Achieve That Feeling of Zen: 6 Ways to Take Control of Your Money
Well, it’s settled. Today’s women are control freaks – at least as far as our money is concerned.
Research conducted by the GfK Knowledge Panel for the launch of HerMoney.com clinches it. A whopping 87% of women tell us the more control we have over our money, the better we feel. And why wouldn’t we?
Control is a good thing. It’s the antithesis of chaos. It brings your blood pressure down rather than sending it zooming upward. It’s the calm in a sea of financial news and information. We should all say yes, please to a helping of financial control. You can load me up on that.
But how do you attain it? The first thing you have to understand is that not everything can be controlled. Your financial life is divided into three distinct buckets: There are the things you can control (paying your bills on time, checking your credit regularly), there are things you can sort of control (how much you save, for example, and other scenarios in which you do the best you can but your financial constraints figure in) and there are those you can’t control at all (interest rates or the stock market.)
Here’s how to handle each bucket to achieve the feeling of zen:
Bucket No. 1: Controllable
- Systemize. There are some things that feel uncontrollable because they’re a little too all over the place or voluminous. Piles of paper can easily become chaotic if they’re not dealt with in an organized, systematic way. Take bills, for instance. Research has shown that people who open and pay their bills as soon as they arrive are happier than those who let them pile up. That makes sense. A stack of unpaid obligations can weigh on your mind as it builds – plus it’s easier to stomach (and manage) sending small chunks of your money to your billers rather than a great big sum all at once.
Many financial tasks can be systemized just by being scheduled. If you pay quarterly taxes, it’s helpful to schedule your payment in your calendar a week or so before they’re due. Similarly, noting that you want to pull one credit report from annualcreditreport.com every four months will insure it gets done three times each year.
- Automate. There is another group of controllable items you don’t even need calendar alerts to schedule. These are the ones that can be truly automated. Many regular bills – the health club, utilities, mortgage, rent, etc. – can be paid automatically. You can elect to have your retirement plan contribution increased annually (if your employer offers auto-escalation) by a percent or 2. And you can save automatically as well by splitting your paycheck and having money moved to savings or setting up a regular transfer from checking into your saving or brokerage accounts. All of these set-it-and-forget-it moves will help you feel more in control.
Bucket No. 2: Semi-Controllable
- Understand. There are some financial issues that aren’t totally controllable – but can be more in your grasp than they are today. First, though, you have to understand why they’re feeling fraught. These tend to fall on both sides of the financial equation: money you earn (either through a paycheck or investments) or money you spend. If it’s money you’re earning through work, that means taking a look at whether you’re fairly compensated for the job you’re doing or, if you work for yourself, the going rate in your marketplace. If your investments have you feeling queasy, it’s time to take another look at your asset allocation and time horizon. And if it’s your spending, try to separate out what the cause of the problem really is by paying closer attention to where your money is going for the next several weeks.
- Tweak. You can be more hands-on in all of these areas by micromanaging the problem once you’ve isolated it. If it’s your salary, it’s either time to ask for a sit-down conversation with your employer to explain how much you’re adding to the bottom line and request a raise to go along with it. If you’re denied, then it’s time to go job hunting for another offer that you can use as leverage in your current job or to accept (changing jobs is the best way to get a sizable salary bump.)
Though you can’t control the stock market (more on that in a moment) there are things you can control about your investments. If you haven’t rebalanced since the markets have increased substantially, doing so will likely can reduce the risk in your portfolio. The amount you’re paying in investment fees is another element within your control. As for that spending, once you’ve nailed down the trouble spots, try cutting back in those particular areas by 5% to 10% each month until you bring the costs in line.
Bucket No. 3: Uncontrollable
- Buffer. Then there are the things you truly can’t exert your power over: hurricanes, illness and yes, interest rates, inflation and the stock market. In these cases, you’ll want to do whatever you can in advance to shield yourself. Line up the insurance that can help get you through a tragedy in advance. Make sure the money you need in the short term is out of the market (it never belonged there to begin with.)
- Consciously ignore. And last but not least, shut out the noise. When the markets are plummeting and the financial news is all gloom and doom, turn it off and don’t do anything. As long as you’ve made the other moves to put yourself in control, in the long term it’ll all be just fine.
Join us on your own financial quest for zen. The HerMoney Facebook group is a judgment-free zone to chat about everything.