Do You Have a Healthy Relationship With Money?
How many times have you heard the phrase “Life is all about relationships”? Relationships with parents, spouses, friends, food and your own body all fall under this umbrella. So why does no one talk about relationships with money?
The way you feel about and treat money has a direct impact on your financial well-being, which can filter into all other areas of your life. Good relationships with money can result in strong savings, healthy credit, fun life experiences and being able to cover your wants and needs. Poor financial relationships can leave you stressed and scraping by to pay off debt.
There are several questions you can ask yourself that may shed light on whether your relationship needs some work.
1. How have you treated cash in the past?
Are you coming out of a bad debt situation that you have struggled to overcome or does your financial history read clean? Looking at how you have spent your money in the past can tell a great deal about how you manage it now. Perhaps you ran into financial trouble when you were younger that forced you to reevaluate your priorities. Maybe you have always put some money away for savings each month and steered clear of debt (in which case, hats off to you!). Some may still be grappling with their income and struggling to balance savings and debt. Either way, each scenario can point out your financial strengths and weaknesses.
2. How do you manage your credit card?
Many people mistakenly separate “cash” and “credit,” which can be dangerous, because the credit card balance you accrue will be paid from your hard-earned dollars. If you have a growing balance that you can’t seem to chip away at, it’s time to realize that you may be overextending yourself. If your first instinct is to swipe your card when you’re having a bad day, this also represents an unhealthy relationship with money. To avoid focusing solely on the negative, there are others who use credit as a way to help them accomplish their goals. They may use a rewards card to make purchases, and then pay the balance in full each billing cycle. This allows them to earn valuable savings and discounts, while avoiding debt.
3. How would you spend a cash windfall?
The way you would manage a sudden influx of cash speaks volumes about your relationship with money. If you would use it to help strengthen your financial position, such as paying off debt, contributing to retirement or padding your savings, it shows a disciplined approach. Blowing it all on new clothes or a vacation when your savings account is empty should prompt you to reevaluate your priorities and financial strength.