How I stopped worrying about money (almost)

Couple working on their finances

It might be the incessant nagging of an unpaid bill or a stomach-churning plunge in the stock market, but suddenly you don't know how to stop worrying about money. Join the club.

Even having a decent nest egg of savings and a solid financial plan is no cure for money worries because the more you know about personal finance, the more you understand how fragile any plan and any investment program can be. Still, I worry about money less than I used to, thanks to a collection of habits and attitudes that have helped cushion me from obsessing about money. That means I've come a long way, because there was a time when money was a constant worry.

A Sobering Graduation

Like most people, I am a product of my experiences; and when it comes to personal finances, the most important formative experience was graduating college during the early 1980s, a dismal period for the job market. In fact, my senior year — the time when one is supposed to be making career plans and lining up a job — was marked by the highest unemployment rates of the post-World War II era. So, I spent the first several months after my college graduation caulking windows and scraping paint, stocking shelves in a supermarket, and working as a busboy in a greasy spoon. All minimum wage jobs, and even then the work wasn't always steady.

I had worked every summer during my college years; but up until that point, I had never been a particularly hard worker — and I spent money as fast as I made it. Once I had to support myself on minimum-wage jobs after graduation, I quickly realized two things:

  1. It's important to save money when you can because you never know when you're going to need it, and
  2. If things are going to get better, you have to make it happen yourself.

Things did get better for me — much better as it turned out. However, even as my wealth grew, I remained nervous about someday running out of money. This is unfortunate because, while it is appropriate not to take anything for granted, there is not much point in having money if you are in a constant state of fear about losing it. Dialing down that fear is what I've been working on in recent years, and I've found six things that help me stop worrying so much about money.

6 Things That Help Me Stop Worrying About Money

Here, in no particular order, are six things that I've realized have helped me worry less about money:

  1. A wife who shares my financial outlook. Very often, financial pressure comes from within the household. If two people aspire to different financial goals, or if one is much more of a spender than another, it can cause tension within a marriage. Fortunately, my wife shares many of the same attitudes I have toward money and lifestyle, and a key to having that kind of harmony is communication. Once a relationship starts becoming serious, having open discussions about how you handle money and what your financial goals are can help you make sure each person's thoughts on these matters are compatible. As time goes on, continued communication makes sure each person understands where the household stands financially, and what expectations to have.
  2. Early savings. As soon as I started making more than minimum wage, I started saving money. In my early 20s, I wasn't thinking about long-term goals like retirement or even buying a house — but I viewed my savings account as a buffer against the unexpected. Once you know you have a little money set aside to cushion against some financial shocks, the less time you can spend worrying about those shocks.
  3. A debt-free lifestyle. There is nothing wrong with borrowing money for long-term purchases; and over the years, I've had home mortgages and car loans when appropriate. However, I don't think being in debt should be a constant condition, so I've tried to keep loans as short-term as possible and more often than not I've paid them off early. The real reason for this is that I'm just happier when I don't have outstanding financial obligations, but the side benefit is that, over the years, I've saved thousands of dollars in interest charges by minimizing borrowing.
  4. Modest tastes. As you might expect, being intent on saving money and minimizing debt requires some financial sacrifices, but I don't really feel like I'm missing much. Part of what helps is that being able to appreciate small luxuries makes one less inclined to yearn for the really expensive ones. Another element is self-knowledge — I know I could never really enjoy something unless I could afford it easily, so often not spending makes me happier than spending would.
  5. Multiple sources of income. I am a freelance writer, analyst, and consultant; and freelancing can be an unsteady way to make a living. What helps is that I get projects from a variety of different sources, and it often seems that one source will pick up just when another slows down. Working full time for one employer would probably be more steady, but I worry less about job security when I know I have work coming from more than one source.
  6. A financial plan with a shock absorber. Besides my freelance income, I also live partly off investments, which can make one prone to worrying about the stock market or the rental market — especially when they start behaving erratically as they have in recent years. A few years ago, I realized I was living and dying emotionally with the stock market way too much, so I built what I call a shock absorber into my financial plan. This is an assumption that my assets have declined in value by 15 percent, so any spending assumptions based on those assets are forced to adjust accordingly. This may be a little nutty, but I am more comfortable assuming a decline in value has already happened than worrying that it is about to occur. As a result, when stocks take the occasional dive, I can more or less ignore it because it is already built into the plan.

Related >> Stealth Savings: Little Moves That Equal Big Money

In truth, I still worry about money, but it has gone from a near-constant state to something that crosses my mind for a few minutes every several weeks. Financial success is as much a matter of perception as it is one of reality, so learning to put concern about money in the proper perspective is an important step.

