Worry-Free Money: The Confidence Issue
Women live longer than men and typically earn less while taking more breaks from the workforce to raise kids. By 2026, Canadian women will control close to half of all accumulated financial wealth in the country and yet studies show that women feel less confident about their finances than men. A lack of financial confidence leads to increased worry, sleepless nights and insecurity over your family’s financial future. No fun. But, it doesn’t have to be that way!
It doesn’t matter what age you are if you’ve got debt or a million dollars in your chequing account, we all worry about money. Especially once we have children. The stakes get higher and the cost of daily life skyrockets – hello daycare years!
We need to figure out a way to financially survive our daily life and still enjoy it. That’s how you feel empowered, confident and excited about your finances.
The solution is threefold:Firstly, you need to stop overbudgeting. You know what I’m talking about. A massive excel spreadsheet populated with 50+ categories: Coffee shops, takeout, clothes, pet, housing, bills – the list goes on. You forecast your spending goals in these micro categories then do your best to live within the confines of the rigid budget but it’s so unrealistic! What if one week you needed to buy a vacuum? Or the other weekend the money to pay for your children’s swimming lessons was due? Inevitably, these types of budgets lead to failure, lack of confidence and maybe even giving up on finances altogether. But, I have a solution. STOP BUDGETING. You only need 4 categories of money. Not 50. Fixed Expenses, Meaningful Savings, Short-Term Savings and Spending Money.
- Fixed Expenses, or the bills that must be paid each month, like housing, insurance, or minimum debt payments
- Meaningful Savings, which includes money that’s put aside to improve overall net worth by increasing assets or decreasing debts
- Short-Term Savings, or money to stash away for emergencies or spikes in spending.
- Spending Money, which is the money left over to spend on things like groceries, gas, clothes, and entertainment, offering greater flexibility to account for shifting priorities from month to month.
Secondly, figure out what you can and can’t control. The next thing you need to do is make your money guilt-free. When you’re not sure what you can and can’t afford, every purchase can feel scary. Can you really afford to order pizza tonight or was it a bad financial call? Can you afford to take that professional development course? Or, should you wait until your business grows? This constant wondering makes us feel out of control, worried and guilty when we spend money. Once you figure out what you can safely spend, you don’t have to worry anymore. P.S. YOU ARE ALLOWED TO SPEND MONEY.
Thirdly, prioritizing your savings. We all have a million savings goals: Save for retirement, pay down debt, save for a vacation, put money in the RESP. But, we only have so much money and we can’t always do everything. Without a plan, it can feel scattered, like you’re spinning your wheels. Make a plan. Prioritize properly and then implement. It doesn’t have to be scary, intimidating or boring. In fact, it can be fun.
We all need to worry less about money. Confidence in your finances will lead to future successes. I’ve seen it enough times to know.
Shannon is a Certified Financial Planner, Chartered Investment Manager, author, and founder of The New School of Finance. Her book, Worry-Free Money is a national bestseller. She has a monthly column for Globe and Mail and is a personal finance columnist for CBC’s On the Money and Metro Morning and a financial expert on The Marilyn Denis Show.