Taking Your Financial Security Seriously

Taking Your Financial Security Seriously

What is it about your finances and financial security that makes you think it’s okay to put them on the back burner?  Why is it that “finances” becomes a dirty word and “financial security” lands on the bottom of your list of priorities?

Interesting.

Let’s look at how we structure our priorities.

We’re incredibly diligent when it comes to doing the grocery shopping.  The minute we start running out of things, we’re already trying to figure out when we’ll stop at the store to stock up.  Triggered by what?  Popcorn?

And the minute our hair gets a little long, or our roots start to show, we find the time and money to have it cut and colored.  Regardless of the cost.

Then we have our iPads.  Just the rumor of improvements in an iPad 2 and suddenly we don’t love our existing version anymore.  And, trust me, we’ll find the money in order to stay on the bleeding edge of technology.

All these things are in the present, so we’re obviously present-focused.  (Besides, the past is what we work actively to forget … except for those niggling memories we use to beat ourselves up at night.  And the future?  What’s that?)

I know that popular modern authors like Eckhart Tolle harp on “staying in the present.”  Marianne Williamson feels the same and even complains that:

  • “Although the past is over and the future is never quite here, our minds are usually so involved with one or both of them that the present serves very little function except to form a bridge between the two.”  (From the July 2000 issue of O, The Oprah Magazine)

That’s all well and good in a metaphysical way.  According to popular quantum physics, where all things are happening concurrently and not consecutively, living solely in the present is wonderful.  However, for the less enlightened among us, the absence of concern over anything beyond today is going to make the rest of our day-after-tomorrows pretty grim.

When it comes to finances, the future comes across as almost radioactive.  Too many people have fallen for Madison Avenue’s mantra of the importance of “now” … the importance of having and being and doing today … to the detriment of your financial well-being when you are no longer willing (or able) to earn.

In order to understand why we don’t apply the same discipline to our money that we show our groceries, haircuts, and iPads, let’s look at our priorities where we earn our money.

Our Priorities Related to Our Work

We get up in time to make it to work whatever time we’re supposed to be there, whether we like it or not.  If we have jobs, there are rules we need to follow.  Okay, maybe we follow them because they’re the only way we’ll be paid the money we need to pay for our groceries, haircuts, and gadgets.  And this attitude applies to entry-level workers as well as corporate big-wigs.  (Their toys are just bigger.)

In the case of self-employed entrepreneurs, in that case the discipline has to come from the gut, because there’s no one saying what time work starts or stops.  And many entrepreneurs put in unbelievably long hours.  They are diligent about paying employees and vendors.  Government withholdings and other fees are paid religiously.  Their books are kept impeccably.  And they pay themselves enough for the groceries, haircuts, and gadgets.

But where is the automatic savings plan on the part of the employee, or the contributions to 401(k)s that max out employer matching funds, or structured SEP-IRA pension plans for the self-employed and their employees?

To be fair, it’s not as if no one saves and invests.   But the percentage of people who do not is staggering.  And the question is:  why?

Maybe because we’re so rooted in today, we don’t allow the inevitable reality of our later years to take on their full dimension.  They remain in muted grays while the present is seen in Technicolor.

And maybe we don’t internalize what the money we do spend represents.  Maybe we’d spend it more conscientiously if we looked closer at what it took to earn it.  Yearly or monthly incomes are too vague.  We need to put things in terms of hours.

What Is Our Work Worth?

Say you’re married and earning twice the median household income in the U.S.($46,000), or $92,000.  Say you are lucky enough to live in a state with no income tax, like Florida or Texas (and not New York where you’re soaked for state and city taxes as well).  After Federal Withholding, Social Security, and Medicare, your $7,666.66 monthly paycheck nets you about $5,750.  If you’re working the typical 50 hours a week most people put in today, you will have $28.75 for each hour you work.

If you start looking at your mortgage or rent in terms of how many hours of your work are needed to pay it, it might be a wake-up call for you.  If you then look at the work required in order to enjoy the budget-less grocery cart, or that haircut or electronic gadget, you might start respecting your money a bit more.

And once you start relating your expenditures to the effort you put out to pay for them, you might even recognize that one day you won’t be able to work as hard, or work at all.  At that point, you’ll wish you had spaced out your haircuts further apart and passed on the iPad 2.

An additional smokescreen is our extensive use of plastic credit cards and online direct payments.  It creates one more disconnect between how we spend our money and what it represents in terms of sweat off our brow.

Between our focus on instant gratification, our inability to see beyond tomorrow, and our desensitized view towards money, financial security appears more and more remote.

It is only by taking a critical look at our daily lives and being willing to dig into the “whys” of our behaviors that a good number of us will live out our later years as a time of personal exploration, recreation, and well-deserved fulfillment.

What are you willing to do?

  • Sharon, you’re like a shining compass needle beckoning us with a voice of reason, compassion, and empathy! Thank you for wise words of guidance 🙂

    • Anonymous

      Susan, when I write, it’s almost always triggered by something I see in my everyday life or in my mentoring. This one jumped out at me when talking about money with a group of women at an event I attended. They thought the “per hour” comparison was so useful, I wanted to share it.

  • This is really good advice. I used to do this in a way, comparing what I was spending to the scheduling fee of one transport. I haven’t done it in awhile and now after reading your advice I need to go back there. My money was handled in a more structured manner back then. Thanks for the directions, Sharon.

    • Anonymous

      Glad it was useful, Carla. Our lives get so busy, it’s easy to move away from these simple tools that make our decision-making easier … and smarter!

