How To Have A Healthy Relationship With Money

Relationships are crucial for our well-being. Without healthy relationships, we may face isolation, loneliness, and depression. Many of us strive to build strong connections with our coworkers, friends, and family. But how often do we consider our relationship with money in the same way? Have you ever asked yourself, "How is my relationship with money? Is it healthy or unhealthy?" In the spirit of fostering healthy relationships in all areas of our lives, here are ten ways to develop a healthy relationship with money.

1. Do Not Make Money the Center of Your Life

Don’t make acquiring more money your primary life goal. No one lies on their deathbed wishing they had spent more time with their money. I spend a lot of time thinking, writing, and talking about money—that's essentially my job. But my ultimate wish is to live my life with compassion, courage, and purpose, to love and support my family, and to serve my community. Money is just a tool to help me achieve these goals. It shouldn’t be the center of my life because what’s the point of having all the money in the world if I lack meaningful relationships and purpose?

2. Get Comfortable Discussing Money

Many people find it difficult to talk about money. Surveys show that in 30% of couples, partners are unaware of each other’s income, and only 17% of parents earning $100,000 or more have told their kids about their income or net worth. Most people are more comfortable discussing politics, race, and marital issues than money. But like any relationship, if we don't talk about it, things don’t improve. So, despite the discomfort, get comfortable talking about money. Start by asking yourself questions like: How does money make me feel? Where is my money coming from? What scares me about money, and what can I do about it?

3. Lower Your Expectations

Money can do many great things, like keeping a roof over our heads and reducing financial stress. But don’t expect it to transform your life completely, especially the intangible aspects. Society often idolizes money, making us believe that more money will solve all our problems. However, ask anyone who has amassed wealth, and you'll see they are not much different from when they had less money. Lowering your expectations allows you to celebrate the benefits money brings rather than being disappointed by what it can't do.

4. Align Your Spending with Your Values

Look at your latest credit card statement and ask yourself if your spending aligns with your life values. If one of your top priorities is spending more time with family, does your spending reflect that? This reflection can help you better align your spending with your values, such as saving money by packing lunch instead of eating out alone during work, so you can spend more on family meals.

5. Do Not Compare

Comparing your financial situation with others is like poison. We might think someone has a perfect relationship with money because they have nice things, but appearances can be deceiving. Many people who appear wealthy may actually have a poor relationship with money. Personal finance is not a race; you win by cultivating a healthy relationship with money that supports your values and reduces stress.

6. Embrace Frugality

Frugality is one of the best financial habits for a healthy relationship with money. Many people mistakenly think that spending more equates to wealth. However, true financial success comes from living well below your means. Most real-life millionaires live frugal lives, contrary to media portrayals of lavish lifestyles.

7. Follow Your Money

Have a good awareness of your finances. Know how much money is coming in and going out, what investment accounts you own, and how much debt you owe. Use account aggregators like Empower, Rocket Money, Wab, or Monarch Money to track all your transactions and net worth in one place. Understanding your finances is crucial, but don’t obsess over every penny.

8. Avoid Being Pennywise and Pound Foolish

The phrase “Pennywise, pound foolish” describes someone who saves small amounts of money but incurs larger costs in the long run. Don’t get so focused on saving pennies that you miss the big picture, such as income, mortgage interest rates, and investment allocation. Focus on what really matters to your financial health.

9. Spend Extravagantly on What You Love

Allow yourself to spend extravagantly on things you truly love and cut costs mercilessly on things you don’t. The purpose of money is to fund a lifestyle that brings joy and satisfaction. Don’t deprive yourself completely of life’s joys, as this can lead to burnout and dissatisfaction.

10. Keep the Past in the Past

I have a lot of emotional history with money, from bankruptcies to home evictions. I’ve made many financial mistakes, but I try not to dwell on them. Reflect on your past to learn from it, but don’t live in it. Focus on what you can do today to improve your financial health.

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