Everyone has their own personal relationship with money and finance. There is no one thing that determines how you will relate to money: it’s a multi-factorial thing. You are influenced by your childhood – how your parents and guardians handled money, for instance. Your finances are influenced by your own character traits – whether you are organised, conscientious and controlled, or chaotic, risk-taking, and free-and-easy. Your finances are also influenced by your adopted philosophies of life, including what you believe life is for, and what you want to make of it. Finally, it is influenced by your relationship with time, especially the future; for instance, whether you are able to forego present resources for future resources.
According to accountants, there are two main ways to measure finances.
The first is a matter of flow, like water coming through a dam. If you spend as you earn, you are like a dam that is not there, allowing water to flow downriver as it comes. If you save, you are like a dam that slows the outward flow, and lets resource build up temporarily. And if you overspend, you are like a river with no dam and leaky banks, which is in danger of not being a river at all! This overall concept of flow is what is meant by profit and loss. It measures whether you are increasing or decreasing the resources under your care.
The second is a matter of position, of the current state of resources. One could use the dam analogy again. If you are wealthy, you are like a well-situated, well-maintained dam that has sufficient water for the needs at hand. If you are poor, you are like a poorly-situated dam that is dried up. This overall concept of financial position is often measured with a balance sheet. It records the resources under your care at a particular point in time.
HEALING YOUR RELATIONSHIP WITH MONEY
The beginnings of a healthy relationship with money, is to understand the many factors that have contributed to your present situation. Without that understanding, you are powerless, like an untethered sail blowing aimlessly in the wind. You will tend to describe financial things as beyond your control.
As long as you maintain an illusion of non-control, there is not much that can be done. If you are biased towards a helpless description of your life, then don’t be surprised if you experience yourself as helpless. Your relationship with money is ‘victim’, and that is all that can be said.
If, on the other hand, you begin to understand how you work – your learned practices, your character, your philosophy, and your relationship with time – then you give yourself a chance of development. You then have a choice to lean new practices, to harness your character, to brush up your philosophy, and even to refine your relationship with time and the future.
IMPROVING FLOW AND POSITION
Going back to the analogy of a dam, there are things you can begin to do to improve both flow and position. This is only a short article, but here are a few suggestions as to first focuses:
- Firstly, attend to your flow. Begin, in a small way, exercising the function of a dam. This means starting to hold back resources in store areas. One good way of starting is to open a savings account, and then pay a regular amount into it. This teaches you the possibility of accumulation.
- Secondly, attend to your position. This is more a matter of strategic understanding. The first step in strategic understanding is to know and accept what is. Therefore a good first step in attending to financial position is to list what you own and what you owe (even if it scares you at first!).
These two first tasks are only two in a whole chain of actions that can improve your relationship with money. There is a whole journey to be made, one step at a time.