  • Anonymous

    Great article as usual Sharon. I can admit I am so guilty of this. It’s not because of necessarily not thinking about it. But it is thinking I don’t make enough to save yet. This is a lack mindset that I have been working on a lot.

    • Anonymous

      Jaime, I did the same thing you’re doing … and, oh, do I regret it! I missed out on all those years when the little contributions could have been growing. But as an entrepreneur, “feeding my business” always came first. If 10% of net is not possible, try putting $50 a month into a viable savings account (online ones have best interest today …). If that does what I think it will, and you want to save more aggressively, don’t up the amount. Up the frequency. First, do $50 every other week, then every week. THEN start upping the amount. There’s an energy that comes from that … somehow money does attract money …

  • Anonymous

    This is brilliant Sharon and spoke to me in so many ways. I am one of those who subscribe to living in the “now” as Tolle shares.However, as with the mindset of think it and achieve it, it must be pointed out, as you have done perfectly, that many of those who teach and preach these theories do a disservice when they leave out the fact that there is also great value in planning for such things as financial security and taking action! Great article!

    • Anonymous

      Denny, I followed the Tolle wave as well, including his Oprah interviews as we read his books together. And that did shift my emphasis to many of the daily joys I was overlooking. But I want to be sure I enjoy “my present” 10-15-20 years from now as much as I do today… 😉

  • Duchessherri

    I agree with and am guilty of everything you say. Am 69 and still need to work to supplement Social Security in spite of having had a 401k and some outside investments. The stock market was brutal to my savings plan. I had faith and was sure the market would pull through so I kept my money in the market when I should have sold. The housing market has put me in an almost upside down position on my home. Wish I had never refinanced and I did that twice. It’s been over 20 years and I still don’t own my home. I am at a loss as to what financial moves I should make now other than to invest in dividend paying stocks.

    • Anonymous

      I talk to so many women who felt they had “done everything right” by the old rules, and certainly never expected both the stock market AND the housing market to take a dive as they did. But it sounds as if maybe you were shy on asset diversification and that asset allocation was not in balance for the appropriate risk for your stage in life. FWIW, so many were hurt by having the faith you did in the market and not pulling out because they didn’t want to lock in losses. I’m not certified to give financial advice, so I don’t. What I do suggest, though, is that women look at their lifestyles and remaining assets, especially their housing, and see if they can use them creatively to get their cash flow in balance, even if it means getting out of their comfort zone.

  • Anonymous

    Sharon, your article inspired me to take a closer look at a whopping high credit card bill received yesterday. Guess what? Time to start putting a limit on how much we dine out every week. The total there was pretty scary….

    • Anonymous

      Lily, it’s so easy to have “creeping” behavior changes in all areas of our lives! Things are fine for awhile, and suddenly we realize we’ve crossed the line into excess (I know it well, part of being human, I suppose). Glad I could help you catch this one!

  • Lauri Day

    Sharon,
    Thanks for putting this into a real perspective of what is “wasted” in our daily spending. I am guilty of mindless spending on groceries, running into Target to grab dog food and coming out with a cart full of stuff I “thought” I needed. Time to get my finances in check and become aware of this simple task.
    Thanks for opening my eyes,
    A grateful follower 🙂
    Lauri

    • Anonymous

      Lauri, I finally had to start making grocery lists. And if I want something not on the list, I have to think about it consciously rather than just throw it in the basket. That made a huge difference … although late at night I’ll think about how good “x” or “y” would taste about then … 😉 (No one said reaching financial security was totally painless; you might have to forgo some Cheddar Sour Cream wavy chips …)

  • Thank you for this valuable information. I need to step up my savings program too. Excellent post Sharon!

    • Anonymous

      Glad it was helpful, Elvie. Especially when we’re building businesses, it’s so easy to reinvest everything in the business … and skip ourselves. While it sounds like a responsible thing to do, it really diminishes our self-importance, and that’s not healthy…

  • Excellent post Sharon. Working to implement the increase in savings.

    • Anonymous

      Carol, every little bit helps. I don’t know exactly how it works, but once you start saving and investing, it’s so much easier to keep doing so … in larger and larger amounts.

  • Beau Henderson

    EXCELLENT writing on a vital (yet strangely ignored) topic. If everyone could just devote a few more minutes per week to focus on their strategy…imagine where we would collctively be!

    • Anonymous

      Beau, between the two of us, we’ll unearth all the stumbling points …

  • Great post Sharon – this is the information people want to ignore, it’s wonderful you’re writing about it. And by the way, Washington state has no income tax – just a hefty sales tax!

    • Anonymous

      Jane, most people who talk about personal finance want to discuss 401(k)s and how to invest money. I find there are so many barriers to clear before most of us are ready to do that successfully. That’s what I write about … 😉

  • When you’re suddenly “over 50” and realize your future is NOW… it can be a real eye opener if you haven’t been planning for your financial future. Your article helps to take a cold hard look at reality and make a decision to “make a change”. Would love to get more info on what changes will bring the biggest results.

    • Carol, the answer to your question is so individual! But people are stuck in one (or more) of three areas: (1) they can’t get honest with their money and face it in black and white, so they’re flying blind; (2) they’re held back by money memories from making healthy financial decisions; and/or (3) they have no real direction so don’t know what they want money for. Whichever one is a stumbling block for somebody is where changes will bring the biggest results.

  • Beau Henderson

    I love your logical math! It all makes sense when you look at things on a practical level.