Memphis Real Estate Investing

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Is Your Relationship With Money Hurting Your Investing Potential?

Fri, Jul 5, 2019

relationshipwithmoney-moneymanagement-savingmoney-investinginrealestateWhether we believe it or not, all of us share a personal relationship with our finances. In most cases, we tend to view money from a clinical, number-crunching perspective. As much as we try to treat money rationally, we often do not act that way. Our emotions can be wrapped up in our finances, which leads to poor decision making, planning, and overall financial well-being. 

This can stunt savings, one's ability to invest, and your potential to grow and hold wealth. 

If you want to maximize your investing potential: whether that's getting to a place where you can comfortably start, investing worry-free, or growing your portfolio at a better rate, start by examining your relationship with money.

7 Signs You Have an Unhealthy Relationship with Money

You spend without thinking about it.

A healthy budget is key to a stable financial life. While it may seem as though you are stable and secure in your relationship with money if you can spend without pausing, this is dangerously untrue. Spending on impulse—without considering how your purchase fits into your budget—can be catastrophic to your saving and investing potential.

We've heard it said and know it to be true: spending money on what you don't need is stealing from yourself. If you want a better relationship with your money, be cognizant and intentional of every purchase. Know how it fits into your plan. 

This will help you know where your bank account really stands and keep you from being surprised at the end of the month when your funds are seriously lacking.

You're saddled with tons of credit card debt.

Credit can be beneficial. For investors, you need an excellent credit score in order to acquire financing. Many of us likely got our first credit cards to "build credit." However, we all know how easily these can be used and abused in order to live beyond our means.

If you have a lot of credit card debt, it means you're buying what you can't afford. Something is off with your budget because you are turning to credit instead of the money that you truly have. If you find yourself racking up debt, it's time to step back and re-evaluate your budget and your lifestyle. 

Be sure to check out Financial Strategies to Put Your First Investment on the Fast Track!

You don't stop worrying about money.

Money is one of the world's top stressors. It's one of the leading causes of divorce. While it can be natural to have some worry about finances here and there, to be worried about money all the time points to an unhealthy relationship with your finances. This says that you are letting your finances control you rather than you controlling them. 

This worry can point to many other problems, but ultimately it says that you're not truly steering the ship. 

Talking about money makes you uncomfortable.

Can you talk about money without feeling strange about it? The most important person you should be able to discuss money matters with is your spouse. It's crucial to be on the same page financially. Can you talk to your accountant? Your investment team? These are also key.

Discomfort around the issue of money means that you are deeply uncomfortable with it on some level. You don't have a healthy relationship with money. Instead, you ignore problems, hide amounts, keep it vague, and work on the bare minimum of information to get the job done. Get comfortable talking about money—making plans, addressing issues, and taking action steps. This is how you build a healthier bank account. 

You're always dreaming of more.

There's nothing wrong with having ambition. However, a constant desire for more money, more material things, and just "more, more, more" is indicative of a poor relationship with your finances. If you are unable to be happy with what you have and what you can afford in the present, growing your income likely won't change that. Your appetite for more will just grow. A healthy financial situation demonstrates restraint and an ability to be content in your current circumstances. 

Your emotions and your money are connected.

Emotional spending always leads to trouble. Whether you're spending money because it makes you feel a temporary high or spending money because you're already on a temporary high, there is danger in allowing your emotions to make financial decisions. 

If you feel you must spend money to have a good time, you have an unhealthy relationship with money. If you spend in order to make yourself feel good, you have an unhealthy relationship with money. Money is a tool to be used, not a fix-all for all of life's highs and lows.

You can't be realistic about your finances.

What does it mean to be unrealistic about your finances? This standard can vary, but it comes down to this: are you indulging in things you can't truly afford in order to save face or appear strong? For example, accepting the honor of being a groomsman in a wedding six hours away, knowing you'll have to attend multiple out-of-state events leading up to the event. It will cost you several hundred, if not thousands, of dollars when it is all said and done.

If you can't really afford that but still say yes, that is not a healthy financial situation. Being realistic means sacrificing things (sometimes things you want to do) in order to be financially responsible. So be realistic. Know where you stand and where you want to be. 

 

Need more help getting on the path to lasting wealth? See your free resources for investors.

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Chris Clothier
Written by Chris Clothier

Entrepreneur, writer, speaker, ultra-endurance athlete, husband & father of five beautiful children. Chris puts these natural talents on display every day. As a partner at Memphis Invest, Chris addresses small and large audiences of real estate investors and business professionals nationwide several times each year. Chris is also an active writer, weekly publishing real estate, leadership, and endurance training articles.

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