There are thousands of books and articles written on how to improve your relationship with your spouse or significant other. Sometimes relationships do not work out and you have to part ways. You may need to divorce your spouse. Unfortunately, you can never divorce your money.
Money is with you every day, even if you do not consciously think about it. Just as you cannot live without air, you cannot live without money. Even monks need money.
If money is so important in our lives, why do so many people have terrible relationships with their money? Why is it that people do not hesitate to spend thousands of dollars on therapists to learn how to love and respect others but do not give a second thought on how they treat their money?
If you are just beginning to think about your relationship with money, here are three tips you may find useful:
In romantic relationships, it is important that each partner feels valued. I ask that you value your money as you would a parent, spouse, or friend.
Think about how hard you need to work or how much time it takes to earn money. If you are an hourly worker, you know how much you are paid per hour. If you are a salaried employee, calculate your hourly rate. If you are a business owner and your business is not profitable or operates at a loss, you may not be paid anything per hour.
When I make a purchase, whether clothes, a car, or a pedicure, I ask myself how many hours I will need to work to pay for it. If you calculate you make $40 per hour, after paying federal and state taxes you may actually make $30 per hour. So if you want to make a $450 purchase, ask yourself if you are willing to work 15 hours (about two days) to pay for that purchase. I find this exercise helps to understand the true value of my money and helps me prioritize what things and experiences are really important to me.
If you have to put items on your credit card and are unable to pay off your balance every month, those items cost more. For instance, if it takes a year to pay off a $450 purchase and your credit card interest rate is 22%, that purchase did not cost you $450. It actually cost you $549. You will need to work additional hours just to cover the interest.
Being thoughtful as to how you spend your money shows that you value it.
How could you sustain an intimate relationship with your partner if you did not spend any quality time together? It’s important to spend quality time with your money.
Set aside at least half an hour once a month to visit your money. Look at what you spent on your credit and debit cards over the past month. Check out your monthly statement for your retirement account.
Are your investments performing to your satisfaction? Is there a new app that can help you budget easily? Can you refinance your mortgage to get a lower rate? Is the balance on your credit card increasing? Are there a couple of personal finance blogs you would enjoy following so you can learn more about money?
Each month ask yourself, “Am I earning enough money to cover my expenses and contribute towards my retirement?” If the answer is “no,” ask for help from a financial advisor, subscribe to an online course, or purchase a few books or borrow them from the library.
Once a year go through your home and see what items you no longer use. Maybe you or your children have clothes and shoes you no longer wear. Maybe you have sports equipment, games or toys your children no longer enjoy. Maybe you have small kitchen appliances, dishes and utensils you no longer use. If you itemize deductions on your tax return instead of taking the standard deduction, you may be able to receive a tax deduction for your charitable contributions which will lower your income tax. When you pay less tax, you keep more of your hard-earned money.
If you do not want to donate valuable items such as jewelry, research how much money you can receive by selling the jewelry. There are online auction sites such as Worthy that help you sell your engagement ring and other jewelry such as necklaces and watches with convenience and fair and transparent pricing. You can use the proceeds from the sale to pay off debt or invest for your future.
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