All posts by SeattleMoneyCoach

Are you giving up control to electronic banking? My rant

Practical Money Path

The other day I’m watching television and I see this Chase commercial announcing that they now have a smart phone app that lets you know when your bank balance is getting low. They’ll “alert” you. The commercial shows a woman in the middle of a yoga class getting such an alert. She calmly extends her perfect yoga poise and uses her smart phone to transfer more money into her account. (From where, I wonder.) Thank goodness the bank let her know before she went into overdraft.

I’m not sure anyone has noticed this, so let me point something out: people’s handling of their personal finances have not improved since the advent of on-line banking. In fact, it’s gotten worse. The reality is that many people who used to balance their checkbook stopped balancing when on-line banking came out. There is this strange perception that the bank is somehow managing your account for you now that you can see your statement on-line. When you add to this the ability to put bills on auto-payment, many people have simply checked-out. Who needs to actively manage their personal finances? It’s all on autopilot…

Is this really how we want to run our finances? This is the definition of being reactive around money, as opposed to proactive. Here is how it is supposed to work: We are supposed to be in control of our money and know where it is going and how much we have.  But many of us feel foggier now than ever before. So many are so frustrated and don’t know what to do.

I fear that the world of electronic banking has a very dark side. I worry that it allows us to abdicate our power to the gods of technology. Yes, we are all very busy. And we tell ourselves that we don’t have time to manage our money. (Besides, the bank is doing it for us.) We’ve stopped paying attention as much as we used to. (And some of us never paid that much attention to begin with, I know.) And if our balance goes too low, well, now the bank will just let us know! Like Pavlov’s dogs, we simply react to the sound of the bell. Now we can pay even less attention! We can be totally reactive and just wait until our phone tells us what to do….

So let me plead with you for a moment. Whether you like it or not, money is one of the most important substances in your life. You need it to eat and generally provide for yourself and your loved ones.  It’s also likely that you work between 30 and 50 hours a week for money. Do you really believe that you don’t have time to spend 30 minutes a week managing it—tracking where you spent it or deciding where you want and need to put this form of life energy? Remember, money is simply a form of life energy. (See my previous post on three reasons that people stay in the money fog. As a money coach, I know that it is not as easy as simple deciding to get out. But I just had to rant about electronic banking for a moment!)

I worry for younger people growing up with on-line banking. Will they fall prey to the notion that technology can do everything for them and they don’t have to spend time deciding where they want this valuable resource to go? No one and no gadget can manage your money—only you can do that. Now,  I am not opposed to technology. I use technology to help me plan my income, spending and savings, and to track where my money goes. And yes, I pay bills on line. But I am in control of it. I don’t hate on-line banking.  I love being able to easily access my accounts. And paying my bills on-line beats licking stamps any day. But there is a right use of technology. Anything that beeps at you in Yoga class and causes you to react should be suspect. You are the driver of your financial life.

Your Money Personality– What really motivates you?

Underearning 101

If you have  some extra money that comes in unexpectedly, what do you do with it? Your answer may be related to your own money personality.

We all have different “money personalities”. And one simple way to think about your own personality is to ponder what truly motivates you around money. What is important about money? Regardless of whether you’re aware of it or not, these “money motivations” are part of your personality.

The good news is that if you get clear on your personal motivations, your financial behavior will make more sense to you. Of course you’ve done things the way you have, because you’ve had your own motivations that drove you! If you get conscious about these motivations, it will be easier to make cleaner money decisions.

There are two primary money motivations (well there are more but I’m going to focus on the big two here.) They are FREEDOM and SECURITY. Most of us are motivated by either the deep need for freedom or the deep need for security. Here are three quick questions to help you think about yourself:

1. Is money important to you right now because it allows you to:
a. Go out and get what you want?
b. Feel secure?

2. If you have money left over at the end of the month, do you:
a. Go out and have a good time?
b. Put the money into savings?

3. Are your goals about money:
a. To have enough of it so you can do what you want to do?
b. To save enough of it so you never have to worry about your old age?

Now granted, these are very simple questions. I know that. But I bet you see the point. Most of us are either motivated by freedom or by security.

