...or even your job?
Financial troubles lead to poor performance. Period.
If you are doing any of the following (from least to most alarming), money IS affecting how you do your job:
- Thinking about how much you have in your bank account on a regular basis...and you likely know the amount to the nearest dollar.
- Regularly doing quick math in your head to figure out if you have enough funds to pay all your bills and a little extra.
- Obsessing over the price of gas because a material change will affect your cash flow.
- Waiting until you are almost out of food before you buy groceries or you purchase fewer/smaller size items than you would like/need because you have to stretch your money.
- Keeping your bills off auto-pay because you need to get the timing just right, such as when you receive your paycheque.
- Feeling nervous every time you use your debit or credit card because it might not get approved.
- Dreading opening up bills from service providers because if any of them are above the usual amount, you don't know how you will pay them.
- Paying your minimum credit card balance wishing you could do more, but even that is starting to be a stretch.
- Feeling trapped that you bought a car with monthly payments that are making you wish you had not.
- Juggling your financial obligations by paying off one debt with another.
- Questioning whether you should make your mortgage payment this month or pay the utilities instead.
- Repeatedly delaying a medical procedure because you "can't afford it right now" despite the fact that it might cost more later (in money and physical well being).
If you are exhibiting any of these behaviours, I can guarantee you are not at the top of your game.
Why? It saps you of mental energy & "bandwidth".
Your mind can only handle so many priorities and having financial worries will rob you of some, if not most, of your mental energy & bandwidth. These worries make you hyper focused on this nagging problem of never "having enough" and it can be exhausting.
"We must...get by with fewer mental resources. Scarcity doesn’t just lead us to over borrow or to fail to invest. It leaves us handicapped in other aspects of our lives. It makes us dumber. It makes us more impulsive. We must get by with less mind available, with less fluid intelligence and with diminished executive control—making life that much harder." -- p. 66, "Scarcity" by Sendhil Mullainathan & Eldar Shafir
The greater the financial burden, the greater the impact on your performance. Any of the behaviours I listed above will affect your performance to varying degrees in one or more of the following ways*:
- Lost Creativity: being preoccupied makes it more difficult to open your mind to new ideas and concepts that could get you noticed.
- Reduced Ability to Focus: your ability to focus on and stay on a given task is constantly interrupted by your mind wanting to solve your "money problems" because they feel more pressing than the task at hand.
- Impacts to Attention Span: internal brain chatter causes you to have less bandwidth to pay attention to what a colleague/boss/staff member is saying. Your inside voice always wins and can cause you to miss important information that could be critical to your job performance.
- Increased Stress: having a troubled mind increases your stress level 24/7, which may cause you to be ill more often, increase the likelihood of being in a bad mood and may increase your potential for addictive behaviour to relieve the constant pressure.
- Loss of Sleep: being preoccupied is associated with sleep disturbances and insomnia. If you can't get restful sleep, your ability to produce quality work is affected.
- Greater Potential for Mistakes: distractions lead to mistakes. With thoughts about money on the brain, your are in effect multitasking and multitasking is proven to increase mistakes and rework.
If this applies to you, what can you do to address the situation?
You need to regain your feeling of control ASAP. Take charge by getting a plan together and execute:
- Knowledge is power. Write down all your outstanding bills and short term and longer term monthly debt payments and compare it to what you bring in every month to see what the shortfall is that is causing the stress. You need to know the "number" in order to deal with it.
- Save ALL your receipts and track your spending daily for one month to see where the money goes. I like using the Money Journal app or Mint to track these costs.
- Divide the spending into two categories: essential and non-essential. Essential means you need it to LIVE (shelter, food, water and warmth).
- Make your plan for the immediate future: cut the non-essentials immediately, with a focus on the recurring expenses that you can avoid. This does not have to be permanent, but cutting your costs in the short term will increase your sense of control and you may be able to resume some of these expenses once you have reached at least #10 and have a comfortable cushion in your regular checking account (however, sooner is not necessarily better).
- Be accountable. Who can you talk to to share your current situation and, better yet, your plan for how you will successfully hit the "reset" button? And don't forget the joy of being able to share your successes along the way! Choose someone you trust and agree in advance on how often you will check in.
- If possible in your area, commute to work using public transportation to save on car, insurance, gas and parking expenses.
- Start paying your outstanding bills/debt one at a time, starting with the one that preoccupies you the most. We are going after your mental energy here. Go by nag factor.
- Consider moving to a smaller home/apartment closer to work to lower housing and commuting costs. Doing the math to figure out how much you will save is a huge motivator. Go by what you gain, not what you lose as you evaluate your options.
- As you go along and feel you have a bit more "wiggle room", start putting your bills on auto-pay, which will again reduce how much mental energy goes to managing your finances.
- Once you have eliminated your debt and you are paying your monthly bills on time via autopay, start an automatic transfer to a savings account** that will take the same amount off your pay cheque every pay day.
- Continue to save up in order to feel secure despite what financial challenges life may throw your way. Once you have been able to save up at least three months' salary, money should no longer negatively affect your work performance because any concerns about making it month to month, even if you were to be laid off or lose your job***, have been greatly alleviated.
- CONGRATULATIONS!!! Time for a celebration! Call up that accountability buddy. It's time to say "thank you" and pat yourself on the back for a job well done.
Mia Hamm's quote "Success breeds success" seems suiting here. We all need to have a mindset that allows us to be successful and, that means success in how we manage our personal lives can only help us be successful elsewhere. So, give yourself a little financial peace of mind. It can only pay off!
Do you find your financial situation impacts your life in positive or negative ways? How so?
*This list is in part based on the ideas & concepts presented in the book "Scarcity".
** I do not address retirement savings in this post. You may have auto-deductions already, and potential matching from your employer. If this is not the case, once you have your savings up to one months' salary, either add some money towards retirement savings or split your automatic transfer payments to both a savings account and a retirement account.
***Keep working towards having a 6-month cushion, but 3 months is a HUGE milestone and gets you most of the benefit.