I’m bad with my money

I am bad at personal finances.

It was two years ago in February, I was finalizing my divorce and trying to rebuild my life with my kid. Brick by brick, I was constructing new existence: find a new rental apartment, figure out school questions, buy furniture, focus on my career (how many times the diving into my career saved me!). Still, it was a time of uncertainty, and my sanity depended on how much order I was able to bring to my life.

With time things started to fall together: my new apartment started to look like a livable place, my kid got used to a new school routine and met new friends, my investment in work brought higher title and respective routine. And then it came: one day I woke up with a sick feeling, that I am bad at personal finances.

Money brings uncertainty, anxiety, and fear

I guess, I always knew subconsciously, that I am not good with my money. Sometimes my ex commented that I spend money too quickly or my parents objected to an expensive gift I have bought them. But the small red flags stayed unnoticed or at least out of my immediate attention. By the end of the day, I was an adult and could manage my money.

Now, far away from my parents (they stayed in Europe) and officially divorced, the subconscious knowledge jumped into my face. Probably being out of my safety network and taking sole responsibility for my kid’s wellbeing became the final straw I needed to get the truth kick to my face.

I am bad with my money. I had no control, no idea where I am in the financial aspect, and thus had no direction or clue what or how I must do. Uncertainty sucks in general. Uncertainty if I can provide my kid made my palm sweating and threw me into an anxiety swirl. I felt like a small girl staying in front of a gigantic neon sign “You are bad with your money”, which blinded me completely. There was no way to hide, no clue where to go from there. The sign replaced the whole universe.

How much do I spend? How should I change my behavior regarding the money? Do I earn enough or must work towards earning more? How can I save? What is about taxes? What will happen to my retirement? What if something happened to me, who would take care of my kid?

It was scary.

Hamster wheel: build a career, make more money

I am good at work. I am super hard-working; I am a fast learner and I also know how to work smart as well. It is no wonder why I built my career fast. Withing initial 5 years in the workforce I managed to raise my salary seven-fold (impressive, right?).

The problem is my ability to generate higher and higher income brought me only one solution to solve any financial problem: to earn more. It didn’t seem like the problem from the beginning. Eventually, if I want a bigger house or a better car why would it be bad to earn more money for that? The problem is it always was my default and only solution to the money problem. Need more – earn more.

I set myself into a hamster wheel from hell. Want more – work more – earn more, and then cycle repeated. I always kept the next target golden number in mind. How much do I need to earn? 75? 100? 150? 200? 500? I thought as soon as I reach the next number, then I can relax and enjoy life. But numbers were rising, and the golden number was always in the future.

There was something wrong with the system. Maybe the next number is not an answer? But if it is not an answer, then what? How to jump ahead? Start a new business? Win the lottery?

I looked around. I talked to friends and strangers (thanks to internet forums and groups). And suddenly I realized that I am in so high-income category, that most people could only dream about it. So what’s wrong with me? How can I live from paycheck to paycheck earning 3 times more than the average household in my community???

Avoidance is not an answer

Gosh, I hated it, I wanted to curl under the blanket and make it go away. But there was nowhere to hide: the neon light of the sign “I am bad with my money” lit the whole me.

My kid was 10 years old. She sometimes closed her eyes in response to situations which she wanted to avoid. It is a habit from childhood, and I remember myself at her age or younger. Do not look at scary parts of life – and they will go away. The sky will be blue again when you open your eyes…

But you know it will not happen. It’s like the experience of telling unpleasant truth to your close person. You know it is better that way; it is better not to turn away but look in the eyes and live it through. It will be painful, but not for long – and it will be better right after. Do you want to exchange this short painful moment for a long time of drudging pain draining soul out of you?

I know avoidance is not an answer. Eventually, I read a lot of smart books and consider myself smart. Now it is time to walk the talk. The neon sign is unavoidable truth: what I did in past does not work. The hamster wheel is not an option anymore. I must make the step and change my mark from “bad” to “satisfactory” and eventually “good”.

What is the way out?

The realization of truth provided me good kick but did not provide any clues on how to become better. What are the game rules? How can I get a better score in this game?

Follow other’s path

There is something I’m sure of: it is the fact, that any problem I’m trying to solve is not unique in this world. Somebody already tried to solve this problem, and chances are that they left some useful traces as an article, a video, or a book. Moreover, given the current Earth population, I bet there are plenty of people who are solving the same problem in real-time right now. So, I dragged my eyes from the neon reminder of my epic failure and went to look for trails or roads of those who went there before me.

Do something

Behavior scientists tell that if you need to accomplish something so grandiose that even thinking about it sets you in a procrastination loop, the best way to start is to do something. Simple like this. The “something” is not necessarily connected to your destination. Instead of calculating your retirement plan, you can start reading on how the compound effect works, or even start learning hidden features of your spreadsheet software. The act of doing something eventually starts the flow, which brings you to the point when you start moving in the needed direction.

One thing at a time

It is easy to become overwhelmed with information, which can set you back to the “I’m just bad” mindset versus “I’m learning how to be better”. So be kind to yourself. If you do not understand something, take your time. Or better sleep on it (no kidding, that is how our brain works: the complicated concept is better digested during sleep). If the subject is too big, focus on the next simple question – and find the answer.

Explain to others

One of the best ways to understand something is to explain the concept to others. I often use my pre-teen daughter as the rubber duck (a little bit more active than a normal rubber duck). She will listen if my explanations are: 1. Simple enough 2. Quite interesting. These prerequisites already require a good bit of understanding. Not mentioning the fact, that when you talk something aloud, your brain builds new connections stimulating “aha” moments and deep understanding.

Start from chaos and then make a plan

When we start to build an understanding of any new field, we are like newborn babies in the very beginning. We start moving around, get sporadic pieces of information, sometimes get scared by the known or overwhelmed by the unknown. But eventually, we start mapping all these disconnected pieces of information together to a single understanding canvas. From this moment, even if we are still in chaos, we can start building a plan on how to investigate all parts of this previously unknown field. The plan structures our efforts and leads us to explore. With each new field we feel more empowered and calmer, backed up with acquired on the way knowledge.

Jug fills drop by drop

Money is intimidating in the beginning, but personal finance is the same field of knowledge as math, physics, or phycology. The key here is to search for knowledge and understanding, implement respective findings in your life and seek services or advice when you need them. All these actions seem minor on the way, but when you look back you are amazed by the journey you have undertaken.

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It was two years ago, that morning when I woke up seeing the gigantic neon sign “I’m bad with my money”. I have not done any bold movements: my kid is still in the same school, I am pursuing the same career (making some progress there), I still rent the same apartment. But something has changed dramatically: I feel in total control of my money. I know my net worth, I have a retirement plan, I know my spending pitfalls (and still working on them), I save enough money, I finance my long-term goals.

I must confess, this control feels amazing, I have no single negative emotion attached to money (I even enjoy paying my bills). Now I do not have the gigantic neon sign hanging over me. “I’m good with my money” feels more like a night candle, which quietly glows bringing happiness to my life.