Financial Peace of Mind: An Honest Snapshot

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Financial Peace of Mind Snapshot

Getting to financial peace of mind is a schizophrenic activity.

On the one hand, we’re told we ought to stay present … “live in the present.”  And living in the present, especially if finances are tight, means every time we have a good intention about paying down our debt or setting money aside for retirement, something in our everyday life rears its head and distracts us.

On the other hand, there are moments when we can clearly hear a song blaring in our heads and it starts with “Don’t stop thinking about tomorrow …”

That contradiction dramatically increases the odds that we’ll live in constant anxiety about having financial peace of mind today … and financial security for our many tomorrows.

So, to give you an easy measure of whether you’re on your path towards control over your finances, I’ve selected seven questions for you to answer.  Once you’ve done that, then decide if you should pat yourself on the back … or stop finding excuses and get serious about bringing your finances under control.

Here are those “financial peace of mind” questions:

  1. What dollar amount do you have in your “rainy day” emergency fund today, to cover a blown car transmission, an uninsured accident or whatever?  $__________
  2. If something were to happen to your income source, how many months of expenses do you have saved in an easily accessible place?  (That is, not as equity in your house or some other non-liquid assets.)  _____ months
  3. What is the total amount of all your debt, excluding your mortgage?  $__________
  4. If you made it a priority, how long would it take you to pay off your entire debt (excluding your mortgage)?  _____ years _____ months
  5. What percentage of your annual take-home pay do you owe on your car(s)?  _____%
  6. How much do you have in your retirement accounts (IRAs, SEPs, etc.)?  $__________
  7. Are you putting 10-15% of your gross annual income into retirement savings?  __ yes or __ no

My purpose here is not to give you formulas or targets.  Instead, the purpose is to give you a clear snapshot—that you yourself can interpret—of how well you’re doing.  It may also help you identify where you may have a “leak” in your plan to reach financial peace of mind.

Each of us has a very different personal definition of what total peace of mind looks like … and feels like.  It may be colored by differing lifestyles, expectations and anxiety triggers, among other things.  However, it does follow a certain basic framework.

That framework includes:

•    Having ready cash for small emergencies
•    Having accessible funds to handle larger unknowns
•    Being debt-free … (first excluding, then including your mortgage debt)
•    Being on track with a solid plan to fund your retirement

That’s what lets you sleep like a baby.  That’s what’s called financial peace of mind.

Let us know in the Comments section below if there are areas you feel real good about … or areas where you feel maybe you could do better.

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Bio: Sharon O’Day lost everything at age 53: her home, her business, everything. But how could that be? She’s an expert in global finance and marketing with an MBA from the Wharton School. She has worked with governments, corporations, and individuals … yes, she was the secret “weapon,” if you will, behind many individuals in high places. Yet she did! Since then, with her finances completely turned around, Sharon has gone on to interview countless women. She’s done extensive research to understand how that could have happened, especially with her strong knowledge of numbers and finance.

The surprising answers are shared in her posts, articles and an upcoming book. Today her mission is to show as many women as possible how to become financially free for the long term, through her coaching programs. She has developed a step-by-step plan to get past all the obstacles that keep women broke and scared … and from reaching the financial peace of mind they so deserve … if they’re willing to do what it takes!

  • Some great tips here Sharon! For me having a small emergency fund is a must. It’s always a temptation to dip into it in a shortfall month but then I know that’s the month that we will need it!

    • That emergency fund is the first step towards sleeping well at night, Carolyn, because of the feeling of control it gives us. You’d be amazed how few people have one!

  • Great information, Sharon.The questions really made it clear about what financial peace of mind looks like for me. It’s easy to go about your day and not think about planning- until something happens. Thanks so much for sharing your wisdom!

    • I thought it would be useful to tell readers in a few words what makes up financial peace of mind, Lisa. Then it’s up to them to configure it as they see fit!

  • I love the way you explain these kinds of important financial considerations, Sharon. You make them feel doable, while at the same time, making one want to do them. Thanks so much!

    • I’m glad that helped define the concept in a way that makes it easier to take action, Lisa. We can all find a million reasons not to do some things … And finances tend to land on that list!

  • olgahermans

    An emergency fund is a must especially in these days where we hear about so many catastrophes and damages done in the earth. Thanks for the questions!!

    • You’re right, Olga, we DO hear about so many more incidents today. But regardless of that, having an emergency fund is critical for all “just in case” situations.

  • Financial responsibility is KEY

    • All sorts of personal responsibility are important, Carly and, within that, financial responsibility is huge!

  • Sharon, this is great information, especially about having an emergency fund. The framework of what that financial snapshot looks like for financial peace of mind really works…love it!