If you’re motivated by freedom, you see money primarily as a source of freedom and you want and need a lot of autonomy in your life. If you sense there is not enough money, your deprivation buttons get pushed big time! You tend to chafe at schedules and are more likely to be self-employed or have a work schedule that doesn’t depend on you being at your desk 9 to 5. You’ve probably never worked seriously with a budget, but you are very generous with your money sometimes.

If you’re motivated by security, you see money primarily as a source of security. To you, money equals stability and protection. It means protection against bad things that could happen. You tend to not like a lot of risk (too stressful!) and you enjoy a regular source of income. (An erratic income is super hard on this personality type.)  You’re more likely to plan your finances, and you actually may enjoy this.

Keep in mind that neither one of these money motivations is better than the other. It’s about balance and not being too extreme. There is nothing wrong with being motivated by freedom. But taken to an extreme, you may blindly spend everything you’ve got and end up in deep debt. There’s nothing wrong with being security minded, but taken to an extreme you don’t risk enough and enjoy your life now. You don’t want to only live for the future!

If this intrigues you, I’m teaching a teleclass on understanding your money motivations on September 29th at 12 noon, Pacific Time. Register here. (We’ll send the recording out if you can’t make it live. But you need to register first to get the recording.)

If you would like to read more, check out Olivia Mellan’s books.  Start with Money Harmony. Olivia is a brilliant psychotherapist who focuses on money issues. And her famous book Money Harmony is still my favorite on understanding your money personality. She goes  very deep into many money personality types, going far beyond the two motivations I’ve written about here. (And her other awesome book, Overcoming Overspending– a winning plan for spenders and their partners, is really fabulous.)

So what about you? Are you more motivated by security or freedom? Has this changed for you over the years? Do share!

Three reasons we live with the Money Fog Monster

Emotional Money Path, Practical Money Path

That faceless, nameless monster wrapping its numbing tentacles around you may be none other than: the Money Fog Monster. Run! Scream! Hide! But it has a hold on you….

What exactly is this Money Fog Monster? Well it doesn’t really like to be pinned down (or it would lose some power), but let’s throw out some questions to shine a quick light on it. If you answer no, the money fog has got you. I should know. I used to be in its grip!

* Do you know how much you spend eating out? On groceries? How much have you spent on clothes this year? What about your hobbies? What do you spend on gardening, books and other fun things? What have you been spending on your car?
* If you have debt, do you know all your debt balances (and what that money was used for?)
* Do you know your savings balances and do you know what your net worth is?

Those irritating questions point to the monster. And if you feel its tentacles curling up your leg, constricting your ability to see clearly (or breathe sometimes!) you are not alone.

Now, I’ll write other posts about escaping from this Money Fog Monster, but I want to look at the question: why do we stay in a fog? It likely sounds obvious that it would FEEL better to be clear. We often have a friend who doesn’t seem to live with the Money Fog Monster, whether she makes more or less then us, and we secretly envy her. So why do we live with the fog?  Three reasons:

1. We don’t realize we’re in a fog. Maybe we know we’re a little foggy, but it’s not that bad! Sometimes it takes an event to wake us up. Our debt deepens and we are seriously perplexed. It seems like we must be making enough money, so why the heck is the debt going up? Or where the heck is all the money??? It’s a big version of going to the ATM machine to take out 60 dollars and then a week later your wallet is empty and you just can’t remember where it went so fast. Often times, I find that people don’t realize just how deep the fog is until they start to come out. (By the way, because the fog can feel like it thickens when you try to get out of it, it’s one more reason why we back away, give up and stay in the fog. It can feel like the fog has a mind of its own. ) The Money Fog Monster would rather you stay foggy. Wait—is that a part of US that would rather stay foggy?

