The income trap…when yesterday’s luxuries become today’s necessities

Not surprisingly, my financial therapy clients with low to moderate income and few assets often experience symptoms of financial stress such as anxiety and depression. Even though they juggle their funds by alternating which bills they pay each month, they still come up short. Interestingly, even clients with triple digit incomes and substantial assets report symptoms of financial stress such as panic attacks, mood swings, and a loss of interest in regular activities.

Paradoxically, the attainment of more income does little to alleviate financial hardship. Increases in salaries are expended on larger houses, finer wines and more frequent and extravagant vacations. Soon yesterday’s luxuries are today’s necessities. Too often, when a couple’s spending is disproportionate to their income, they contend with more than harassing calls from bill collectors. Financial pressures lead to arguments, especially as the pile of unopened and unpaid invoices fill the mailbox. Numerous research studies reveal that arguments about money are more likely to predict divorce than arguments about other topics. Utah State University researcher, Jeffrey Dew found that those couples who are burdened by higher debt argued more frequently about their finances and spent less time together. One reason couples may argue about money is they do not share a unified view of their family income, assets and liabilities. One study found that half of the couples surveyed reported significant differences in knowledge of family assets and liabilities.

Poet E. E. Cummings summed up the financial condition of these clients when he acknowledged,

I’m living so far beyond my income that we may almost be said to be living apart.”

Are you and your income “living apart”? Would you like to get your spending more in line with your income? Are your financial problems exacerbated by relationship tensions?

If so, you may benefit from reevaluating your spending priorities.  For many couples, spending creeps up each year until there is not enough money to pay for all those luxurious necessities. That is, until there is a financial crisis. A Pew Research found that many Americans changed their minds about which everyday goods and services they could live without when unemployment, foreclosures and personal bankruptcies were on the rise from 2006 to 2009. Over this period, a declining proportion of all the adults surveyed viewed the following items as necessities: microwave (-21%), clothes dryer (-17%), home air conditioning (-16%) and dishwasher (-14%). Looking more closely at the survey answers reveals that higher-income adults are more likely than lower-income adults to rate more of the items as necessities regardless of the prevailing economic conditions. It seems that as higher incomes are spent instead of saved, people become trapped into a more luxurious lifestyle.

Implementing spending cuts is never easy. Financial therapy may help you sort out what is really necessary for your financial wellness and relationship satisfaction.


Dr. Jean Theurer is a Certified Financial Planner® and a Registered Marriage and Family Intern.

Be SMART about Financial Resolutions

Finance Money

At the stroke of midnight on New Year’s Eve, our commitments to newly formed resolutions seem unwavering. Most people who make New Year’s resolutions are determined to meet their goals. Many develop detailed and thoughtful plans to ensure that monthly budgets are followed, weekly exercise is performed or daily nutritious meals are consumed. According to research done by Professor Norcross at the University of Scranton, nearly half of adult Americans make New Year’s resolutions. A week later more than three fourths are still on track with their plans.

As a financial therapist, I am happy to report that one of the top three resolutions is to spend less and save more. Unfortunately, the toasting stops here.  As the year progresses, commitment wanes and after six months, only  40% of the New Year’s resolvers report they are still trying to stick to their New Year’s plans. How did these “best laid plans go awry”?  Were they too broad, vague, ambitious or unrealistic? Not always.

As a certified financial planner, I often work with my clients to develop a plan according to the SMART principles of financial planning. By setting specific steps to follow, we establish measurable objectives that my clients can achieve within a realistic time frame. For most people, that is a lot to think about. Inevitably, even some of the most elegantly and comprehensively designed financial plans are ignored or discarded within a few days or weeks.

As a marriage and family therapist, I understand that there is more to being smart about the financial planning process than these cognitive tasks.  Our emotions play an integral role in the success of our financial plans. Nobel prize winner in Economics, psychologist Daniel Kahneman found that the lion share of all financial decisions are made emotionally, not logically. Were you tempted by the preholiday sales to buy items that you did not need or even want? Have you succumbed to the temptation of  buy one get one free for products you do not use? How do you justify depleting your “rainy day” account when there is not a cloud in the sky?

