Personal Finance: Evaluating Your Relationship to Money - dummies

Personal Finance: Evaluating Your Relationship to Money

By Eric Tyson

Copyright © 2016 Eric Tyson. All rights reserved.

How a person relates to and feels about money has a great impact on how good he is at managing his money and making important financial decisions. For example, knowing that you have a net worth of negative $13,200 because of credit-card debt is useful, but it’s probably not enough information for you to do something constructive about your problem. A logical next step would be to examine your current spending and take steps to reduce your debt load.

Practical solutions to common financial quandaries abound in books and on the Internet, but money also has a touchy-feely side. For example, some people who continually rack up consumer debt have a spending addiction. Other people who jump in and out of investments and follow them like a hawk have psychological obstacles that prevent them from holding on to investments.

And then you have those somewhat philosophical and psychological issues relating to money and the meaning of life. Saving more money and increasing your net worth aren’t always the best approaches. Many people attach too much significance to personal wealth accumulation and neglect important human relationships in their pursuit of more money. Some retirees have a hard time loosening the purse strings and actually spending some of the money they worked so hard to save for their golden years.

Balancing your financial goals with other important life goals is key to your happiness. What’s the point, for example, of staying in a well-paying, admired profession if you don’t care for the work and you’re mainly doing it for the financial rewards? Life is too short and precious for you to squander away your days.

So as you educate yourself about managing your money, please consider your higher life goals and purposes. What are your nonfinancial priorities (family, friends, causes), and how can you best accomplish your goals with the financial resources you do have?