2. We don’t know how to exit. Let’s say we do know we’re in a fog. Lovely. So how the heck do we get out? I had a client once who said it felt like she had fallen down a well and couldn’t figure out how to climb out, and was terrified. When we started working together, she said she had this image of me standing at the top of the well, throwing her down a knotted rope and coaching her out. I’ve never forgotten that image. The truth is that we often simply don’t have the skills. No one taught us. Did your parents teach you how to plan where you wanted to spend your money? And then analyze what was happening? And then figure out creative ways to get your needs met so you didn’t feel completely deprived if you didn’t have enough? I hope you had those parents, but I’ve heard countless stories of people who learned nothing beyond a few financial platitudes. “Don’t go into debt. Here’s a credit card”, “You better live within your means”. “Don’t talk about money”. Seriously folks- learning about money is not something in the water supply. You won’t understand money if you were not taught about money. That is not your fault!

3. We are afraid of what we’ll see. Let’s hit this last one on the head. So often we are afraid of what we’ll see that we don’t want to escape the fog. It’s the whole “ignorance is bliss”. Or—“if I don’t know, maybe everything is okay.” Maybe. Money is a very emotional subject.  It is part of our very survival, so no wonder it is a scary subject. If we escape the money fog monster, we are often afraid of what awaits us on the other side—will we have to spend less? Is it possible we can’t have everything we want—or need?! Will we have to make hard choices? What about income? Will we see that we don’t make enough? How will this whole financial clarity thing affect our relationships? Our career direction? Gulp. No wonder we would rather live with that blasted monster!

I find that people write about money issues all time like it is not an emotional subject. “Here are the rules. Just do this.” But the truth is that there are reasons we stay in the fog, and no one seems to talk about that. So let’s talk.

Why do you stay in the fog? Which of these reasons spoke to you? For me, it really was all three. I didn’t realize how foggy I was until I started to climb out. And I really didn’t know how to climb out. But I found a great mentor. And in helping me climb out, she helped me face my fears of why I didn’t really want to climb out.  And now I coach other people out of the fog.

In the end, clarity is a far more beautiful thing. I can go on and on about how happy I am about being financially clear. But I vow never to forget all the reasons why it was so hard to face that damn money fog monster.

More shopping advice and the pain of parting with your stuff

Practical Money Path

You know my motto: Earn more and spend wisely! So this post is about that second part- because it doesn’t matter if you earn more- if you blow it all at Target.  Well, thanks to the hot new field of “neuroeconomics”, I’ve learned another bit of shopping advice.

Recently, I wrote in a post about going to Home Depot and what happens when you buy something big and then follow it up by buying a lot of small things. Those small things really start to feel free, in comparison.

I mentioned that I have this habit where I always tell myself I can throw anything in my cart, but it doesn’t mean I’ll buy it.

Now I’m thinking I should rethink that habit, due to what neuro-economists call “the endowment effect.” Brian Knutson, an associate professor of psychology and neuroscience at Stanford, has written about this. Basically, he says that you should avoid hanging on to items you’re thinking of buying in a store. When you carry them around with you, they start to feel like yours. Then you experience pain when you think about getting rid of them. In essence, you will feel like you are “losing” these objects if you don’t buy them, because you’ve become attached to them.  They’ve done interesting studies to support this, all of which point to the same thing: when you have an object in your possession, it feels like “yours”, and you start to value it more then you should. It’s not really conscious.

If I hit Bed, Bath and Beyond and pick up the bamboo cutlery organizer which is right at the entrance to the store, and then proceed to carry it around with me for twenty minutes while I look at other things, well,…. It gets harder to let go of. I’ve pictured it in my kitchen and held it for a while. The point is that it is more painful to put it back then we realize.  If I had left it on its shelf and then gone back to check it out at the end, I would be less likely to buy it. But who wants to have to go all the way back to the front of the store? (Stores know this, of course. They steer you around more purposefully then we know.)

When my son was younger, he was into “Rescue Heroes”. (They are basically action figures for younger kids.) We went to Toys R Us one day to spend a gift certificate and his allowance. While there were many things he wanted, the Rescue Hero’s display was the first thing he saw. So he picked up Billy Blazes and carted him around the store while we were looking. Well, surprise- even though he found a Lego set that he had talked about for a LOT longer, he simply couldn’t give up Billy Blazes.  It was too painful to part with him. The toy already felt like his.

