As a doctor, you’re well versed in reading a patient’s symptoms, making a diagnosis, and creating a treatment plan. You can apply this same mental framework to reviewing your personal finances, looking at money symptoms. To do so accurately, however, is going to take a high level of objectivity and self-awareness. Generally, people (doctors included) tend to exhibit three major money symptoms. These symptoms exist on a continuum. No person tends to exhibit one all the time. However, people tend to have a proclivity toward one. Once you identify your money symptoms, you can begin your money treatment. Bleeding You’ll know a money bleeder not by the trail of blood left behind, but the trappings of luxury goods, lavish vacations, and multiple homes. Money bleeders lose money like blood from a severed carotid. Generally, bleeders see a bump in spending not as an opportunity to achieve financial stability, but simply more buying power. Many bleeders have never been on a budget and they wouldn’t know how to create one. They tend to make many impulse purchases, too, driving up their debt load. The drawbacks of being a bleeder are apparent, but there’s at least one upshot: With what little financial life they might have left, a bleeder is going to live it up. Bleeders tend to know how to live large and have a good time. Frequently, money bleeders were raised in extremely frugal households. They receive their first taste of cash, and they want to give themselves (and possibly their children) everything they were denied. While the instant gratification can be great, it also leaves you one job loss, illness, or unexpected life event (like a pregnancy, or a lawsuit) away from financial ruin. Rx for money bleeders If you want to save a money bleeder, you need to apply a financial tourniquet. That means going on a budget. If you’re not the budgeting type, then perhaps having the accountability of a financial advisor will get your spending in check. Some other possible fixes: Give yourself a weekly cash allowance. When that’s gone, you’re done spending for the week. Remove your credit cards from your wallet and smartphone, making impulse buys more difficult. If you want something, make yourself wait 24 hours before buying. The cool-down period before the purchase will help you determine if you really want the item. Obstructed Let’s be honest, from a financial standpoint, most Americans should probably save more money. However, over-saving creates its own set of psychological and logistical problems. That’s when people become financially obstructed. The financially obstructed get an almost erotic satisfaction from their wealth. Their idea of a wild night is checking their asset allocation in their retirement accounts. They are puritanical with their frugality. Buying a cup of coffee or splurging on appetizers is out of the question. Many financially obstructed people have a fear-based attitude toward money. Maybe their parents didn’t have much. Or maybe they endured severe financial hardship at some point in their lives. The wound caused an extreme reaction, and now they’re holding onto every cent that comes their way. Rx for the financially obstructed The financially obstructed need to loosen up a little bit. They’re often missing out on what wealth can do for them, which is the true value of money. It’s time for a financial laxative. Obsessing over your finances isn’t helping you. It’s time to relinquish some control. You’ve made enough, now hire a financial advisor you trust to watch over things for you. Spend a little. But spend wisely. Want your purchases to generate some happiness for you and your family? Spend on experiences. Get the appetizers and the latte. If you’re already wealthy, you should be investing mental bandwidth on amounts such as $5,000, not the $5.00 coffee. Disoriented You’ll know the financially disoriented by their catatonic stare when the topic of personal finance comes up in polite conversation. Say words to them like 401K, IRA, tax-advantaged accounts, and they’ll nod their heads. They know what you’re talking about. They know they should be taking these financial steps. But they don’t. The financially disoriented exhibit an almost sociopathic regard to money. They don’t think that the rules apply to them. These poor souls think that the money piling up in their checking and savings accounts (which is actually losing some value over time due to inflation) will be enough to meet their needs if and when retirement ever rolls around. Many financially disoriented people have become so because money and financial planning makes them anxious. It all seems so complex, risky, and time-consuming. The financially disoriented are often stressed and overworked. They simply don’t have time to open the 401K, meet with a financial advisor, or start an emergency fund. Rx for the financially disoriented The financially disoriented need to realize that money and personal finance aren’t all that complicated. Once their fear and anxiety are alleviated, they can begin taking action and automating their finances. Start by reading a good, simple financial book. We like I Will Teach You to Be Rich by Ramit Sethi. Assess why you haven’t done what you should be doing with your money. Is it because you don’t have time? If so, then it might be worth paying a financial advisor to do the legwork for you. But if it’s because you’re afraid, well, see the first bullet point. Set goals. Many financially disoriented people don’t take this first step. Maybe you want to retire by age 45. Perhaps you want to own a second home. Maybe you want to put your children through college. As Stephen R. Covey wrote, you need to begin with the end in mind. TL;DR What are your money symptoms? The money bleeder: Reckless spending. Stop the bleeding by applying a tourniquet. Go on a budget. The financially obstructed: Compulsive saving. Needs a financial laxative. Relinquish control by hiring an advisor and spend wisely, like on experiences you’ll cherish. The financially disoriented: No idea what’s going on with their money. It either makes them anxious to think about, or they don’t have the time to manage it. Needs to form goals and create a plan. Source