What helps you stay calm, focused, and happy about your finances? Share your thoughts in the comments below.

More about...Debt

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MrRicket
MrRicket
4 years ago

This is my Net Worth update for November. Thought you’d be interested in checking it out.
http://www.myricketyroad.com/2015/12/01/net-worth-update-november-2015-e1076/

Cheers
MrRicket

Beth
Beth
4 years ago

Totally agree on #2, 3 and 4! I think a modest lifestyle and modest tastes are really important. I think it’s really challenging to save and stay out of debt if you’re always chasing “the good life” — that is, your happiness and sense of success seem grounded in expensive stuff and expensive experiences. Inherently, there’s nothing wrong with those things unless they are an expectation or entitlement rather than a special occasion.

My Factoring Network
My Factoring Network
4 years ago

I believe that savings is the best option to be financially rich. When we create multiple streams of income then it is necessary for us to create a savings account in which some part of the income is saved. We all have money worries but these ideas can really make us care free about money. I agree to your early savings point with good financial planning. Thanks for sharing.

lmoot
lmoot
4 years ago

I truly enjoyed this article. But then I’m partial to the touchy-feely emotion exploring side of personal finance. I like this subject because it’s a dark horse in the financial world. Are we saving enough, or earning enough, will we have enough in the future, how did we screw up in the past, analyze to maximize by turning over every stone (then trying to squeeze every drop from it, worrying we missed something). I particularly agree with this: “I don’t think being in debt should be a constant condition” We are too comfortable with debt as a society, and it… Read more »

freebird
freebird
4 years ago

I guess my list has three: (1) dual income from working full time after reaching financial independence, (2) diversified savings, and (3) flexible spending habits. Pulling down both a paycheck and investment returns when either alone can suffice gives me peace of mind, so if my work project goes south I look to my portfolio, and during a market crash I can use my paycheck to buy new positions. I also keep enough in bank checking accounts so if both job loss and market crash happen at the same time, I can still meet my obligations for several years. Flexible… Read more »

Nicole
Nicole
4 years ago

#1 is very important because without your spouse being on board, all your efforts would be for nothing. Isn’t money the primary source of marital arguments? I’m lucky it’s a non-issue in my marriage. Saving is definitely important. Case in point – when I decided to quit a stressful job without another one lined up, we cut back to the bare essentials even though we could get by on my husband’s income. However, I wasn’t happy just getting by, and not being able to save any money, so we “sacrificed” our entertainment/vacation budget until we had more breathing room. It… Read more »

Karthigan Srinivasan @ StretchADime
Karthigan Srinivasan @ StretchADime
4 years ago

I like item #2 regarding “early savings” and would like to expand on it a little bit. The best advice a parent can provide a 16 year old is to work part-time and earn enough to start a Roth IRA and invest the maximum allowed contribution of $5500 per year for at least 1 year before joining college. The $5500 would turn into $169K when they turn 60. The money in an IRA is sheltered and wouldn’t count against the financial need analysis. You can see the full details if interested in my recent post – http://stretchadime.com/power-of-compounding/

Jen From Boston
Jen From Boston
4 years ago

I agree. I am blessed that my parents and grandparents openly talked about investing for the future, avoiding debt, etc. When I got the first job after college that paid me enough to move out I knew to being saving in the company’s 401(k), and I would save in an IRA when I could (i.e., when I could take the deduction). As a result I’m in good place for retirement savings.

Raj
Raj
4 years ago

having multiple sources of work will help freelancers, I have freelanced earlier and have faced issues like no availability of work as I have to stick with one contractor during that time. Now I am doing full time work and exploring my freelancing options.

Richard Barrington
Richard Barrington
4 years ago
Reply to  Raj

Exactly right. It is amazing how just as one of my income sources slows down, another one usually picks up. It’s a form of diversification, which is usually a sound financial principle.

Mrs. Money Monster
Mrs. Money Monster
4 years ago

Actually seeing progress helps me stay calm about our finances. When I know we have X dollars to invest/save it makes me feel like we will reach our financial goals. There are always mishaps, like the call from my property manager yesterday telling me the tenants needed a plumber STAT, but it’s all part of the journey. Knowing I have the funds to take care of this eliminates the stress.

Mrs. Mad Money Monster

Richard Barrington
Richard Barrington
4 years ago

I love your point about how seeing progress can be reassuring. Financial goals take a long time to accomplish, and tracking progress incrementally is the best way to stay encouraged.

