Addicted to…Monday, December 7th, 2009 by Charles Mayfield, CFP®
Not since the sultry sounds of Robert Palmer in 1986 has the term ‘Addicted’ been associated with much of anything positive. It seems the term always carries a negative connotation and for good reason. Addiction implies an unhealthy level of desire for something. We can further that label by the common thread that addictions are typically closely related to the term vice.
Cass has been busy lately posting articles about the mental/behavioral side of investing. In that same vein, I’d like to talk about the difference between a healthy and unhealthy addiction to our money. There is likely to be a little push-back from readers when I make the statement that we are all addicted to our funds. We are closing in on the end of the year and what better time to focus on making sound choices about our finances then now.
Here are three areas where you can curb your addictions for less stress in 2010:
Online Access: If you’re pulling up your 401k or investment accounts once a quarter or even monthly to see the balance that seems reasonable. If the first thing you do at your desk every morning is pull them up while listening to a radio or television pundit spinning the latest opportunities and flops in the market…this has an unhealthy feel to it. To make things worse, most online portals now allow you the ability to change your portfolio. Now you’re reacting in the moment and most likely going to make a decision that is detrimental to your long term goals. Put down the mouse!!! If you have questions about how your investments should be doing, talk to your financial advisor to make sure the money is invested as it should be. Review it periodically and don’t make any moves without talking to your advisor.
Spontaneity: We all enjoy surprising our family or friends with an impromptu vacation or night out on the town. Better yet, how about just doing something for you? Spa treatments, weekend getaways & new toys are atop the list. It is healthy and therapeutic to make yourself and loved ones feel special. However, a constant barrage of eating out, theater nights and hotel stays can add up quickly. Compound that with a tighter budget this year and you have a formula for financial disaster. Stay spontaneous, but make a budget (monthly, quarterly or annual) to keep expenses in check. We tend to spend more than we intended with little planning or research. Money is atop the list of stressors in our lives. You may be compounding your stress/anxiety by not keeping expenses in check when it comes to stress reducing activity.
The Vice: For me, it was smokeless tobacco. It could be coffee, soda or chocolate for someone else. Odds are good that whatever that “unhealthy addiction” you have, it’s costing you money and probably your health. Is it realistic to think you can completely remove something like tobacco from your life? Absolutely! Coffee or sweets may be a much tougher challenge due to less social stigma. There are things you can do to cut costs. Make your coffee/espresso of choice at home. Create a reward system for eating that snack food. For example, a balanced checkbook at the end of every month gets you that sweet snack. Successfully running a 5k race earns you a trip to IHOP. I had one client that was addicted to diet soda. Her rule was simple…she couldn’t drink a diet soda until she had consumed 32 ounces of water during the day. Not only did she save money from less soda purchases, she lost nearly 20 pounds in a month.
A few changes to how we live our lives can mean huge reductions in stress & expenses. Try some of these on for size in the coming year.