Balance in our personal finances is important; when we place too much emphasis on any one aspect of our financial plan, we often harm our financial (and emotional) wellbeing. Strive for equilibrium in these seven key areas:
Spending and Saving
Saving for a rainy day is extremely important; however, it must be balanced with enjoyment of the journey. If you are afraid of what your financial future might bring, focus instead on what you want your future to bring. This doesn’t mean you should spend crazily…we’re talking about balance.
On one hand, being too conservative might inhibit your ability to reach your long-term goals. This is especially true when your investment decisions (or, more typically, inaction) are fear-based. On the other hand, while investors who take too many risks may reap bigger returns, they are also setting themselves up for very big losses.
Don’t bury your head in the sand when it comes to your finances – but don’t go to the other extreme by obsessing about things you can’t control. You neither want to be like someone who checks her weight three times a day, nor do you want to be someone who only wears elastic pants so she never has to confront the issue. Do you have a financial disorder?
Giving and Receiving
One of the best strategies for reducing financial stress and increasing prosperity is to give charitably. When we give, we focus on others and instill ourselves with confidence that we have enough money that we can spare some. Of course, balance is important here as well. Don’t give to the point that you put yourself at risk. Remember: It’s just as important to receive graciously, as you are giving someone else the happiness that comes with giving.
Vision and Action
We love a good financial plan because it’s a vision and a roadmap for a successful future. But if you spend all of your time and energy on the vision without taking any action on your plan, you will not go very far.
Too often, people worry about things that are out of their control, like the global economy. Nonetheless, taking personal responsibility for our own financial lives is a great way to build wealth and feel more in control.
Financial stress is usually a good indication that your finances are out of balance in some area. Take a breath, step back, and look realistically at bringing more balance into your financial life.
Ellen Rogin, CFP® and CFP, is the President of Strategic Financial Designs, a life and wealth advisory firm in Northfield, Illinois. Ellen is co-author of the book, Great with Money: The Women’s Guide to Prosperity. www.ellenrogin.com