    • Sometimes it helps to see the whole picture … hence the framework. As I worked on this article and simplified more and more, it emerged!

  • Martha Giffen

    What a great group of questions to show us the roadmap to financial peace. Your blog should be a “must read” for young people. That way, they can get into the right mindset early and understand what a working financial plan looks like! Great post, as usual!

    • I’d love to see these concepts integrated in educational programs, Martha. I think I heard this week that only 15% of high schools require ANY personal finance education …

  • myspalmer

    Very, very true Sharon and a great worksheet by the way. It really puts things in perspective. Maybe not a happy one, realizing whoa there’s some thing that need to be done, but at least now we know! Awesome post Sharon. Did you enjoy your labor day?

    • My Labor Day was terrific! Hope yours was too … I know this article can be seen as an eye-opener, but if at least we know clearly what’s needed, we know where to focus our energies!

  • Lauralee

    Loved the fill in the blanks. Really makes one think.

  • Certainly good food for thought. This is something that we are thinking a lot lately; we do not have a lot of debt, very minimal but we’ve decided to get rid of it all. Thanks for a great post. x0x

    • “Debt-free” is a powerful state … and state of mind, Norma. But be sure you also have an emergency fund. Then when those two are in place, the multi-month expense backup is next … congratulations, BTW!

  • TBLcoaching

    We have emergency fund cash and very little credit card debt. However, we are not doing well when it comes to long term retirement or putting money into savings to cover expenses for 6 months. However, we did set up our savings account last month to take money out of our paycheck automatically so we are slowly starting to build that nest egg. Thanks for the reminder…and the gentle kick in the rear to get moving towards our financial goals!

    • Wow! You’re SO on your way! The automatic savings account is powerful because you won’t see the money and won’t have to make the decision each month. You may say “slowly build” but it starts taking on momentum before you know it. Congratulations!

  • Really useful article. We all need to follow your tips for financial peace of mind, indeed!

  • Maria Stefanopoulos

    This is a spot on Sharon, well said. I have to check mine using the questions you have here to keep me in track with my finances. I like to save for rainy day. Thanks for sharing this, it will help many of us here…Great post!

    • Answering those simple questions is an easy way to keep your finger on the pulse of your finances, Maria … 😉

  • What an awesome set of questions. Really got me thinking! I have shared your wisdom 🙂

    • Thanks for sharing this, Anita. As I wrote it, I realized how powerful it could become …

  • Jamie

    i really need to sit down and write this out. My clear goal is to get all my debt paid off. I ideally know the debt I have on my belt, and know a good chunk of it will be gone in 2 1/2 years… beyond that it doesn’t look too pretty 😉

    • Just one piece at a time, Jamie. First a little relief in the way of an emergency fund and then your debt. You’ll get it all done if you’re following a sound plan …

  • Sharon–I am interested in knowing what kind of response you get from your “listen to this” option. And, if it is very positive, how do I go about doing it for my blog? Please respond to my at mbeck333@mac.com since I might miss the comment if you write it here. Thanks!

  • There’s always something that I can learn about finances. It was something my family never taught us growing up.

    • Denise, there were so many things our parents didn’t teach us! And how to handle our money was sure one of them. But it’s never too late … 😉

  • Susan Preston

    Wonderful post, Sharon! Great “financial peace of mind” questions! Thanks for sharing your Amazing knowledge and wisdom, thanks!

    • I’m glad you found it valuable, Susan … always happy to share whatever I know!

  • Your questions are spot on to helping me see where I need to do some work. Keeping the emergency fund fluid while raising children seems to be a real challenge! Thanks for sharing this…it is always helpful to have your guidance to gain financial peace of mind!

  • Just as I expected, you delivered another powerful post Sharon. Your questions are thought provoking and have really given me a path to see why I don’t sleep like a baby. Thank you for sharing your knowledge with us.

  • Pat Moon

    Sharon, a great down to earth article touching on the basics of financial peace. We had our rainy day fund and retirement set up mainly in real estate investments but most of it has disappeared in this latest downturn of the economy leaving us with very little peace of mind right now in regards to finances.. so we are having to cut every corner possible to try to stay afloat. We are to the point of really having to trust God at every corner.

  • Mandy Edwards

    Wow – I have some work to do! Those are great questions to ask ourselves!

  • These questions are certainly an eye opener Sharon. I can see I have some work to do to get to my financial peace of mind.

  • Definitely have some work to do! Love the financial worksheet Sharon, it really helps to have a visual of where you are really focusing, OR NOT, you money and priorities.

  • You are always helpful, supportive, and informative!