This approach soon had me realizing that money is about a lot more than dollars and cents. It’s about possessions and wealth, for certain, and self-identity, even dreams, relationships, and community.
Your labor and your time are particularly crucial considerations relating to money.
It’s easy enough to figure out what you’re paid by the hour. Or, if you’re on a salary, to divide a week’s income by the number of hours you’ve worked.
But that’s not a true figure. Joe and Vicki would have you factor in the hours you spend commuting, plus fuel and related transportation expenses. Add to that clothing, if you have to dress a certain way, and even your hair styled or other grooming.
Add it all up and you may realize that a higher-paying job can cost more in the end than the old one.
Joe and Vicki then use time as a means to evaluate a given purchase. How long did I have to work to earn what this item or service costs?
That is, money is no longer an abstract figure on the bill. It represents time you’re exchanging. And, as they say, there’s only so much time in a day.
No wonder Jo and Vicki called their book Your Money or Your Life.
Try this as you go through the week. How much of your working time are you spending on groceries? How much on a cup of coffee? Or gasoline? Or that big dinner out?
If you’ve been using the tiny spiral notebook I suggested to record all of your expenditures, down to the penny, you’re getting a good picture of where your cash goes: vending machines, coffee, parking meters, breath mints … the whole shebang. Pull out your checkbook and your credit card statements, along with any automatic deductions from your paycheck or checking account, put all the figures together with your notebook’s, and you’ll have a decent snapshot of where it’s going, going, gone.
(And what’s a major credit card, you ask? Any one that most stores accept, naturally.)
As you tally how some of those little items become expensive over time, you may well need to apply the emotion-related insights you now possess — to say nothing of a moment or two for prayer. Remember, each of these is the result of a decision.
I’ve usually had a pretty clear picture of where my change was going and am quite aware how easily we can be “nickel and dimed” out of our cash. Still, seeing it all at once can come as a shock.
Up to this point, we’ve been learning to speak more openly about our experiences with money. But now we’re turning to some essentially private work, done in several stages. This is where the action really begins. As you get your act together, it’s also where the fun really begins. Seriously. It’s where those earlier considerations come down to the bottom line. It’s the recipe where all of our ingredients become a dinner or a dessert. It’s where we get ahead of the bills.
It’s what’s usually called budgeting, though holistic CPA Lu likes to give it a more positive spin, referring to it as a Spending Plan. Either way, the gold-standard guideline for this is set up in Your Money or Your Life by Joe Dominguez and Vicki Robin, for reasons I’ll discuss shortly.
Usually, when we think of budgeting, it’s along the lines of dieting. What do I have to give up to lose weight or reduce expenses?
Joe and Vicki have a nifty series of steps around this. They have us look at each purchase and then ask about our satisfaction level with it. Can we get as much pleasure by spending less on that item (buying a less expensive bottle of wine, for instance) or, if we spent more, would our enjoyment rise correspondingly? They also introduce a concept they call “gazingus pins” — pet expenditures we indulge in, for our own pleasure; we’ll look at these and other “toys for adults” in a bit.
Taking your snapshot, break out your monthly spending by categories — housing, utilities, transportation, food, clothing, and so on. Within each one, what is essential and what is discretionary? (In my old yoga circles, this was seen as “needs” versus “desires.”) In their system, you then make a plus sign or minus sign for each item to indicate ways to adjust your spending level. Yes, you’re allowed to say you want to spend more on something. This doesn’t sound like dieting, does it?
You then match this against your monthly income. The goal, if you’re interested in financial independence, is to increase the amount you’re saving.
There are two ways to do this. One is to increase your income. The other is to reduce your spending.
Their book contains a nuts-and-bolts approach to budgeting and planning — or, as they put it, to achieving the American Dream on a shoestring — and you really should take a look at it. Other spreadsheets are available — feel free to tell us of ones you’ve found helpful or of ways you’ve tweaked Joe and Vicki’s.
As you look at your spending, what items surprise you? Are any out of line with your expectations?
We live in a culture where openly talking about money is a taboo. We need to create safe spaces where we can share our money stories and concerns.
Don’t tell me it’s not emotional. A few more tax deadline questions, while the issue’s still on your mind.
Do you file your returns early? Or do you wait till the last minute? Is there a reason for your timing?
Do you file online? Or with a trip to the post office?
Do your tax dollars fund services or activities you find morally offensive?
Have you ever openly refused to pay a portion of your taxes? Do you know someone who has?
Are you afraid of an IRS audit? Prepared? Relying on yourself? Or a tax accountant?
Of course, one big time when we feel the weight of accountability comes with a deadline attached each year: April 15. It’s also a good place for us to observe just how close the interplay of our emotions and values can be.