Tom
Tom
4 years ago

So you’ll freak out when it hits -15% and more? 😉

Richard Barrington
Richard Barrington
4 years ago
Reply to  Tom

Oh, I’ll probably start freaking out well before then, but at least the shock absorber idea helps me a little less anxious than normal!

Jerome
Jerome
4 years ago

Great post! Apart from your vision on debt, I believe that debt should be zero and stay zero as soon as possible, I agree with the lot. The one additional thing which also helps us reduce anxiety is seeing that long-term planning, which at the start feels like just a theory, actually works in practise. I made our first plans in 1995 and these plans proved that we could get an amazing (for us) amount of money together by saving and investing. 20 years later I know that I planned to conservatively and we have even more money than predicted.… Read more »

Kristi @ Femme Frugality
Kristi @ Femme Frugality
4 years ago

Freelancing definitely helps keep my outlook on money better since it helps give us breathing room in our budget. When I’m feeling stressed about money, though, I just try to remember how far I’ve come. Things used to be a lot worse, so I try to focus on gratitude.

Dan
Dan
4 years ago

it’s not the 50’s anymore as long as you’re healthy you can find a job easily and stop worrying as long as you spend your money wisely.

Christian Lifehacker
Christian Lifehacker
4 years ago

I’d add that one of the coolest things you can do to ease your internal money tensions is to stop comparing yourself to others.

In my opinion, many folks slowly acquire a mound of debt because they are borrowing money from their future in order to impress other people in the present.

Richard Barrington
Richard Barrington
4 years ago

I totally agree. It’s not just that people feel compelled towards conspicuous consumption to keep up with their neighbors, but also the fact that everyone they talk to is in debt makes them feel it is normal and ok.

Beth
Beth
4 years ago

Agreed!

I read an interesting article a couple weeks ago about how the concept of “imaginary audience” affects us as adults — and our finance. Essentially, spending to impress other people is a useless strategy because other people don’t spend as much time thinking about us as we think.

Er… Gail Vaz-Oxlade explained it better. http://www.metronews.ca/views/my-money-gail-vaz-oxlade/2015/11/15/forget-the-joneses-keeping-up-a-senseless-concern.html

I find the less I judge other people’s spending and material stuff, the less I feel judged in return.

valletta
valletta
4 years ago
Reply to  Beth

My dad used to say when I was a kid “You wouldn’t care what people thought about you if you knew how seldom they did”
🙂

Katie Ryan O'Connor
4 years ago
Reply to  valletta

Hi Valletta,
I love this. Thank you for sharing!

Kate
Kate
4 years ago
Reply to  valletta

Someone once said, “Status is buying things you don’t want, with money you don’t have, to impress people you don’t like.”
That was an “Aha!” moment for me.

Mr. Groovy
Mr. Groovy
4 years ago

Richard, like you I’m lucky to have a wife with the same financial outlook. We also have that buffer you mentioned, which keeps us from worrying about job losses and unforeseen expenses.

John
John
4 years ago

Being 100% debt free and having an Investment Policy Statement have helped me the most. Owing no one is great. And having a pre-defined plan for our investments helps reduce stress about what to do and when to do it! It eliminates a lot of the emotional side of investing, especially when the market is in a correction.

Phil Danley
Phil Danley
4 years ago

I think putting your wife and a common financial outlook in the #1 spot was where this belongs! My wife and I paid off our non-mortgage debts in 2012 when we decided to get out of debt. This teamwork kept us going when one of us would be tempted to buy something; the other would look into cheaper options or reallocating budget money. We paid off our mortgage in 2014 but we still communicate about how to spend money. She likes to put more into savings whereas I like trying to max out our 401(k)s.

Carly
Carly
4 years ago

Having a similar financial outlook is one of the first things I look for in a significant other. Extremes on either end of the spectrum (overly frugal / irresponsible spender) are unattractive to me.

Latoya @ Femme Frugality
Latoya @ Femme Frugality
4 years ago

All of these indeed are great ways to ease the worry associated with money and I tend to live on a couple of these principles. My husband and I have similar money values and we definitely live modestly. Over the years I’ve had to adjust my way of thinking about the things I wanted and a few other behavioral aspects, all of which have helped reduce the stress of how much money we have.

Latoya @ Femme Frugality
Latoya @ Femme Frugality
4 years ago

All of these indeed are great ways to ease the worry associated with money and I tend to live on a couple of these principles. My husband and I have similar money values and we definitely live modestly.

Jason
Jason
4 years ago

Very helpful article. I’m new to this topic and this definitely helps me learn!

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