Cash Conscious

Cash Conscious

Know what you spend
Every financial expert suggests doing this for good reason: Start tracking your money daily, using a bookkeeping system like Quicken or Quickbooks, so you know exactly how much you’re spending and what you’re spending your money on. “At least 50 percent of my clients have never looked at what they actually spend every day,” says Tessler-Linden: “They may make $150,000 a year, and they’re still terrified to look. But simply seeing where you spend money allows you to see what’s working and what’s not, and helps you make changes.”

Get a financial physical
At least once a year, check in with a financial planner, suggests Mellan. “Look for a financial mentor, someone good with money who can teach you,” she says. No cash for a pro? Join an investment club or start your own. For help with that, contact the National Associations of Investment Clubs (finweb.com). Hiring a financial planner was a game changer for me. Scared as I was to see my real numbers—what I’d need to send my sons to college and to retire—sitting down with an expert revolutionized my relationship with money. The first thing the planner asked my husband and me was to name our top three goals. Once we’d named those, it was easy to view spending differently: It either took us toward those goals or veered us away from them. Did I really want daily cappuccinos at $3 a pop when an extra $90 a month could go toward the mortgage on a new house?

Map your plan
First, outline your basic needs: What are the concrete numbers to cover food, shelter, school and health care? Then, figure out how much you need to live a comfortable lifestyle. Finally, write down your ultimate lifestyle. Tessler-Linden suggests creating a budget or map that begins to meet these goals, making a list of what you value and then figuring out how much cash you need to make those dreams happen.

Keep your eye on the prize
Remembering that it’s a lovely vacation you’re after makes it much easier to take your lunch to work every day or bypass that stunning pair of shoes. You’re not deprived; you’re selective. One of Tessler- Linden’s clients, for example, stayed focused on her wish for a more creative life by making a “creativity” line item in her budget with subcategories “theater” and “dance classes.” Not only did that make her budget seem like a far more personal (and much less forbidding) document, it also reinforced her dreams. “Just by renaming her accounts she gave them more meaning,” says Tessler-Linden. “She aligned how she spent her money with her goals and dreams.” And there’s the meat of it. You can’t make peace with money until you know the dreams that lie behind it. Years ago, a friend told me that having a budget gave her permission to spend. I didn’t understand her then, but I do now. Knowing and planning how I want to spend money also gives me the right to spend it. I’m not saying that my financial life has become suddenly easy. I can still feel the tug of a fantasy world where I can pretend money doesn’t matter—and spend that way. But most of the time, if I remember what I truly want, my closed wallet looks just as inviting as a cappuccino. 

WHAT’S YOUR MONEY TYPE?
We each have a money style that, taken to extremes, can hobble our relationship to finance. Here, three of the most common money types—and the best ways to shape them.
1. The spender You shop to reward yourself, to make yourself feel better, to feel beautiful. Solution: “Channel your energy toward something healthier and cathartic, like exercising, meditating or even watching a movie,” says finance expert Farnoosh Torabi.
2. The innocent You don’t know how much money you have and you don’t really want to know. You may struggle with debt and live month to month, hoping your money matters will magically resolve. Solution: “Get support looking at your financial numbers,” says Kessel. “Knowing the truth of your money situation is a critical first step. Ask a friend or a financial planner to help—but make changes gradually.”
3. The saver You accumulate money to feel secure. The problem is that it doesn’t bring you lasting happiness. Solution: Set aside a certain amount of money each month for things that make you happy, suggests Kessel, whether it’s buying a CD or giving to charity. Spending may make you anxious, but sit through those feelings. Eventually your grip will loosen.