Most Americans face some degree of anxiety around tax time. It is to be expected; the system is set up and operated in a way that is intended to instill a degree of fear. Filing an income tax return is a mandatory citizen responsibility. We’re expected to deal with incredibly complex rules. There’s even an “honor system” to report our income and pay our taxes, although there are stiff penalties if we don’t and are then caught.
Fear, loathing, and distrust are widespread. Some people worry about being audited, doing it wrong, or unexpectedly being ordered to pay a lot more taxes. Others fret over having their return done on time and insist it be absolutely correct. Some are far more willing to take risks, while others willing overpay in the hopes of being “audit proof.” Others can’t sleep at night if they think the Internal Revenue Service is getting one penny more than it must. They obsess over finding every possible deduction. And then there are all kinds of stories to back up those claimed deductions.
Lu, our holistic accountant, had a wealth of examples regarding tax phobias and obsessions — the ones that can result in the April 15 deadline coming and going without the tax return being filed. Her advice: “Here, you might do well to go ahead and file the tax return on time, even though you believe it is not absolutely perfect. Later, when you discover the extra deduction or special rule, it will be relatively easy to file an amended return to correct it. By the way, filing an amended return does not mean you will be automatically audited. Although each amended return is processed manually, by a human being, we have never seen an audit of the whole return result from filing such a correction.”
The important thing, then, is to avoid being jammed by your values and emotions. When you can openly discuss these, you’ll discover you’re not alone. A lot of your friends have big tax secrets, too, and they are eating a hole in their stomachs. Try talking about it, laughing about it. It appears to be part of the human condition. Go easy on yourself. The April 15 deadline is not really as ominous as you make it out to be! If your return isn’t filed on time, it may just cost you a little more when you finally get it in.
How do you feel about paying taxes? Do you think you pay too much? Not enough?
Do you feel you get your value’s worth?
Name three public services you value highly. Name three you think are wastes of money.
As Lu put it, the most common way we keep from dealing with our money issues is to cloud our relationship with their existence. We, as a society, have found many ways to keep the reality of money at arm’s length. We have developed effective words and phrases that keep us from really talking about money. And we have mystified personal money management so much that someone like a certified public accountant may seem superhuman.
Even a holistic CPA like her. OK, I’ll go along with that.
She added that we know any change can be difficult and will usually be resisted by those around us. So, we have lots of excuses not to do it. Keeping money unreal also lets us continue to avoid our responsibility for the money that flows through our lives. Most important, though, it helps keep us powerless. When we are ready to change, to take responsibility for our money energy and to take back our economic power, we can we do it by getting real with money.
That’s the thrust of her work — step by step identifying all the ways we cloud our relationship with money. Once we are aware of our “mind games,” we can choose to change our participation in the games, one at a time.
She would start with some of the ways we manage to avoid even touching the stuff. Remember, money or currency developed to make the barter or exchange of things easier. As she said, without it we had to accept a lion’s pelt in exchange for a bunch of our baskets when what we really needed was a few beautiful seashells to decorate our headdress. Somehow, though, gold and other media of exchange got a bad name, so we developed paper substitutes.
Writing checks to pay for things we need or want is very different from the feeling of paying with cash. At least, though, we are encouraged to keep track of where we sent our money and how much we have left.
Several decades ago, the plastic industry set a goal to put a piece of plastic in everyone’s pocket, and the credit card was born. This made it possible to completely ignore the connection of working for money and spending it! The ultimate disconnection comes from our Automated Teller Machines. Lu heard a child respond to her mother’s comment, “We don’t have enough money,” with, “Oh, no! We can just go to the Money Machine!”
It must be that money is dirty. That’s why we’re trying to hard to keep from touching it. That may also explain why we aren’t supposed to talk about it, either. We have developed a lot of handy sayings about money that enable us to avoid expressing our real feelings about the money in our lives.
For instance, we may say “Money doesn’t grow on trees” instead of talking about our real struggle to earn enough to provide for our family. We tell our children, “We can’t afford it,” rather than explaining why we choose not to spend our money on what they want and why we have to spend it on other things instead. We perpetuate the misunderstanding that “money is evil” instead of taking responsibility for what we are really doing with the money that comes into our hands.
Perhaps more powerful are those big words used to describe the ways we are supposed to keep track of our money, such as: reconciliation, statements, disbursements, amortization, debits and credits, invoices and vouchers. Lu apologized from the bottom of her heart for the great disservice her profession has wrought with this language.
Well, that gives you an idea of Lu’s approach.
Sound familiar? What especially strikes you?