Pete the Planner: To feel good, you need to really know your finances

Feeling like your financial life is working is an amazing feeling. Sometimes the feeling is legitimate, sometimes the feeling is manufactured, and sometimes it’s not even justified. And despite the fact that I’ve both experienced and witnessed dozens of ways people can make themselves feel financially stable, there are only a handful of ways in which a person can sustain this intoxicating sense of control.

One of the strangest realities I’ve discovered over the years is that spending money makes you feel like you have money. And not spending money can make you feel like you don’t have money. It’s the habit of spending that convinces you your spending muscles are strong and active. Yet the spending muscles somehow atrophy when you don’t use them, and you lose faith in their ability to flex.

I’ve seen this scenario play out over and over again. Households filled with beautiful luxuries and the people who acquired them stand in stark contrast to their sparse bank accounts that once held the prospects of possibility. While across town, a modest, seemingly unappealing residence is filled with financially abundant people, primarily defined by their value of scarcity.

Which group of people feels good?

Yeah, it’s a trick question. No one really knows how these hypothetical people feel. But I do know each household thinks their way of spending, or not spending for that matter, will ultimately make them feel good. I believe the nuance is whether a person’s actions are sustainable.

I certainly know what techniques, tricks and misdirection aren’t sustainable. I know wildly spending money on pleasurable things after a stressful week at work feels good in the moment. But I also know you’ll eventually have to pay the piper, if not AmEx, for that flurry of spending. I know people can take great comfort in hearing, speaking or reading their high annual wage, but I also know that income is only one side of the ledger.

I know not owing anyone anything feels pretty good, but that, too, doesn’t indicate that forward progress is being made. Believe it or not, while owning your home outright is better than not owning it outright, being able to hold your deed doesn’t guarantee financial stability.

Even having copious amounts of money doesn’t guarantee sustainability. In truth, some of the most gut-wrenching struggles I’ve ever seen were prince-to-pauper tales.

Self-control is the holy grail of financial stability. It involves consistently acknowledging your use of resources, studying spending patterns and moments of weakness, and correcting course when life steers you astray.

To understand knowing, you must first understand faith and ignorance.

I won’t overstep my bounds today by superficially exploring faith in a higher power and its impact on your financial life, but I will note that faith without action has ruined many a financial life. In other words, your choices are vital to your success. Math is wildly important, and denying it is dangerous. Even faith in “it will work out,” doesn’t pass the sniff test. At the deepest level, money is the intersection of math and behavior.

I think the cruelest financial peculiarity of humanity is that we don’t want to have to care. We don’t want to budget. We don’t want to have to know how much things cost. And we don’t want to delve into painful financial imbalances. Ignorance is not your friend. Trust me, I’ve tried.

If you want to feel good more often than bad, pursue knowing. Know your financial plan works. Know how much you spend dining out. Know your rate of return. Know the month your mortgage is paid off. Know the face amount of your life insurance. Know how your financial adviser charges you. Know your tax bracket. Know the 401(k) maximum contribution. Know your checking account balance. Know your savings account balance. Know your financial life.

You might not believe me, but I have not just described a tedious person. I’ve described a person who feels good financially. It’s not a fleeting feeling, either. It’s real, it’s possible, and it’s exactly what you’ve been looking for.

You’ve tried the alternative. I know I have. It will take you less than one hour per month to know. This quest for clarity is an investment in your sanity. I, too, am on this journey, and every once in a while, not knowing feels like the better option. But time and time again, knowing proves itself to be the feeling you and I are seeking.•

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Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to askpete@petetheplanner.com.