Worried about Money?

by Eric Tyson

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We Americans are a financially anxious lot. While much of that anxiety comes from living paycheck to paycheck, which the vast majority of Americans do, we're also anxious about our investments, balancing work and family, etc. Money is the number-one issue couples fight about, and spending is the number-one thing we hide from our spouses. (The number-one issue married couples cover up is how much they spend according to Ipsos-NPD! Husbands hide details on their purchases from their wives about as often as the women dupe the men in their lives.)

So if you're anxious about your spending, your investments, and balancing work with the rest of your life, what can you do to develop better spending, investing, and other financial habits to make the most of your money and your life? Tyson offers the following tips for developing the best money habits:

  • Don't think that a budget is the best way to save more. Telling people to reduce their spending is like telling an overweight person to just lose weight. Easier said than done. The fundamental problem is that following a budget or a diet is simply unpleasant and often doesn't attack the root causes.

  • Do track your spending. Get out your bank record, credit card statements, and anything else that will help you detail where you spend your money in a typical month. Track these cash purchases for a week or two in a small notebook that you carry with you. Determining where your money has been going should help you to identify some fat to cut.

  • Replace your credit cards with debit cards. If you've had a tendency to carry debt balances month-to-month on credit cards, cut those up and instead get a debit card, which is accepted by all merchants who take credit cards. The difference is that a debit card is connected to your checking account, which prevents you from spending money that you don't have and carrying costly debt balances month-to-month.

  • Change the way you approach purchases. To change your consumption habits, you must first change your mindset about shopping. Typically, this involves changing shopping from a source of entertainment, a distraction from other problems, and/or an impulse decision to a simple means to an end, acquiring a product that you feel you need and want.

  • First pay off consumer debt and then start saving. Don't begin a saving program until you've paid off your consumer debt. You're very unlikely to earn an investment return, after taxes, that exceeds the relatively high interest costs on credit cards and other common consumer debt.

  • Don't practice financial envy. Our culture too often focuses on getting ahead, promotions, and pay raises. But if you're going to make time for the important things in life, you must resist the temptation to be envious of those with loftier titles and salaries at your place of business and in your field. You can begin that process by realizing that there are no free lunches. Although some people are blessed with extraordinary talent and luck, you'll often find that the super-successful people in this world, with their mugs on the cover of every magazine, are workaholics. Don't emulate these workaholics to get "ahead."

  • Choose employers and careers considering the big picture. Many people with modest incomes make the decision to fit work into their lives rather than continuing to try to fit their lives into their work. So often, though, people twist and contort their lives and priorities to meet the perceived expectations and demands of their bosses and employers. Fitting work into the rest of your life often involves choosing employers and even careers that enable you the flexibility and ability to accomplish your personal and family goals.

With a deliberate, conscious effort you can overcome your overspending and poor investment habits and better balance your life's demands. And the payoff is huge. Not only will you reap long-term financial benefits, you'll gain peace of mind and the satisfaction that comes from mastering money. And that's something you can't buy in any store.

True or False

Debt is preventing me from taking a vacation this year or the vacation I'd like to take this year! Tell us: Yes, debt is affecting my vacation plans! or No, we're going exactly where we want to go but we'd love to learn make our trip as inexpensive as possible!

Eric Tyson is one of the nation's best-selling personal finance book authors and has penned five national best sellers. His Personal Finance For Dummies (Wiley) won the Benjamin Franklin Award for the Best Business Book of the Year. He is also the author of Investing For Dummies, Fifth edition and co-author of Home Buying For Dummies, 4th Edition and Real Estate Investing For Dummies, 2nd Edition , among other titles. His educational background includes a bachelor's degree in economics from Yale and an MBA from the Stanford Graduate School of Business. Mind over Money: Your Path to Wealth and Happiness (CDS Books, 2006, ISBN: 1-59315-238-8, $21.95) is available at bookstores nationwide and all major online booksellers.

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