I guess we’re not that different. So I think that I’ll stop carrying stuff around in my cart while I “debate” buying it. Because it does start to feel painful to part with my stuff…

What is your money story?

Emotional Money Path

Why do we do what we do when it comes to money? The answer: We behave according to what we believe, or rather—we react without thinking based on what we unconsciously believe.

So how do you figure out what you believe? There are many ways. David Krueger in his new book, The Secret Language of Money, talks about getting in touch with your “money story”, so I wanted to share his suggestions. It’s important to understand that we use stories to make sense of our world. It is part of being human—though we are not always aware of the stories we tell ourselves. We use stories to simplify complex circumstances and to help us order our personal universe. And if something doesn’t fit our internal story, we either ignore it or change the circumstances to fit it….

So the question is, what is your money story? What is the story you tell yourself about money? Krueger suggests this:

1. Write down three significant “money memories” (These could be positive or negative incidences/ memories)
2. Why is each experience significant to you? What are the emotions around each one?
3. What is the story you tell yourself to make sense of each incidence? What did this experience “prove” to you? Krueger suggests that you imagine telling someone your experience and then end the telling with, “The moral of this story is…”

Don’t assume these are about negative experiences. Your significant money experiences may be how excited you were at landing your first job, or stealing something and getting caught, a broken financial promise in your family, hearing your parents fight about money, or a saying your family had about money.

If you recall an incident related to money, good or bad, you likely still remember it because it was highly emotional. We remember and store things if they are emotionally “charged”. Otherwise, we’re likely to forget. So what are the feelings surrounding each story?

What story does each experience prove? You told yourself a story about each thing, good or bad.

Emily remembered that when she was 15, her mom sent her to the store to buy some groceries. But apparently she bought the wrong things. When she got home, her mom berated her and told her, “I can’t trust you to go to the store! That was good money you squandered!”

Who knows if this is what Emily’s mom actually said. But that is how Emily remembers it. It was a significant memory to her because she felt so bad- she felt she let her mom down, she was embarrassed, she felt she failed and that she wasn’t very smart. Wow. In fact, the incident was so painful that instead of recalling it over and over, she just made up a story to make sense of it all. (That is what we do!) The story she told herself was, “I’m not very smart with money. I can’t be trusted with money.”

As an adult, she lives out this simplified story in many ways. She continues to “make the story true” since it is her story. As you can imagine, she does things that she doesn’t feel are very smart financially. Then she beats herself up.

But once she became aware of her story, she could see how it played out for her. Then she chose to consciously tell herself a new story.

So what about you? What is your money story? What is the story about money you’ve been telling yourself? How long have you been telling yourself this story?

Are you tired of this story and ready to write a new one?

Teleclass on June 23rd– From Underearning to Prosperity

Underearning 101

Well, I can’t make it any easier than this! Our events calendar is now up. Every month I will offer a one hour teleclass on some aspect of improving your relationship to money, for a whopping $37 bucks. (These calls are free to my current Financial Recovery Coaching clients.) I’ll teach for 40 minutes and then we’ll discuss your thoughts for the rest of the call. Or just download it if you can’t make it live. But I hope you’ll join me! June 23rd, 10am PT/ 1 pm ET.  (How to escape the “Money Life Drain” is on July 1st. Check out the calendar for other ones. I’ve got a really cool one on shopping and brain science in Oct. And then there’s the one on Noble Poverty etc etc. I love this stuff!)

From Underearning to Prosperity—the Four Keys  June 23rd, 10am PT/ 1pm ET
Underearning is the pattern of earning below your potential.  So are you earning at your potential? Or are you struggling against an “internal income ceiling”? In this powerful teleclass, Mikelann explores the psychology of why women undersell themselves and what to do about it. From expecting less money than other people, to difficulty in asking for what they really want, women who “underearn” deal with complex emotional issues around making money. Learn four crucial skills to earning what you are really worth and start making more money today!
We’ll cover:
•    One way to make asking what you want easier
•    How women under-price themselves and what to do about it
•    A powerful strategy to conquering the “good girl syndrome”
•    The importance of getting in touch with your “resentment number”.
Come away feeling empowered to earn what you are worth! You really can conquer underearning. Register.

