Let's talk about money
Because we don't do it enough and yet managing it well is an essential life skill. Plus the 5 best podcasts about finance, and more.
Talking about money can stir up all sorts of unwanted feelings. Combing through every penny you spend can be painful, embarrassing even. This is because we have an emotional relationship to money, which in turn is influenced from many, often unconscious, directions.
As a result, most people prefer not to talk about it — anything to do with income, net worth, debt and other issues surrounding finance can provoke feelings of guilt, shame or embarrassment, even anger.
But, the only way to break the taboo, particularly for women for whom the financial gender gap is significant, is to get it out in the open. Talking about money will empower you to take action and establish the financial freedom you deserve. So here we go, the first of a short series of posts about money...
Where to begin?
If you want to discover your priorities, look at your bank statements. These will show you what you value, because they will show you how you spend your money.
And yet, in conducting some deeply unscientific research (ie I asked my friends) I discovered that many of us do not in fact routinely check our bank statements. Let alone review monthly spending patterns or even total the amounts spent in common categories such as food, household, transport, children etc.
But if you don’t know how much you spend on the basics — your fixed costs — how will you know what’s ‘spare’ for the variable costs of life, like a sudden hike in energy prices, birthdays or unexpected roofing bills? And, how will you know how much to save for the future, whether a pension, extension plans or a dream holidays?
It’s hard though, I know. We work hard and we believe we deserve nice things. But if we don’t know what we’re actually spending on, then we are not making the most of what we earn. And as you’ll read later, our money = our time, and managing the former dictates the amount of choice we have on how we can use the latter.
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I admit, my vision of future financial planning used to be winning the lottery (it would have helped if I’d bought some tickets). Then in January 2020, I read an article in The Sunday Times called Light Your Fire, Do The Sums to Enjoy Early Retirement. It was about the FIRE movement, an acronym that stands for Financial Independence Retire Early. I was intrigued. So much so that I wrote about it in my book Happy Inside (see page 24), filed the cutting and added the name of the financial adviser mentioned in the article to a long list of things to follow up.
Fast forward to today and I signed up with Cleona Lira of Conscious Money, who was that adviser (you can read her Conscious Money Newsletter for free). I’d followed her for a while first on Instagram, and liked her holistic approach to financial literacy, which starts with really getting to grips with any emotional blocks you might hold around money (more than I imagined; to be discussed in a future post) before exploring your thoughts about saving or investing. She’s also super UNpatronising, which after dealing with many a (I’m sorry but usually male) finance person who made me feel like an idiot, was the deal-maker.
She also recommended right up front that I read a book called Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez (first published in 1992). She described it as a book about “transforming your relationship with money, that’s about so much more than money”. And it was true. I think it might actually have been one of the most pivotal books I read last year.
And for the whole of 2023 I put some of its core tenets into practice. Very roughly, for me, these were as follows:
I noted every outgoing expense to really evaluate my spending patterns.
I recognised that my time was my most precious resource.
I understood that money is simply what you choose to trade that time for aka your tangible, finite life energy.
And that some ‘expenses’ were absolutely not worth it.
In fact, the big eye-opener was that some ‘expenses’ were simply compensatory spend for being unhappy about where my time was being spent! Also, that financial independence has nothing to do with being rich, and everything to do with the experience of enough — having enough, being enough.
But I’m not going to attempt to summarise the entire nine steps to financial fitness of the book here, that would be to do it an injustice. Instead, I’ll share below some of the bits that truly resonated with me as insight into why I’m suggesting that you read it too — incidently, I listened to it first on Audible as it lends itself very well to that format, but found I wanted a physical copy afterwards to refer to (a worthy double expense!).
The Money Trap
“Most of us cling as long as possible to the notion that there is a way to live that makes more sense, that brings more fulfilment and has more meaning. but over time as our jobs wear a groove into our lives and our days fill with to-dos, the idea that we could have a more rewarding existence seems to fade.”
“Aren’t we killing ourselves — our health, our relationships, our sense of joy and wonder — for our jobs? We are sacrificing our lives for money, but it’s happening so slowly that we barely notice.”
“Many of us are out there making a dying [the author’s flip on making a living] because we’ve bought into the pervasive consumer myth that more is better.”
“We project onto money the capacity to fulfil our fantasies, allay our fears, soothe our pain, and send us soaring to new heights. In fact, we now meet most of our needs, wants and desires through money. We buy everything from hope to happiness. We no longer live life. We consume it.”
There’s also questions, forcing you to dig deeper into how you really want to spend that life energy to prompt a re-evaluation of where you’re currently at with your one and only precious life… Or, to put it another way, questions that prompt you to consider, how can you spend less time working but more time doing the things that have true value to you? How can you organise your life so that you can actually have a life? And, most significantly, what are the lies that we tell ourselves about money and the dreams we think we can’t achieve if we don’t have enough of it.
What did you want to be when you grew up?
What did you always want to do that you haven’t yet done?
What have you done in your life that you are really proud of?
If you knew you were going to die within a year, how would you spend that year?
What brings you the most fulfilment, and how is that related to money?
If you didn't have to work for a living, how would you spend your time?
And once you’ve started logging every expense, try these for size regarding every potential purchase before you buy anything…
Will I receive fulfilment, satisfaction and value in proportion to life energy spent?
Is this expenditure of life energy in alignment with my values and life purpose?
How might this expenditure change if I didn't have to work for money?
But let’s pause for a moment as you might have read this far and be thinking, well, it’s all right for some, if you have enough money then you have choices. I can’t just leave my job even if I wanted to. So let me say loud and clear, this is not what this is about. This thinking is another reflection of your relationship with money, not a fact of money in itself.
Ultimately, the hard truth is that most of us use our time making money to spend on things we don’t need, striving for meaningless goals or instant gratification, often to impress other people rather than being truthful to ourselves about our real needs and wants, all the while getting ourselves into wholly unnecessary debt.
To finish, let me take you back to my opening paragraph. If you looked at your bank statements right now, would your expenditures reflect your values? Or would they reflect habit, peer pressure, dissatisfaction or boredom? Or to put it another way, how much money do you spend mitigating the frustration and discontent of your job, relationship or life?
Becoming more conscious of this work/spend cycle, not quitting your job, is the first step to breaking it = financial independence.
