What are the healthy elements (green flags!) in your relationship with money?

Last summer, my client John asked, after much talk about unhealthy financial habits, what a healthy relationship with money actually looks like? I paused, realizing that I couldn’t quite answer him. After almost fifteen years in practice as a Financial Planner, I had seen plenty of wealthy individuals with both healthy and unhealthy relationships with money. But what were the takeaways?

So I promised him I would think on it. I’ve spent the last six months examining my financially healthiest, happiest, and most balanced clients. What did they do? What do I do, when I feel my healthiest, happiest and wealthiest?

As I put this together, I realized it may be an impossible or even a triggering list. You will probably be missing a few green flags, and that’s okay. You might notice someone important in your life is missing those green flags – ask yourself, is that okay for you?

Please see below an (absolutely not comprehensive) list of the key elements of a healthy relationship with money. You will find the “element” in bold below, with a small explanation or story told about fictional, composite clients named John, Jane, Jimmy and Joan – based entirely in fact, on actual clients and their actual decisions.

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If you’re looking to have a healthier relationship with your money this year, pick your theme:

• Income.
• Spending.
• Bills & Payments.
• Balance.
• Boundaries.
• Investment.
• Relationships.

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INCOME:

• Stand up for the value of your work. Get paid for your time and effort.
• Accept that not all money is hard earned, and you deserve some of that too. John’s business has been able to pay the household income for both him and Jane during her maternity leave. They’re already planning to enjoy this for longer and Jane might stop working altogether.
• Be open to multiple ways to earn an income or make money. Jimmy was tired of his job and was unable to find the position at the rate he wanted. He realized that he is secure in his retirement plans and decided to contract for a few years instead.
• Have an attainability/abundance mindset but be PATIENT. John doubled his net monthly income in 3.5 years. Joan was able to grow her net worth from $500,000 to $4,000,000 in 5 years. Jimmy paid off a $750,000 loan in 4 years. Jane built a business with $1,000,000 in gross revenue over 3 years.

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SPENDING:

• Spend money on yourself and your loved ones for care and for fun, in a balanced way, relative to the rest of your goals. You need to spend money to live.
• Have a good idea of how much you spend to maintain your lifestyle on a monthly basis. Jane and John were feeling anxious about their monthly spend, thinking they were way over, until they completed an analysis. They felt better as soon as they knew that they were still a little under net income and could put money towards their goals.
• Feel in control of your purchases. Your purchases should feel good in the short-term AND the long-term (no buyer’s remorse or guilt).
• No matter how much you spend, money remains to apply towards goals. Or, you put money towards goals before spending - even if it’s a small amount or the goal is to maintain status quo.
• Adjust or reduce lifestyle spending in real-time if emergencies or other needs call for it. Jane had a big purchase coming up, so she decided to cut her lifestyle expenses (eating out, shopping, etc) and live frugally for a few months to save and afford her dream wedding.

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BILLS & PAYMENTS:

• Have an organized system that keeps you on top of regular payments and the costs of living in general. Know your bill payments, deadlines, options, and keep track.
• Be aware of banking and financial fees. Make active decisions to pay for services when needed rather than being surprised by statements. Jimmy pays $100/month for private banking, but bought extremely low-cost ETFs to save money on investing for retirement.
• Accept taxes as a part of life. Save for your taxes, plan for your taxes, file your taxes, pay your taxes.
• Have a specific debt plan that focuses on payment amount or repayment deadlines. John and Jane are paying off some loans that accumulated as they set up their life and family. They chose a deadline of 3 years and are slowly, consistently making payments that also allow them to travel and live well. They are right on schedule, feel no shame, and have no stress.

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BALANCE:

