How Solid Is Your Financial Foundation?

Having a solid financial foundation is essential to our well-being and to fulfill our life purpose.

It doesn’t mean achieving a certain level of wealth, but it does mean being financially stable on a daily basis, and generating enough savings to be able to support ourselves when we are not/will not be able to earn new income.

A solid foundation is therefore not dependent on just earning more money, at least not past a certain threshold. Once we’re talking about income levels above what’s needed to live and not merely survive, more money is not the key to financial stability. What allows the creation of a good foundation is having a comfortable gap between what’s coming in and what’s going out. Your wealth is not what you earn, it’s what you keep.

In a way, money is simply a type of energy - just like food, electricity, gas, etc. What’s great with money is that it’s a very flexible form of energy. We can convert other forms of energy - like our physical, emotional and mental labor -  into money, and conversely we can use money to buy various types of energy (food, fuel, services, etc).

Managing our “money energy” well - just like our other forms of energy - is essential to live well. When we mismanage our food intake, issues arise. When we mismanage money, issues also arise.

In this age of readily available information, people interested in learning about managing their money and improving their financial lives can find plenty of advice and recommendations in books, online articles, YouTube videos, social media, etc. But is getting information truly enough? Good financial management certainly requires some knowledge, but education itself is not enough. Many people struggle with their finances despite knowing what they need to do.

In my observation, a lot of people know the basics: living below one’s means, spending less, saving more, paying off debt, investing savings, working at earning more income, etc. For those people, the problem is not a lack of knowledge but how to work with their patterns and habits around money. Our financial habits are rooted in our personality, family conditioning, and lifestyle choices, and how we interact with money is actually deeply emotional.

For example, even if we know that we should spend less on takeout meals, if we find ourselves constantly overwhelmed, exhausted and hungry at the end of the workday, we will order another takeout meal for the family. Survival will take precedence over knowledge, and it makes complete sense. It’s intelligent to satisfy hunger, and money can help us save time when we need food now. To continue with this example, if we want to save on takeouts, we’ll have to explore the needs and emotions driving us to order takeout food at the end of a long day. We’ll have to look at how we plan/don’t plan ahead, the pace of our days, what overwhelms us, what happens when we’re hungry and there is no food ready to be eaten at home, etc.

As we can see with this simple example, it’s not just a matter of knowing that “I should spend less and not order takeout”. In order to be in a position to not order takeout and save money instead, we’d need to do some investigation and also some planning work. First we’ll have to anticipate being overwhelmed and hungry at the end of the day, and knowing that we’ll want food that tastes good to give us not only the nourishment we need but also the endorphin or dopamine boost that we crave when we’re stressed out. If we want to avoid buying more takeout, we’ll have to plan ahead and make time on weekends to plan appealing meals, get groceries, perhaps even precook dinners so that they’re ready to be eaten when we get home, etc. This requires a lot of reflection and planning, way beyond simply knowing that we should “spend less, save more”. All this planning and reflection can conflict with one’s usual personality pattern, for example if someone is all about spontaneity. And this is only for one simple example about dinner time.

If solidifying our financial foundations certainly starts with education, our main effort will involve working with our personality and deeply ingrained habits. The key to having a solid financial foundation is indeed self-awareness, self-regulation, and self-control. When we know ourselves really well, and when we have the ability to self-regulate our emotions, we can start having more self-control. We can anticipate our needs, and make sure that we have what will make us feel satisfied.

Over time, we realize that we don’t need to use as much money to cope with life anymore, such as needing to spend on services to save time or to soothe our stress. We also don’t need to use money to feel better about ourselves, and money can become the neutral energy form that it truly is. We can start using it more efficiently and wisely, finding a good balance between covering the basics, splurging on some occasional treats, being generous with others in a sustainable way, while also building our financial future for when we will be older and less able to generate new income.

If financial education can give you the knowledge that you need, developmental coaching can help you with everything else. Be in touch if you’d like to work on this topic with me.