habit any worse than a drug habit? Is a dining-out habit any worse than a drinking habit? Is an over-gifting habit any worse than a gambling habit? Again, financially speaking, I don’t think any of them are different from each other. Addiction is addiction. I’d love to tell you about the two worst clinically addicted individuals I’ve ever come across, but their spending habits make me uncontrollably sad. Seriously. Why is your insistence on spending money on something trivial, okay? It’s your money, feel free to do what you like. But the reality is that you need money because you have a jones for an item or experience that has taken ahold of your sensibility. This is why YOU need money.
4. It’s simply a byproduct of work- A job’s main purpose doesn’t have to be the generation of income. Income can simply be the byproduct of work. In my opinion, this renders money worthless. I believe this to be a good thing. I understand how weird this sounds. If you understand this, then you understand it. If you don’t, you have yet another reason to think I’m a jackass. There are some very centered individuals both objectively wealthy and not, that feel as though money is silly. I hope to get to this point in my life. It takes a tremendous commitment to cause and purpose to render money worthless. Wealth alone, even vast wealth, doesn’t get a person to this point. It’s a combination of reduced financial obligations, a purpose-driven life, and effortless frugality.
Why do you need money?
There’s one thing I hate talking to Mrs. Planner about: what happens to characters in a book or movie after the story ends. You see, she’s a literature teacher. She likes talking about the characters, what they’re thinking, and what they may hypothetically do next. I dislike that. It stresses me out. Why? Because the characters don’t exist, and I find it to be a waste of brainpower. Does this make me pig-headed and dumb? Absolutely. But I refuse to spend one second discussing the crappy ending of Vanilla Sky or any other movie. It ended, let’s leave it that way.
But what if it was important for Mrs. Planner and I to discuss why Forrest Gump might end up being President of the United States? Then I would have the conversation. I would just need to set some ground rules that would prevent me from going crazy.
It’s quite possible that you hate talking about money with your significant other. And if you don’t, there’s a possibility they hate talking about money with you. But unlike my aversion to to discussing whether or not Dirk Diggler will ever work again, your financial life actually matters.
What if your money conversation didn’t stress you out? What if they didn’t suck? What if they were actually awesome? I can make that happen. I can prove it. I once had a client blame me for their new child. That’s right. A child was the result of post-financial talk vibes. And if the conception of a child isn’t proof of a successful meeting, then I don’t know what is. Know what I’m sayin’?
Financial conversations generally suck the way middle school dances sucked. You only half want to be involved with it, and you don’t want anyone to notice your blemishes. Below, you will find the perfect plan for having a great money meeting. In fact, I plan on whipping this out on Mrs. Planner this weekend. We have great money conversations, but I refuse to ask you to do something that I wouldn’t personally do myself.
Don’t go running home tonight and whip the following list of questions out on your pookie. Spontaneous money conversations often lead to stress. Either email your snuggle bunny right now to ask if it’s cool to talk about money tonight, or schedule the talk for the weekend. You may present it like this, “hey baby, a very handsome ginger gave me some good tips for having a productive financial conversation. Can we take 30 minutes to discuss this on Saturday afternoon?” Believe it or not, allowing the other person to get their mind right, is an important factor in this discussion’s success.
When it’s go-time, allow the following 12 items to guide the conversation. Feel free to open a bottle of wine.
1. Is there something that I’m currently doing, in relation to our financial life, that stresses you out?
2. What’s my most annoying financial habit?
3. What am I good at, when it comes to money? (Hopefully he/she doesn’t say “spending it”)
4 . Do you worry about money?
5. Do you think we were in a better financial position 12 months ago?
6. Do you think we’re trending toward being in a better financial position 12 months from now?
7. If we could wave a magic wand and eliminate one expense, what would it be? Do we need a magic wand to eliminate it?
8. Do you mind if I answer the same questions, as they relate to you?
9. What is the first step we need to do, in order to create some positive momentum towards addressing some of the concerns we just discussed?
10. Perfect. So I will _________ in the next week. And you will ___________ by next week. (This is where you collectively assign tasks and homework to begin taking action on getting better)
11. This was great, but we shouldn’t celebrate over a nice dinner out.
12. Let’s go hug aggressively.
Money conversations are hard, because most people don’t know what they need to do to make progress. This plan will help you make progress. You are going to need to be transparent, humble, and understanding. And if the meeting does go very well, send me a birth announcement.
Got this great email the other day. It’s an excellent question. And by the way, I LOVE giving free advice.
In my weekly newspaper column for The Indianapolis Star, I tend to write about the behavior and decisions that affect our financial lives. This week I wrote about taking the time to measure your priorities against your actions. For many of us, our spoken priorities are simply lip service once we examine our actions. Check out this week’s piece for further explanation.
What are your real financial priorities? (courtesy of IndyStar.com)
This is my son Ted. He and I were playing last night, and something hit me: joy is a powerful thing. Look at Ted. He is filled with joy. His joy is contagious. I felt his joy last night, and this picture of his joy brings joy. To me, joy is overwhelming happiness. Not superficial contentment, but overwhelming excitement. Who doesn’t want to feel joy? What if you could use joy as a tool during one of the most challenging times in your financial life, if not your life in general?
For a moment, let’s look at an example of a situation that requires significant change. Dave was a director of business development for a mid-size tech company. He made roughly $120,000 per year. His financial life was hell. While his income is certainly attractive, the debt that he had incurred was choking him. He owed roughly $90,000 in credit card and unsecured debt. He was miserable. Most people would be miserable in this situation. He was paying nearly 35% of his income towards debt, and another 35% of his income towards a car payment and his mortgage. Dave got in the habit of spending every single dollar he made. If he was paid a $7,000 bonus, it was spent within two weeks. This made him content, but it didn’t bring him an ounce of joy. To dig out of this massive hole, Dave needs to be incredibly focused and disciplined. But I also think he needs joy.
In this situation, Dave will be forced to say “no” to many things. He’ll say no to things that he’s habitually spent money on weekly over the last five years. This constant no festival can be daunting. I’ve urged him to say yes. He won’t be saying yes to purchases, he’ll simply be saying yes to his future. He’ll be saying yes to his mental health. He’ll be saying yes to joy. Dave will be faced with incredibly challenging financial decisions over the next several years, in order to get out of this situation. I believe that he needs to focus on being out of debt, versus focusing on being in debt. Every credit card payment needs to bring joy, not despair. Every major decision, such as downgrading his car and house, need to bring joy, not sadness.
If you currently are spending ridiculous amounts of money on stupid things that don’t bring you joy, then stop. Is that daily $10 lunch bringing you joy? No. But saying yes to your future by saving over $200 per month certainly brings you joy. We all face financial challenges. I know that I do. I’ve decided that I’m going to stop saying no. Instead, I’m going to start saying yes to my financial goals. This brings me joy. What can I say, I just want to be like Ted.