Overwhelmed With Your Money? Try These 3 Simple Steps
Today (and on episode 72 of The Canadian Money Roadmap podcast), we’re talking about your financial life force.
It’s a concept inspired by an interesting documentary I watched a few weeks ago on Netflix—Stutz. The film was created by Jonah Hill, who wanted to showcase therapy techniques used by his therapist, Phil Stutz, that Hill found useful in his own sessions and hopes to pass on to others.
The main theme was how to get your life force back. I know, it’s a bit woo-woo to talk about a “life force,” but you can replace it with whatever word you want—energy, excitement, or well-being.
The documentary focused on three very practical things to do when you’re feeling overwhelmed or powerless in light of personal problems. They are:
Focus on your physical body: Prioritize healthy food, sleep, and exercise and you will start to feel better—we all know how true this advice is.
Focus on your relationships with others: When people are depressed or not doing well mentally, they withdraw from others… which only makes things worse. So, take the initiative to reach out to others who love and care for you.
Focus on your relationship with yourself: This is the hardest part, but potentially the most important. Processing emotions and situations through writing and journaling is a way to come to terms with yourself and bring back that life force.
These three simple (though not always easy) steps can help you when you’re unwell, depressed, or having a hard time.
Okay, cool concept—but what does it have to do with money and personal finance?
Well, just as there are some simple, highly effective ways to take care of yourself emotionally and mentally, there are simple and highly effective ways to take care of your finances.
If you are feeling stressed or overwhelmed by your finances, take a step back and focus on these three simple steps to bring back your financial life force.
Step 1: Know Your Cash Flow
Knowing your cash flow is the very simple step of understanding where your money goes each month.
Assuming you have any income, your money lands in your bank account and you spend it—where exactly does it go?
You don’t need to do anything fancy or come up with an elaborate budget, simply track your spending each month and see where your money is going. You can do this in one of two ways:
Create a spreadsheet and download data from your credit card or bank
Use a budgeting app such as Mint that makes it easy to track your spending
So many problems can be solved simply by understanding where your money goes.
It allows you to approach your finances clinically rather than emotionally. Instead of being in the dark and chalking it up to “everything’s expensive now,” you can get a clear picture of exactly what you’re spending.
Once you’ve tracked your finances for a period, look at where you can free up $25.00, or any other small amount. This could come from a subscription you don’t need or one less meal out that month. In any case, you’ll need it for step two: growing something.
Step 2: Invest Your Money
The second thing to do when you’re feeling stressed and overwhelmed about your finances is to start growing something.
It’s psychologically motivating to see something grow, so your next priority is to start investing.
Now, this doesn’t have to be complex or scary. Remember that $25.00 you found after tracking your cash flow? Take it and make a commitment to invest it into something simple and diversified. (Learn more about a diversification investment approach here).
You can even focus on saving in a high-interest account for now—the point is to commit to putting the same amount away each month and start growing something.
The stock market ebbs and flows, and the reality is that the dollar amount in your account may go down at times—this is normal.
But to reap those motivational benefits of watching something grow, I want you to track the number of shares or units you own, not the dollar amount. The units will continue to grow as you invest your $25.00 each month, which helps keep you motivated to keep going month after month.
Growth doesn’t have to start big—focus on consistently contributing a small amount and you’ll see the progress in no time.
Step 3: Give Some Money Away
If you’re already doing numbers one and two, you’re doing great things with your finances. So, this next one is more about your relationship with money and mindset.
Step three is to give some money away.
It doesn’t have to be a lot, just what you can afford and want to give. It can be to any cause, person, or initiative of your choice—something that will help your community and others who are less fortunate than you.
Why do this?
It’s simple—giving money away brings us back to reality and releases the grip money can have on us.
Giving money away is a true psychological exercise in generosity and thankfulness that will help strengthen your relationship to money and make you feel great.
So once you know where your money is going and have freed some up in your budget to start building something, you can challenge yourself to give some away.
There it is—the three simple steps to regain your financial life force when you’re feeling stressed or overwhelmed. It doesn’t have to be complicated, but you do have to take action and follow through on these things.
I’d love to hear how this goes for you. So, go ahead and listen to episode 72 for even more details, and then shoot me an email at hello@evanneufeld.com to let me know how it goes.
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Evan Neufeld is a CERTIFIED FINANCIAL PLANNER® professional in Saskatoon, Saskatchewan and offers both investing and fee-only financial planning services.
*Disclaimer: Any numbers or rates of returns are used for illustration purposes only and should not be taken as fact. Note that the information in this article is current to the time of writing but is not guaranteed as up-to-date past then.
This article and accompanying podcast do not constitute personal financial advice. Evan Neufeld is a CERTIFIED FINANCIAL PLANNER professional in Saskatoon, Saskatchewan, and provides this Canadian personal finance content for educational purposes to the public.