Why small things start to feel free: Shopping advice

Practical Money Path

So I’m at Home Depot to buy a hundred dollar garden bench. This was the plan. Really. And while I was wandering around the garden section, I found these cute five dollar hangers for pots. Then I saw some discounted annuals. Three dollar Pansies. Even I can grow pansies. Throw them in the cart. I mean, really, it’s almost free. I was already spending one hundred dollars! Then I saw some ten dollar solar lights for my garden. Hey, they were only 7.99 on sale! Throw them in. Okay, now some 99 cent seed packets and a $5.00 hose attachment. I mean, come on, it’s only five bucks. I was there to spend a hundred. What’s five bucks?

I always tell myself I can throw anything in my cart, but it doesn’t mean I’ll buy it. So before I hit the checkout stand, I added up my “freebies”. They came to forty bucks. Oh, and the hundred I was already planning on spending.

What was going on here? I was experiencing a shopping phenomenon that actually has a name: It’s called “decreasing sensitivity to losses.” George Lowenstein is a cutting edge researcher in the hot new field of “neuroeconomics”, at Carnegie Mellon. And he warns against this. (I’m really fascinated by this new field of “neuroeconomics”. I just can’t help it. I’m a money coach who has a masters in “consciousness studies”, so it’s not a surprise, though perhaps a bit nerdy.  It’s a combo of psychology, economics and neuroscience. )

Basically, you want to be careful about buying too much in one store. When you spend a large amount at a store (my hundred dollars) then everything else feels cheaper there then it normally would. It’s all relative, right? So when you start buying a lot of small items, they start feeling free.

If you go to another store to buy these small things, they don’t feel so free. I doubt I would have spent the forty bucks there if I hadn’t been about to part with a hundred dollars.

I find this type of research really helpful. First of all, it tells me that I’m pretty normal. My brain is just as likely as anyone else’s to experience this. I’m really a pretty smart cookie. And now that I’m more aware of this “phenomenon”, I’m less likely to fall prey to it.

I could say, “Would I still buy all of this stuff if I wasn’t spending the hundred?” Or I could simply put it all back and tell myself that if I still wanted it, I could come back a different time and buy it. But that gets into delayed gratification, and that’s a different post.

For now, I’ll try to be aware of adding a ton of “free” things when I’m spending a hundred bucks.

Financial Recovery Coaching

Emotional Money Path, Metaphysical Money Path, Practical Money Path, Underearning 101

I did it! I finally finished my new website about my money coaching/ Financial Recovery Coaching and I want to share it with you—www.seattlemoneycoach.com . (Yes, my clients are all over the country, but my actual office is in Seattle.) The Women’s Earning Institute has had a site for many years (and still does) but I’ve realized that the information on my coaching practice was very buried. That, and I think some people thought I stopped taking private clients because I do so much work on underearning issues. But underearning is just one facet of money coaching.

Actually, the number one reason people call me is that they are either tired of not feeling in control of their money (business or personal) or they just wish they felt—more in control of their money! And they want to escape the money fog, end the debt cycle, build meaningful savings and deal with emotional money issues. Oh yes—and earn more. So if you’re curious, I recorded a four minute video where I talk about my coaching practice. One of my gifts is helping people develop—and integrate into their lives–  their own P.F.P.- Personal Financial Practice. And self-employed people desperately need this too. (How many of us talk about developing our prayer or meditation practice?) It’s life-changing work. So check it out.  www.seattlemoneycoach.com (By the way, I do help train new Financial Recovery Coaches, so contact me directly for information on that.)

3 reasons why Food and Money are related

Emotional Money Path

As a money coach, I ask new clients about their relationship to food.

What? Why am I asking that? Because food issues and money issues are VERY related. They are the two most common things we turn to, to make ourselves feel better.

Think of it this way– when we are depressed, sad or angry, many of us will eat to make ourselves feel better or we’ll spend money to feel better. They are also how we sooth ourselves when we feel anxiety.

How about you? Have you ever had a bad fight with a friend or a boss and then found yourself out shopping? Or perhaps indulging in some yummy ice-cream?

