If you’re like most of us, there’s at least one designated junk drawer in your home. This is the “drawer of no return,” the place for rubber bands, loose batteries, coupons, cables, cords, pennies, nail files, anything and everything without a permanent home.
The frustration of a junk drawer, of course, is that it becomes the black hole of your home. Finding a specific item, especially if you are in a hurry, is challenging at best. By the time you finish rummaging around for that particular thing, the moment has passed, and you find yourself wrapping your cut in a paper towel instead of with that bandage you just knew was somewhere in the drawer.
As a financial services professional, I’ve long suspected that many people carry a junk drawer mentality with them when thinking about money. Disorganization with personal finances may the first sign of more profound issues when it comes to money.
Northwestern Mutual did a recent study that indicated money is the number one source of stress for over 44% of American adults.
I believe that much of this stress is due to people never cleaning out their mind’s junk drawers and learning how to thinking clearly and concisely about the role money plays in their lives. These people live in a constant state of financial chaos. Their thoughts about personal finance are fragmented and disjointed. As a result, they often make poor money decisions that come back to haunt them, especially when they want to retire.
Money clarity is about more than knowing where you put your W2’s or when the property taxes are due. It comes when you have a clear mental picture of your relationship to money, what you need that money to do, your overall life goals, and how you can avoid missing opportunities to grow your wealth.
A plethora of confusing, often contradictory financial advice also contributes to the chaos. Our brains cannot handle information overload and push us into procrastination mode. It’s just easier to shut down and not think about it than deal with the confusion.
If you are someone who desperately wants and needs financial peace, there are some things you can do right now to get the peace process started,
1. Pray or meditate. Now, before you accuse me of “woo” science here, you should know that there have been several prominent university studies indicating that prayer and meditation have a cleansing and calming effect on the brain. The act of praying or meditating involves the deepest parts of the brain, including the medial prefrontal cortex and posterior cingulate cortex. These are the areas of the brain that enable us to pause and reflect, rather than act. Praying can cause changes in the brain which control our emotions and allow us to make more practical and rational decisions. I believe prayer is a great place to start your mind cleanse.
2. Determine where you are right now: Once you have cleared some of the bigger junk out of your brain, it’s time for you to take a long, hard assessment of your current situation. Getting real with yourself is going to be uncomfortable, no doubt. But it’s something you must do. You will never be able to get where you want to be until you are honest with yourself about where you are. Ask yourself hard questions such as, “Am I living beyond my means?” “Is my debt out of control?” “Am I ready for life emergencies?” “Can I account for every penny of my paycheck each month, or am I making mindless transactions?” “How did my family’s attitudes toward money affect my own?“ Write these questions down, along with the answers. Don’t sugarcoat your situation; be brutally honest with yourself.
3. Write down your realistic financial objectives. Do you want to be debt-free by a certain point in your life? Pay off your mortgage early? Have money to invest in real estate or start a business? How do you see your life at age 50? Age 60? Age 70? Would you like to create multiple streams of income so your retirement will be less stressful? Practically and realistically define your priorities when it comes to money.
4. Start an emergency fund. I know you’ve heard this advice many times before, to the point where it’s almost cliché. However, it’s critical, so I feel I need to mention it. An emergency fund helps you avoid making bad financial decisions (such as maxing out a credit card or borrowing money) and brings you greater peace of mind. Many experts now recommend having a year’s living expenses set aside. If this seems daunting due to your current income situation, take baby steps. Start by saving 3-6 months’ worth, then build up gradually. You can do this!
5. Pay off as much BAD debt as possible. Bad debt is debt that is used to obtain things that quickly lose their value. This is the type of debt that you are unable to leverage in order to acquire cash-flowing assets or to invest. Bad debt is a finger hovering over the nuclear button, just itching to destroy your life. Don’t let it. Attack bad debt, such as credit card debt, in a strategic manner and never allow yourself to become overwhelmed. By using simple debt management strategies, it is possible to get out from under your debt load and breathe easier.
6. Enlist the help of a money mentor. Your parents have lots of life experiences and wisdom, but they may lack training when it comes to personal finance. You should seek out the services of a qualified professional who can mentor and advise you on every facet of your financial life. He or she can help you design a plan based on your unique situation. Often these financial guides will go the extra mile to help you gain the insights and commitment you must have to create a less stressful, more prosperous life.
The good news in all this is that habits, however profoundly ingrained, are not permanent. They can be changed and modified. It is possible, with a bit of determination and assistance from your trusted financial advisor, to clear out the junk in your head that is holding you back. You can have a more prosperous and peaceful life.