These 5 Questions Determine Whether You Have an Unhealthy Relationship With Money
Are you a 'savings addict'? These trying times can exacerbate an already troubled relationship with our finances.
Danielle has saved money her entire adult life. She worked a full-time job while working towards her degree at Yale University Law School. When she got married, she didn’t have a wedding or go on a honeymoon, because she didn’t want to incur a huge expense. She sold her engagement ring to pay for her law school books. When she hangs out with friends, she often meets them at the grocery store, or to run an errand. She never eats at restaurants. “My entire social life has been built around doing things that don’t cost money,” she says. “My husband always tells me that I’m bad for the economy.”
Then, the coronavirus pandemic hit, and Danielle, who asked that we keep her identity private due to her career, began taking her saving to another level. Danielle, who was 9 months pregnant with her second child, decided not to take maternity leave or hire childcare after she gave birth to save money. Instead, she worked while breastfeeding her newborn, wrangling her toddler and recovering in bed. In the midst of this all, she re-examined her budget, and determined, among other things, that her toddler was eating too many expensive, unnecessary items—nutrition bars and yogurt pouches mainly—and cut the cost of his daily food intake by half. Her goal is to have three years of living expenses in cash in the bank—despite the fact that most experts say you only need about 3-9 months of income—and she saves one-third of her income every month.
“I’m a woman with kids, who could potentially get fired at any moment,” she says. “Mothers are highly, highly dispensable.”
In many ways, she’s right. In April alone, women accounted for 55% of the total jobs lost amidst the pandemic. Saving, especially in such an environment, is prudent. And many Americans are doing it: In April, the personal savings rate in the United States hit a record high of 33%, up from 12.7% in March, according to the U.S. Bureau of Economic Analysis. The previous record was 17.3% in May of 1975. In other words, we are currently saving more money than our grandparents and great-grandparents did, even as they underwent wars and depressions.
How one woman conducted a DIY spending audit, creating a roadmap to help you cut expenses—and keep more of your hard-earned cash.
But, experts say, there is a such thing as saving too much—namely when saving money hinders your happiness or relationships or harms you in the long run. For example, if you’re hoarding money to prevent financial insecurity, you may miss out on job opportunities or investments that initially seem risky, but may actually have long-term benefits. Or, if you’re saving in the short term on expenses like childcare, you may be sacrificing your productivity and mental health, which in the end, are necessary for long-term success.
Of course, to save money during times of crisis is understandable, says Jillian Tucker, a social worker at Weill Cornell in New York. “It’s sort of like why people began hoarding toilet paper,” she says. “You can’t see the virus, and you can’t control if other people are wearing masks, but you can control how much money you’re spending—or not spending.”
Indeed, Tucker explains that saving money is often a proxy for control, and can be a direct response to traumatic events. Danielle, for example, says that her father died when she was young and that her single mother sometimes struggled to put food on the table. As a result, both she and her brother find it almost impossible to spend money freely. The coronavirus pandemic, and accompanying economic crisis, only heightens her sense that she’s on the brink of disaster.
If our habits are derived from trauma, Tucker says, they can make us hyper-vigilant and focused—in order to prevent the trauma from repeating. When you’re in a state of hyper-vigilance, she adds, “You aren’t taking in data correctly, and in that way, you’re hurting yourself for the future.” Stress also has long-term effects on your health. “Financial stress is the same as any other stress, it takes a toll on the body physically and emotionally,” Tucker says.
To determine if you have unhealthy habits around money and saving, Tucker encourages you to ask yourself the following five questions:
1. Do you spend more than an hour a day worrying or thinking about money—for example, checking your bank account or working on a budget?
2. Is worrying about money interfering with your job, your family life, or your ability to enjoy leisure activities?
3. Are your saving habits hurting the people around you, including your children or spouse?
4. Is worrying about money harming you physically—for example, preventing you from eating nutritious food, or cooling your house in the summer?
5. Is worrying about money keeping you up at night?
If you answered yes to three of the five questions, you might want to consider reaching out to someone you trust for help. “Part of the issue with people having maladaptive financial habits is that in our society it is often seen as taboo to discuss finances,” Tucker notes. “As a result, we don't learn good techniques from friends and family members who could be helpful.” Another option is reaching out to a professional. To find a financial therapist near you, visit the Financial Therapy Association website.
Even if you don’t have a major problem, it’s likely that you’re worrying a lot about money right now. Tucker encourages women to think of these trying times as a “temporary normal” rather than the “new normal.” “Don’t make a five-year plan right now,” she says. “Make a budget for the next six months.”
Most importantly, Tucker encourages rewarding yourself once in a while with low-cost things like a coffee, or even a piece of clothing from an online retailer. “So many of our natural coping mechanisms and daily joys are removed from our lives right now, so it’s important to engage in self-care activities to help mitigate some of the deleterious effects of stress,” she says. “If you do spend money, try to remove the guilt.”
This can be easier said than done, especially as both unemployment and COVID-19 cases continue to rise in the United States. But in the end, your mental health is more important than how much you save in the coming months.
“There are times when I’ve been pretty unhappy,” admits Danielle. When asked for a number that would make her feel truly safe, she said $50 million.