Yahoo Finance Rachel Cruze: This Is the Real Reason You Feel Behind With Your Money
It’s normal to feel behind financially. According to a CNBC survey, many American adults feel like they aren’t where they need to be in their retirement planning and other financial matters. So, what can you do to get rid of that unpleasant feeling?
In a recent podcast episode, personal finance specialist Rachel Cruze discussed why she thinks people feel this way and what you can do about it.
Here is what she had to say about this issue.
Also see Cruze’s four steps to overcome financial FOMO.
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Why Do People Feel Behind Financially?
Cruze uses the term “money dysmorphia” to describe this financial discontentment that many Americans are experiencing. She said it is “feeling confused about where you are financially compared to other people. Are you ahead? Are you behind? Are you checking all the right boxes? Are you doing all the right steps?”
Once you start asking yourself questions like these, it’s easy to stress about the answers. That stress can grow until you’re certain you’re behind financially and upset about it. As Cruze acknowledges, everyone asks themselves these questions at some point. It’s not a sign that you’re failing financially.
The popularity of social media also makes it easier than ever to compare your life with other people’s. If you see people taking lavish vacations, buying luxury items and flaunting wealth in their social posts and you don’t have those same things, you may feel negatively about your financial situation.
“Even if we know deep down that social media is just a highlight reel, it’s still really easy to get discouraged when you see other people doing all of these things and having all of these wins that maybe you have not experienced yet,” Cruze said.
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Lack of Contentment Is the Issue
According to Cruze, the root of this financial insecurity and money dysmorphia is a lack of contentment . “Contentment is something that I really value. Contentment is this place where you have this level of gratitude and awareness about your life and you have peace with what you have.”
She clarified that contentment doesn’t mean you’ve accomplished everything you set out to do with your finances. “You can still be striving for more and still have goals, but that’s coming out of a place of health rather than a place of feeling like ‘I need these things to be OK.'”
If you don’t have that contentment, feelings of lagging behind can creep in. Cruze said looking at everyone on the internet makes it easy to feel behind in your finances, even if you’re trying to practice contentment.
“[R]emember, you’re not seeing the whole picture. When you have peace and gratitude, knowing that ‘hey, I’m where I’m supposed to be,’ that will be huge for you,” she said.
Benefits of Practicing Financial Contentment
Cruze is a proponent of practicing contentment to get yourself out of that damaging comparison culture. “It’s not about everyone else and what everyone else is doing or not doing — it’s about you.”
She believes that eliminating those comparisons in your mind won’t just make you feel better — it will also help you make real improvements to your finances. “Once comparison is no longer part of your financial discussions, then you really are unstoppable when it comes to building wealth.”
Here are three benefits of financial contentment, according to Cruze:
Saving More
When you outline your financial goals, at least one of them probably involves saving money. Perhaps you’re saving for a wedding, your children’s education or a down payment. Whatever it is, saving money is challenging for many people.
The majority of American workers would not be able to afford a $500 emergency expense, as reported by CNBC. This worrying statistic indicates that most people don’t have at least $500 saved and are in danger of going into debt for emergency expenses if they can’t save more.
Cruze explained that financial contentment can be the answer to saving more money. Financially content people save more because they can confidently say no to expenditures they don’t need or want. Instead of feeling like they need to spend everything they earn, they will take some of their earnings and save.
Paying Off Debt Faster
Financial contentment may make it easier to pay off your debts, too. Cruze said “content people also find it easier to sacrifice their lifestyle to pay off debt.”
To eliminate your debt, you need to find extra money in your budget and put it toward your outstanding loan balances. That’s tricky when you’re spending all your income trying to keep up with everyone else. Understanding that you’re doing your own thing and being willing to cut unnecessary expenses will help you find room in your budget to pay off your debts.
Being More Generous
Cruze said the final benefit of financial contentment is it enables you to be more generous. While this effect may not benefit you directly, it will help you make a difference.
“When you are grateful for where you are and a need comes along and you have the money, you can let it go that much easier,” Cruze said. “You’re not thinking of opportunity costs.”
How To Track Your Progress With Financial Contentment
How do you know if you’re financially content or making progress toward that goal? Cruze said to ask yourself the following questions:
Can you afford your basic needs: food, shelter, utilities and transportation?
Do you know how to save for what you want out of life?
Can you reach a maintenance phase so that financial peace is long-lasting?
Work toward the point where your answer to all three questions is “yes.” Each time you answer one of these questions positively, it will help you build more financial contentment.
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