Three years later jobs are still uncertain and debt issues loom nationally and internationally. BUT the average savings rate went from negative to a positive 5%. Total credit card debt decreased. Americans were saving and doing a great job of it.

Today, despite high unemployment, many people adjust and manage. An ex- middle manager I was talking with the other day had been laid off and given a severance package that kept him afloat for a year. Inspired one day by the mounting junk in his own basement, he was surprised how good it felt to get rid of it. Following that burst of pleasure he got an idea-how about starting a business of hauling away junk? A month later he had a truck ready to roll and ads on the Internet for Sam’s Haul Away Service. Now, two years later, he has a thriving business, little stress and is 20 pounds lighter!

The other day I overheard two men talking with each other in Williams Sonoma while their wives bought gifts without restraint. “Hey, Bill, feels good to give the economy a kick for a little holiday cheer, doesn’t it?”
“Yeah, it’s one hell of a change from ’08. Let’s hear it for the good old US of A!”

What? Retail spending? No worries? Well yes, despite the clouds in the sky there is only so long being extra tight with money can continue without a desire to break out and splurge. It’s like a diet. You eat healthy for a week and over the weekend you head for your favorite cake. An occasional splurge helps you sustain the healthy eating over the long term.

Does this make sense to you? Weigh in and let me know. In the meantime, go with the jingle in your heart and pocket to a Happy Holiday!

On September 11-13, 2011, financial planners, psychologists, social workers and academics met in at the University of Georgia’s College of Family and Consumer Services to share ideas about how to help individuals and families act more effectively with money. Papers ranged from presentations about how anxiety affects money behavior to how money acts as a way to regulate self-esteem.

As with many conferences, the interaction among attendees during the breaks offered some of the most interesting insights. There was a general feeling that we were all embarking on an exciting adventure in creating a new integrated field of study. Financial planners are not trained to take people to the depths of their psyches, just as therapists aren’t trained to help clients with the details of their portfolios. And academics love all the new concepts and want to create new research studies. We absorbed the breadth of knowledge and thought together about how to pool all our resources to invent powerful ways to work with people and their money issues. The psychologists pooled their efforts and signed a petition to start a Division of Financial Therapy as part of the American Psychological Association.

Although the conference may not be of core interest to everyone, I think it represents a step forward in breaking down the emotional barriers that often prevent many people from dealing well with money. We will be several steps ahead if we all come to realize that everyone has money issues and that the way we avoid or deny or inflate aspects of our money behavior are normal tendencies (except in the extreme) we can become aware of and change, if we so choose. All we have to do is  take the first step and become aware.  

Try this simple exercise. Get a small note pad and write down every dollar you spend for the next two weeks. Every time you write a number down also write the feeling, thought or reaction that comes with it. At the end of the two weeks sit down and evaluate your money behavior. Did you spend your money the way you wanted? Did you spend more than you thought?  As you review how you spent your money do you think it reflects you and what you value and believe in?

Send me an email and let me know if this exercise helped you become more aware of how you relate to money. I’m eager to hear!

Over the course of our trip, the exchange rate from dollars to Euros varied between $1.48 US to $1.42. It wasn’t very friendly to my American budget, so I made the most of my dollars by getting Euros from the ATM (best way to get money and avoid unwanted credit card fees) and paying for most of my vacation expenses in cash.

I discovered on my trip that something funny happened with foreign money (in my case, Euros) in my pocket. Once I’d walked away from inserting my debit card into the ATM, the Euros that cascaded out were really fun to spend. They’re larger, more brightly colored, and unlike the usual dollars I watch with care at home. Although my brain was clearly able to make the mental conversion of Euros to dollars, it just didn’t. “I’m on vacation,” I said to myself. “I want to have fun and just RELAX.”

So out went the worries… and out went the Euros from my wallet. When I came home, I discovered I was over my carefully-designed vacation budget.

My spending spree in Italy reminded me of a Danish friend of mine who came to the States and learned some pretty spicy swear words. When something upset her, she would curse like a drunken sailor in English. When I asked her about this, she would laugh and say it meant nothing to her to swear in English, though she would be entirely embarrassed to say the same in Danish. I rarely overspend at home, but abroad it was like the language of money was entirely different. I spent my money in Italy in a way I wouldn’t consider appropriate at home.

If other travelers have similar inclinations, what protection do we have from ourselves when we are in a state of traveling, carefree abandon? Next to not going, the best advice may be to set a limit each day of what you want to spend. Put that amount in your wallet and when it runs out don’t reach for your credit card (or into your friend’s pocket). If you have set your daily limit too low, you can readjust it the next day. The point is to think through ahead of time what your spending needs will most likely be. That way, it is harder to blow through all your money and come home with a bad case of vacation remorse.

The four money scripts are:

MONEY AVOIDANCE (people who distance themselves from money), 

MONEY WORSHIP (people who believe that money will make everything in their lives better),

MONEY STATUS (liking money and what it can buy to impress others and to increase self worth)

MONEY VIGILANCE (being cautious about spending and saving money).

One of the important points Dr. Klontz’s study brings out is how our beliefs, attitudes and emotions about money set the stage for how we spend it. He suggests that MONEY AVOIDANCE, MONEY WORSHIP and MONEY STATUS all have a large downside because people in these categories use money as an expression of strong personal needs that cannot always be satisfied with money.

Let’s look at a typical MONEY WORSHIPER who believes that money will solve problems. Let’s call her Rosie. Rosie sells computer equipment and loves her job. She really likes the affirmation she gets from selling. As a matter of fact, she likes it so much she is known for taking her customers out for free rounds of drinks and dinner because she craves company and adulation. These compelling personal needs take her way over her company’s expense limit. But, in the moment, she doesn’t care because her personal need for affirmation is being fed. At the end of the month, however, when she sees how much she has to pay out of her own pocket, Rosie embarks on a round of self-criticism that is sharp and painful. The only way she can recover is to seek more affirmation. Though this vicious cycle feeds on itself, Rosie can’t stop this ultimately destructive behavior.

Dr. Klontz’s study suggests that the only script that is not destructive for a financial future is MONEY VIGILANCE.  People in this category pay their credit card bills at the end of each month, don’t live beyond their means, and don’t show their money off. If they are too careful they lose out on financial opportunities, but they don’t tend to lose their house, their good credit rating, or their self worth.

Do you find this research news a bit depressing? As if the only way to be financial healthy is to have a well developed watchdog side that protects you from your more immediate, pleasurable, meandering impulses?

On first reading it does sound as if the “dessert of life” must  be banished from our  lives to stay afloat. At the same time, I believe that what this study reveals is that the golden mean virtue of the ancient Greeks still stands  tall today. Everything in moderation. Showing off with money  or indulging in retail therapy once in a while is fine and only human. It is when spending or showing off becomes extreme or compulsive that we should really worry about our money sanity.