One of my favorite parts of running Her First $100K is our Facebook group, The $100K Club. In it, members share stories of their financial success ranging from opening their first HYSA or Roth IRA to paying off debt, negotiating higher pay, and even leaving abusive situations. The group is one big shot of serotonin to my days, and so incredibly supportive.
However, common themes pop up in the group, and one of them is the idea that your financial situation is a component of your self-worth.
On every post about someone hitting their first $100K, there’s usually a comment or two of someone feeling awful about their perceived distance from their financial goals –– whether it’s getting out of debt, buying a home, investing, etc.
I’m always a little heartbroken over these posts because as much as I empathize and see where these members are coming from, I almost want to shake them and remind them fervently that their self-worth is not at all dictated by the amount of money they do or don’t have in the bank.
Like any situation where we find ourselves placing our value in external factors, the best solution to removing a sense of self-worth from our finances comes from finding it elsewhere, and often, that place is within ourselves.
But there are ways to heal this particular money belief system, including changing our relationship with money, healing our own perceptions, and learning to use money as a tool for good. I’m going to break down a few ways you can work with your money, regardless of your financial situation, to help improve your own lens of self-worth.
Recognize You Are not Alone
In the United States, debt has become the norm. The average American carries $92,727 in personal debt ranging from student loans to credit cards, mortgages, and everything in between. Debt is usually the culprit that drags down our net worth, which is why younger generations specifically struggle with building positive net worth.
When looking at net worth statistics, it’s essential to look at the averages and the median net worth, which tells a far different story.
For a quick refresher, averages take into account all numbers, meaning that the scales tip into a slightly more optimistic picture because of those with extremely high net worth.
The “average” net worth for age 35 and younger is $76,000, which seems pretty high! Break it down into the median (which is the number directly in the middle of a set of data), and you’ll see a slightly less promising figure: $14,000.
Personal Capital Data: The Average Net Worth By Age
Why mention this? Personally, I think the median paints a more accurate picture of what the Gen Z and Millennial generations face in terms of debt-to-income ratios. Hopefully, you’re feeling a little less alone.
Put on the Blinders
No two people are ever completely alike, and in the same vein, no financial situation is the duplicate of another. We all grow up with different circumstances, beliefs, and money stories.
It’s natural in the world of social media and endless information to feel the temptation to compare your life to someone else, but all the comparison game does is cause more stress, anxiety, and a lack of focus on your own goals and dreams.
When building your financial game plan, asking for advice or finding others who have come from a similar background is a smart move. It never hurts to see how someone else paid off their student loans or built their first $100K–– but the comparison has to stop somewhere.
As soon as you have your plan, put the blinders on and focus on your own race. Your timeline will be different from everyone else’s and that’s OK.
You can use free personal finance tools to track your own financial life –– sans comparisons. Since the start of my financial journey, I’ve used Personal Capital’s free tools to track my net worth. I linked my financial accounts and could see in one place how I was tracking toward my goals. You can use them to visualize your own goals, whether that’s paying down debt, building up an emergency savings, or investing. It allows you to set goals and makes recommendations for how you can get closer to the financial life you envision for yourself.
Make Values-Based Spending Decisions
One of the most infuriating pieces of financial advice is the “don’t spend money on anything non-essential” tip. Not only does complete deprivation not work, but it’s also likely to make you more stressed and resentful towards your current situation.
Don’t get me wrong, cutting your budget down to essentials is a part of helping you get better control of your finances, but everything needs a balance. A latte once a week is not going to alter your ability to build wealth demonstrably. Nor is going out on a nice date with your partner every once in a while.
When you’re trimming your budget to help pay off debt or build wealth, I recommend creating a category called “value-based spending,” where you choose three areas in your life that you are willing to spend money on (typically outside of your essential spending). This could be as simple as loving organic food and not feeling guilty about shopping at a more expensive natural grocer or getting a massage once in a while because it’s a bit of “you time” during the month.
Celebrate Your Wins
Humans love a good dopamine hit, and rewards systems are great ways to keep us motivated as we work towards our financial goals. Plus, this is a chance to truly celebrate yourself for all of your accomplishments along the way.
Let’s say you’re working towards paying off $10,000 in debt and building your net worth to $20,000 in the next two years. Build a plan that includes a few “milestones” and choose something to do for yourself that you really love and makes you feel like the best version of yourself.
Here’s an example of how mine might go in this scenario.
Paying off $5,000 in debt: Buy one new plant to add to my collection
Paying off $10,000 in debt: A nice dinner at an upscale restaurant I’ve been dying to try with a friend
$10,000 net worth: Buy a roundtrip domestic flight and hotel for a weekend stay
$20,000 net worth: Booking an international trip
These are just examples based on what motivates me. Spend some time thinking about what rewards might light you up. As a bonus tip, go a little bigger with each milestone!
Use Your Money for Good
One of the best ways to heal your negative emotions around money is to learn how to use it as a force for good in the world. You don’t have to be a millionaire to make charitable donations to causes that matter to you.
Using your money for good can be as simple as grabbing an extra few cans of food to donate to a shelter, or setting up a recurring $5 a month donation to your favorite charity.
When we use money as a source of goodwill, we inherently begin to heal the way we view it.
You Are More Than Your Money
We put a lot of emphasis on money, and I’m not going to pretend like it isn’t important. Money is a tool that can bring you security, joy, and freedom, but you are also so much more than the number in your bank account.
It’s worth saying again –– you are NOT your net worth. So, don’t let those numbers ever make you feel like less of the incredible person you already are.
Personal Capital compensates Tori Dunlap of Her First $100k (“Author”) for providing the content contained in this blog post. Compensation not to exceed $500. Author is not a client of Personal Capital Advisors Corporation. Additionally, in a separate referral arrangement between Author and Personal Capital Corporation (“PCC”), Author is paid $70 and $150 for each person who uses Author’s webpage (www.HerFirst100k.com) to register with Personal Capital and links at least $100,000 in investable assets to Personal Capital’s Free Financial Dashboard. As a result of these arrangements, Author may financially benefit from referring potential clients to Personal Capital and/or be incentivized to present blog content that is favorable to PCC. No fees or other amounts will be charged to investors by Author or Personal Capital as a result of the Referral Arrangement. Investors that are referred to PCC and subsequently subscribe for investment advisory services provided by PCC’s affiliated adviser, Personal Capital Advisors Corporation (“PCAC”) will not pay increased management fees or other similar compensation to Author, PCC or PCAC as a result of this arrangement. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.