By Wendolyn Forbes, CFP®
Your relationship with money can be like most relationships, complicated. In fact, just thinking about your relationship with money can be, like most relationships, complicated. In fact, just thinking about money can cause shoulder tension, stomach pain, and a racing pulse.
Rather than revealing the reason for your reaction, think about the steps you could take to manage your relationship with money and feel more empowered about your financial situation.
Think of the word OWN as an acronym for Organize, Work, Net [Worth]. Here are the actions you can take to OWNER your money:
Organize your money. How much money do you spend? How much are you saving? If you are unsure of these numbers, consult the resources available through your financial institution. For example, credit unions and banks, through their online banking portals, often offer tools to help members and customers track their spending habits. (Champion Credit Union members have access to Money Manager and Wells Fargo customers have access to Spending Report.) The beauty of these services is that they do the work for you! You log in and, if you’ve used your accounts, you’ll find out where your money is going. These services may also include accounts from other institutions. Additionally, apps such as YNAB (You Need a Budget) and Mint are available, if you prefer an independent service. The key is to look at what’s available, do your due diligence, and decide which service is right for you. Choose a service that you will use regularly.
Work with your money. Once you know where your money is going, work with it by earning more and establishing a safety measure with an emergency fund.
First, ask yourself if you can earn more. Look at your salary and compare what you earn to others in your field. One resource is Simplyhired.com/salaries. How long have you worked for your current employer? When was the last time you asked for a raise? Do you know how to ask for a raise? Google “How to ask for a raise on YouTube”. Watch videos. Find an approach that works for you and use it!
Second, assuming you have your money organized, look at how much money you spend in a month. Multiply this amount by 3 if you and your partner are working; multiply by 6 if you are single. Once you have written this amount, look at your accounts. Do you have enough money to support yourself in an emergency? When you have an emergency fund, you may find that you have less anxiety when it comes to thinking about your relationship with money.
Know your net worth. Net worth is a simple equation: Assets – Liabilities = Net Worth. Assets are things you own like money in the bank, your car, and your home. Assets are things of value that you can trade or exchange, if needed. Liabilities are debts that you pay off, such as a car loan, mortgage, personal loan, and credit card. Liabilities take away value from your assets. As an exercise, write a list of your assets and their values. For example, your bank account would be an asset, so you would write the amount of money in your account. The value of your home, if you own it, can be found by using Zillow.com and writing down the value. Next, write down the amount of your debts. Finally, total each list and use the formula above to calculate your net worth.
Sometimes the most complicated relationships can be made better by your decision to take empowering action. Although it can seem overwhelming to know what actions to take and when, resources are available to help you on your journey. Read, learn, act and talk with others. You will find inspiration on your journey, and you may be an inspiration.
Wendolyn Forbes is a CERTIFIED FINANCIAL PLANNER™ with Wealth Transition Finance, a member of the Advisory Services Network, LLC, where she offers financial planning and investment management services for a one-time or ongoing cost. For more information about Wendolyn’s financial services practice, please visit its website at www.wtf-asn.com.Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®,
CERTIFIEDFINANCIAL PLANNER™ and federally registered CFP® (with flame design) in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.
This material is provided free of charge and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information relating to your situation.