• Your financial plan addresses all four financial foundations: emergencies, risks, big goals, and the long-term are each taken care of.
• Check your money regularly (but not obsessively). Know where everything is and how much you have, including insurance contracts and legal documents. At the very least, have a person who knows what you have. Check on your finances annually at minimum, if not monthly or weekly.
• Apply some money to several goals simultaneously, rather than all money to one goal. John focused on paying down personal debt, building his cash reserves, and saving for retirement by putting a little away consistently in all directions. Over three years, he was able to improve his overall net worth by about $250,000.
• Hesitate for advice, calculation, or contemplation before taking on big financial commitments. ?Jane wanted to buy a second condo at a great price, but she slowed down enough to talk to her accountant. She decided to wait for a few months so that any new withdrawals for the down payment would be tax-deferred until the next year.
• Feel peaceful, safe, secure, and joyful with money. If feelings like hatred, fear, or anger come up, consider exploring your history with money and contacting a therapist.
• Put reasonable expectations on yourself to meet goals while still living life. Allow yourself to meet demands as they rise, even if it means delaying goals.
• Understand that year over year, your financial situation will fluctuate, and your priorities will change. Jimmy and Joan planned to settle in their forever home, but Jimmy got a great job offer outside of the city. The brother Joan was supporting passed away, and their daughter can’t make up her mind about school. The plan we laid out in 2023 is almost invalid in 2024, but they have cash on hand and are ready to make changes.

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BOUNDARIES:

• Feel confident to make your own financial decisions and don’t allow others to take control. This includes where or how you work, what you buy, who you hire, what you spend or pay for, etc. Joan worked a contract that ate all of her income with expenses she didn’t understand, so she decided to leave and find a practice where she chooses her own overhead. Since then, she’s almost tripled her net income.
• Leave accounts designed for certain purposes (education, retirement, etc) alone, even if tempted or stretched. Hold true to the intention of your money and have the discipline to stick to your long-term goals by envisioning your future self.
• Call it quits, sell, or take the loss to get out of a bad situation. John’s girlfriend moved in with him while he continued to build his very established business. Unfortunately, this ended in a separation where she felt entitled to shares. John decided to pay a relatively large spousal support amount to keep the peace, close the door, and move on with his shares intact.
• Say no and do not pay for something if it’s out of your budget or you feel you are being scammed. Say no and walk away. Your friends can’t force you to pay for something and neither can that angry cab driver.
• Be selective about who you share your financial information with. No one needs to know what you spend, what your income is, what debts you have, etc. Have clear boundaries about what you share with close parties (parents, staff, friends, etc.)
• Recognize your own distorted financial thinking and/or traumas and have systems in place to manage yourself when stressed or triggered. Tell the important people in your life if you are struggling to buy necessities, make payments on time, control spending, or even look at your bank accounts.

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INVESTMENT:

• Invest regularly for mid-term and long-term goals with targets in mind. Ideally within well-diversified, rebalanced portfolios that see annual (or more frequent) monitoring.
• Be comfortable with large sums of money in your accounts. Jane spent a few months sending her savings to her husband when she graduated and started earning well before she could keep the money in her own savings account. She needed to do several cash analyses to accept that she was really earning $19,000/month.
• Understand your level of investment competence and get appropriate help. Do your research, and/or seek out a financial professional who gets you. You might not know as much as you think you do.
• Take reasonable risk. How much of the family money is going into one investment? How accessible is it? How much research have you done? How many people have vetted the investment and how? How well do you understand it? How does this impact your other plans/goals?
• Be willing to put in due diligence and walk away from an investment. Joan almost bought a commercial property; she paid a deposit, inspectors, applied for loans, and considered her long-term return. When the final price was too high with renovations, she called the whole thing off and lost the deposit. John and Jane almost bought a business with another couple; they paid for coaches, accountants, and valuations before deciding that it wasn’t going to earn enough income for them.
• Accept that sometimes you make bad decisions or that you got defrauded. ?Happens all the time; 1 in 6 Canadians were defrauded between 2014-2019, and that is certainly underrepresentation. We have few laws and little recourse. Embrace the "expensive lesson” and move on.

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RELATIONSHIPS:

• Understand that money is neither good nor evil. It is simply a tool. It is power in this world; apply accordingly.
• Understand that no one’s financial decisions are going to look the same. We all have vastly different and complex histories that dictate our priorities, values, and emotional reactions to money. No person will make the same decision that you will; no need to be jealous or judgemental of other people's spending choices.
• Discuss big financial transactions or changes with all people that will be affected by them. Your spouse, your kids, your staff.
• Financial goals that involve others or the care of others should not come at the detriment of yourself or people who rely on you. Make sure to put on your own oxygen mask before helping others.

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And finally…

• Take everyone else’s advice with a grain of salt. You know what’s best for you.

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Please, feel free to share your comments, stories, or examples of how you’ve changed your relationship with money. I’d love to hear from you.

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Wishing you a wealthy 2024.

Tanysia Komers CFP, RRC