It is Worth the Effort to Be in Touch with Your Money Because It Feels Better Than the Alternative
Hi Friendos,
Have you ever felt like you had a couple months go by where you spent your entire paycheck and don’t know where it all went? Or felt like (non-emergency) expenses just kind of happened to you rather than you really choosing them? It feels bad to be out of touch with your money and I think the way to feel better is to look at things directly. Even when you just want to be avoidant, or when you know you’re in an unpleasant money situation like having a lot of debt. Relative improvements can still help a lot!
Last month I read a story about a 79-year-old retired librarian who found paperwork for a $25,000 CD (certificate of deposit) they had opened in 1990 (article gift link). They never redeemed the CD and were not able to find the money, even after “a yearslong quest…including checking multiple states’ unclaimed property registries, contacting multiple financial regulators and hiring a law firm to help retrieve relevant tax records.” Woah! I can only imagine how awful it would feel to lose such a sum, especially knowing the loss was preventable.
A few weeks ago I wrote that “when we outsource personal finance tasks to a robot or a financial advisor or a partner, we lose direct contact with our money and this may need countering.” Well, this retiree’s lost CD story shows we can lose touch with our money even when we do everything ourselves. It’s common to have no transactions in a CD account before the CD matures, so people pay less attention to their CDs. You might have a retirement account from an old job where you have no transactions for many years, so it would be easy to forget about the account. Or a dormant checking account you meant to close but never did, and there’s an account balance you left behind.
In these kinds of situations, you can create a personal money system that helps you stay in touch with your money. A bit of formal infrastructure that supports your goals. This could include some or all of the following:
- A regular budgeting practice where you make a plan for how you will spend, save, and/or donate your incoming money. You might not want or need to rigorously plan for future expenses, but would find a monthly review of last month’s spending quite valuable.
- A personal finance binder that you update once a year. If our retired librarian had a binder with a tab for their CD, and once a year they went through each tab of the binder to check for any needed updates, they surely would not have lost that money.
- An annual personal finance checklist and/or annual practice for year-end financial planning.
This is the perfect time of year to set up a new system for yourself, or tackle a money-related task or two before the usual year-end business hits. Especially if you are worried about overspending for holiday travel or gifts. Dare to be boring! It feels great.
-Stephanie