We also turn to spending or eating when faced with fear of deprivation. When people start a weight loss program, for example, it is common for their spending to spiral out of control. They are afraid of being deprived in one area of their life so they turn to another area to indulge and prove to themselves that they are okay.

I’ve had many clients sheepishly confess to me that before coming to their first appointment with me they did some major shopping. Why? They were afraid that when they really looked at their money, they’d see they wouldn’t have enough. Now I know the truth is that when you truly look and learn how to take control of your finances, you learn how to truly take care of yourself. There is enough. But the initial fear is that of deprivation.

Food and money swing in the same orbit. We use food and money to reward ourselves. We use food and money to punish ourselves. (Sometimes we don’t spend enough money on ourselves and we don’t eat enough. We also deprive ourselves by underearning.)

Food and money are also related because they are both socially sanctioned. What I mean is this—you may have a major spending or eating issue, but no one calls you on it. However, if you have a cocaine issue, eventually (hopefully) someone will call for an intervention. Now you may say that food and money are both “legal substances”, so we don’t call anyone on their addiction to them. True. But so is alcohol.

I find that yet another reason food and money are so related is that there is no hard core “bottom line” for either. You can’t say to yourself, “I just won’t eat.” or “I just won’t spend money.” You have to eat and you have to spend. So what is the right amount? This where it gets very personal. You need to discover, for you, what your ‘bottom line behaviors” are around money. And they may be different than someone else’s.

For me, my bottom line financial behaviors are to track where I spend my money. If I don’t do this, I go into a money fog. And it’s so easy to overspend if I’m in a fog. I mean, hey—maybe everything’s okay, right?

Like it or not, food and money can be very related, though many of us tend to have one we turn to more than the other. So consider this all food for thought. What about you? What you’re feeling super emotional, do you turn more to spending or eating? What are you aware of?

Take care of yourself and let go of low-fee clients

Emotional Money Path

Let’s say the hardest thing first: if you raise your fees, it’s possible you may lose some clients. And I hear the fear over losing anyone. However, if you raise your fees by ten percent or less, it is likely that you’ll lose very little business. (And it’s also likely that if someone leaves over a small fee hike, they were likely going to leave soon anyways.) Still, it’s possible.

Yes, you could lose some clients if you raise your fees – even if you raise them by a small amount. AND this could be an appropriate and good thing. You’ll make more money (and have more time!) working with fewer clients who pay you a higher fee than if you work with everyone who pays you a lower fee. Think of it this way: You must make room for higher-paying clients by letting go of some lower-paying clients at the bottom.

I once presented a rate-setting seminar to a group of therapists, and the possibility of losing clients due to a rate hike was the hardest part for them. Some of them had worked with the same clients for many years without ever raising their fees. They felt that they owed it to their clients to not raise their rates. But this is simply unreasonable. You must raise your fees by about 5% each year simply to keep pace with inflation. Where does it say that we should put our client’s needs in front of our needs and our family’s needs? Where is it written that we should sacrifice ourselves on behalf of our clients? Low fee clients exact a price paid for by our increasing deprivation.

Your lower paying clients will decide on their own if they can afford you, but no professional, including therapists and other healing professionals, should promise her clients that she will never raise her rates. Remember, if nothing else, you have to raise your rates to keep from falling behind.

Our relationships with our clients are very powerful. We may sometimes become very wrapped up and enmeshed with them. We can honor and care deeply for them, but if you don’t take care of yourself financially, the quality of your work will suffer. It makes little sense to deprive yourself in order to help others. Low fees contribute to the syndrome of the wounded healer.

Of course raising fees is difficult. It feels very emotional. But we owe it to our clients to raise our rates fairly and regularly. If you are doing great work and your clients are getting results, they will rarely leave you over a 10 percent rate hike. But sometimes it happens. Time to breathe deeply.

TIME TO EARN MORE?

If you would like to earn what you’re truly worth and step into greater abundance, please see Mikelann’s Unlock Your Earning Power toolkit.   Identify what has been holding you back, learn the skills to ask for more and start earning at your true potential. For both self-employed and salaried women.