Your life should run your money – your money should not run your life
Every February, we celebrate Black History Month by reflecting and honoring the contributions and achievements that African Americans have made throughout history, while also recognizing that the fight for racial justice is still necessary to this day.
This year's theme for Black History Month is “Black Health and Wellness,” as outlined by the Association for the Study of African American Life and History.
Do you have a healthy relationship with money? It may seem like an odd question, but it is important that you understand the link between your money and your well-being.
Is Your Relationship with Money Healthy?
A study by a Utah State University professor quantified the link between money-related tensions amongst couples and the risk of divorce. Beyond sexual relationships, money fights were the most common harbingers of a breakup. Couples who disagreed about finance once a week were over 30% more likely to get divorced than those who argued over money a few times a month.
Money and wealth are not the same. Money is physical or electronic currency that may be spent immediately for goods and services. Liquid money is a component of wealth, but wealth includes assets that are not liquid and not immediately convertible to spendable cash.
An example is a person who is “land, house or business-interest rich” but cash poor. We hear about liquidating personal and business assets at fire sale prices to meet a cash squeeze, or to pay estate taxes or other pressing obligations.
Our relationship with money may be healthy or unhealthy. How we regard our finances is a function of thoughts, beliefs and emotions formed since childhood. Often we deal with money in the same way we deal with relationships. If we are careless in our relationships and our personal behavior, our finances reflect the same lack of care.
How often do we read of the rising Hollywood or athletic star destroyed by drugs and alcohol? Whether born of insecurity, narcissism or some other need, money may be the fuel that fires destruction.
Conversely, there are those who are loving, caring and giving, some with wealth and some with little, who are happy and well-adjusted, leading meaning-filled spiritually rewarding lives.
Why Do You Pursue Money?
People do not pursue money for its own sake. Money represents other things. It may be power, a means of control, satisfaction of competitive urges (“She who dies with the most toys, wins”). The most basic role of money is security. You want to know that you can meet your everyday needs and those of the people you love and care for.
A certain level of available money, along with no debt or manageable debt, may allow one to sleep at night. Your first task in personal planning is building a healthy financial cushion, managing debt sensibly, with insurance safeguards in place relative to property, liability, health, disability and death.
Money is Freedom
Having insufficient money to meet needs and satisfy obligations is a major source of tension in families, in business relationships and in one’s own head. Having ample money and liquidity offers choices and can remove constraints.
Financial freedom may bode good or ill. We can make good choices, or bad choices. Chronic overspending, false friends and bad influences, immoral behavior and a life of dissipation are a slide into ruin, greased by money.
If our relationship with life is one of balance, our money behavior can reflect similar satisfactions. One of the most important questions a financial professional can ask is: “What is the money for?”
The answer should not consist of things, as in, “I want to buy a car.” Frame money in terms of relationships – what it means relative to those you love and care for, your spiritual orientation, your sense of meaning and satisfaction, your obligations to others, what makes you comfortable and uncomfortable, your legacy.
- What challenges do you see in the next 10 years?
- How does money relate to the alternatives needed to meet each positive or negative challenge?
- Is money a resource that can power alternatives, or a constraint?
- How does money relate to what you wish to experience, the outcome desired?
- How do you define money?
- How much is enough?
Money does not define you. Your life should run your money – your money should not run your life.
Again, what is the money for? Make a healthy relationship with money your goal.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by FMeX.
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