I recently read a very, very good personal finance book called Money Drunk, Money Sober (which I'll review this Friday... oooh... the anticipation) where the authors made a brief suggestion of doing a personal inventory of your relationship with your money. At first, I was expecting it to be a rather boring listing of accounts and the ways you spend money - the traditional nuts and bolts of budgeting that most personal finance books take.
Instead, the authors gave a handful of intriguing thought experiments about one's relationship with money. They suggested creating a journal with one's thoughts on each of the topics, perhaps writing out detailed answers to each of the issues each day, then putting the journal away for a while and reading it again later. In other words, it's almost like self-therapy - you're digging through the relationship you've built up with money throughout your life and exposing the areas that really need work.
I was very intrigued by this and I gave the project a solemn attempt, resulting in some very interesting ideas and revelations even after spending a year thinking about my finances a lot. I began to also see how a lot of these ideas led directly to other ideas, and by the time I was done, I'd developed a long list list of topics that were worth exploring.
Starting a Reflections on Money Journal
Getting started There's never a bad time to start a project like this one. All you really need is a notebook to write in or a text editor on your computer to type in - nothing else is really required.
What should I do? Start plowing through this list. Ask yourself each question honestly and then let the thoughts flow from there. You might find yourself feeling that the question doesn't really apply to your life; other times, you might move off on some tangent and really invest yourself in a completely different angle.
The point is introspection - trying to understand your relationship with money as it has built up throughout your life. You're trying to understand the areas where you're weak, the areas where you're strong, and how you can improve the weaknesses and leverage the strengths. This isn't an easy process - in fact, it can be incredibly painful at times. I know that when I reflect on a particularly painful memory about money, I feel kind of sick inside, and when I think about how close my family came to a financial meltdown, it really hurts.
How long should I take? I found that when I really reflect on a topic, it's a good idea to think of the topic several times throughout a single day - or even over the course of a few days - before finally writing out my thoughts and concerns. After all, the value is in the journey. Of course, writing down the conclusions you come to is important, too, as it gives you something to look back on later when you've grown and changed over time. I suggest spending twenty minutes writing at a shot, just letting every thought in your head on the topic just flow out on the paper.
Why do this? It serves three purposes.
One, it forces you to reflect on your personal relationship with money. This is more important than you might think, because many problems with spending too much or spending too little often come about as a result of some experiences in life or things that you've never been able to really think about.
Two, it reveals to you how deep and personal that connection is. Only a small minority of people today have a relationship with money that's healthy. They see it as something distinct and separate from themselves. In truth, money is a representation of you - your work, your values, and the things that you love. When you cast it aside and make it separate from these things, it becomes abstract and valueless - and it's often the source of a lot of money problems.
Three, it gives you something to reflect on later. The answers you derive will often help you make some difficult choices and changes in your life. Having this account of where it all started can often help you later on, too, as you can read it and realize how much impact those experiences and ideas and reflections really had - and perhaps they can offer more insight to you later as well. When I read my old journals from my teenage years, I'm often amazed at how much I've changed as a person, but I also come away with some insights as well - I see the world through a whole different set of lenses.
Twenty Questions to Ask Yourself
Take one of these questions and think about it for a while as you start your day. Maybe reflect on it while you're taking a morning shower or a morning jog. Then let it pop up again a few more times throughout the day. At the end of the day, jot down a few notes on what you came up with - and what you learned from it. Even better, talk about them with your spouse (if you have one). Most of these questions will teach you something if you let them.
Remember, even if you choose not to write down responses, think about these questions, as the journey is often more valuable than the destination. See what truths these questions reveal to you.
1. What five things do you most truly love doing? Think of things that you both enjoy in the moment and also enjoy looking back on later. Do any of these cost money?
2. What five things that you do regularly do you truly hate doing? You hate thinking about them and doing them in every way. Are these in any way worth the reward you get for doing them?
3. What things are preventing you from doing more of the things you love and less of the things you hate? How can you remove those obstacles?
4. When was the last time you felt guilty about an expenditure? Why did you feel guilty about it?
5. What would you do if you went to work tomorrow and your boss handed you a pink slip? Get as specific as you possibly can. What could you do right now to make that less of a shock?
6. What five people (besides yourself) do you care for most in the world? Do they know this? What could you do to show them that you feel this way? Does your reaction involve money? Does it need to involve money?
7. Have you ever been in a situation where you felt powerless about your spending, almost as if something else was in control of it? Why did you feel that way? What do you feel was driving that spending?
8. Can you think of five ways you attempted to control your spending? Did they work or not? If they didn't, can you remember the exact moment when you realized you were losing that battle?
9. Do you remember a time in your life where you weren't concerned about money? What specifically changed between then and now? Is the difference between the two mostly "stuff"?
10. Can you name all of the individuals and organizations that you owe money to, and roughly how much you owe and what the interest is? Which one is dragging on you the most? Why does it drag on you?
11. Where do you want to be in one year? Describe your life in as much detail as you can. Can you name five actions you can take in the next week to lead you to that goal?
12. Where do you want to be in five years? Describe your life in as much detail as you can. Can you name five actions you can take in the next week to lead you to that goal?
13. Do you actually ever want to retire in the traditional sense? If not, what do you want to be doing with your life at the typical retirement age?
14. How much do you actually earn for each hour you work? Don't just divide your salary by the number of days you work and the number of hours you work each day. Subtract out the cost of commuting, clothes, social events for work, eating out, taxes, and other such expenses, and add in the hours you spend commuting, attending conferences and meetings, working late, and so on. That dollar amount is the exact value you put on an hour of your time - your true hourly wage.
15. Once you know that exact value, what else could you be doing to put that much in your pocket, particularly work that leaves you feeling more fulfilled and happy?
16. What would happen to those around you if you walked out of your house and were hit by a Mack truck and killed? What would happen to those around you if you walked out of your house and were hit by a Mack truck and put into a long-term coma? What could you do differently to cover those bases?
17. Think of ten childhood memories about money. Do these memories point to a healthy relationship with money (saving and planning for the future) or an unhealthy relationship (spend, spend, spend!)?
18. When was the last time you bought something primarily to impress someone else? Did it work? Did you ever buy anything to impress someone and had it completely fail to work?
19. When was the last time you bought something that was completely unnecessary? When you look back on it, do you feel happy about that purchase? Do you feel happy about earlier frivolous purchases? If some make you feel happy and others don't, what's the difference between the two groups?
20. When you sit down and send out your bills for the month, are you left feeling good or bad after doing this task? Why? Is there anything you can do to change that perspective?