By exploring your past and present relationship with money, financial therapy helps you move beyond your New Year’s proclamation to spend less and save more. With an understanding of how our emotions affect our financial behavior, we can make changes to align our financial choices with our true passions and values. For example, as a financial therapy client, you may benefit from increased awareness of how your parents, siblings, and extended family members may have influenced your money beliefs and behaviors. Let’s get started.

Take a moment to reflect on the messages you received about money when you were growing up. These money messages may have come from your parents, friends, TV, rock stars, or your great Uncle Albus.  All of them contribute to your relationship with money.  Here is a sampling of statements that may bring forth your memories of money. Complete the following sentences (try not to filter or judge your thoughts; just write down whatever comes to mind).

Parents owe their children …

Financially, I deserve to …

One should never spend money for …

I first understood how much money my parents made when…

One should always spend money for …

Debt is …

When I was little, I was told that money …

You can count on money to …

Never trust money to …

Being rich means …


Most people have lots of feelings associated with the money messages they received during their youth.  Since our money beliefs and behaviors continue to evolve as we experience life’s transitions, this exercise is only the beginning.  I suggest that while you develop a plan to accomplish the resolutions you made for 2015, spend some time to be sure that it feels “right” for you.

Jean Theurer is a Certified Financial Planner® and a Registered Marriage and Family Intern at the University of Florida

Personal Finances don’t have to be that Complicated

Finance Money

On the surface, personal finance may seem incomprehensible. There are financial terms to master, a host of theories and models to sift through, and even mathematical techniques to wrestle with!  Ultimately, you are expected to choose from a vast array of potential investments to create a well diversified investment portfolio. What exactly does all this mean?

Is personal finance really that complicated?

Whether you are just starting to learn about managing your money or have been muddling through the process for years, here are some core principles that I teach my clients to incorporate in their lives that may help you make desired changes in your life.

  1. Do not ignore your emotions about money. For some, emotions like fear, anxiety, sadness and anger are elicited by thoughts of budgeting, saving, or investing. You may be fearful of losing your job, house or assets. You may be anxious about making financial decisions, especially if you don’t think you have the proper training. You may be sad and angry if some of your financial goals are put on hold due to illness or divorce. Although these feelings are important to honor, you do not need to be held hostage by them. Rather, use your emotions to help you make decisions. Slow down to acknowledge your feelings, spend some time thinking about your financial options and then reflect on how you feel about these alternative decisions. Now, you may be ready to act.


  1. Live within your means. There is really only one equation that you have to remember. Income-Expenses=Savings. When your expenses are greater than your income, you have to resort to loans, credit cards, gifts from Mom and Dad, etc. How do you keep your expenses from wiping out all your income and more? A comprehensive analysis of your “wants” and “needs” is the first step. Undoubtedly, this will bring forth a host of mixed emotions. Some research studies have found that what you think you “want” is often connected to feelings of self esteem and security. In a recently published study, Tim Kasser and his colleagues found that as individuals between the ages of 18 and 30 years old placed more priority to financial success and materialist goals, their mental health deteriorated.  So, reconsidering what you want may not only help you save more. It may make you feel better.


  1. Put your money to work. Compound interest helps you make money on the money you have but it isn’t a “get rich quick scheme”. It takes time.   If you invest $10,000 today at 3%, it will be worth $13, 439.16 in 10 years. But if you keep that investment for 20 years, you will end up with $18,061, and in 30 years, you will have $24, 272.62. (For a detailed explanation of the math involved in these calculations, see Investopedia).  Keep in mind that paying down your debt may be your form of savings. After you have accumulated an emergency fund with a balance to meet three to six months of essential living expenses, funnel extra income to pay down high interest debt.

 These three points are not quick fixes, but they are a starting point to improve your feelings about money and sense of confidence in your overall financial health.

 How are you incorporating these core principles into your life?


Jean Theurer is a Registered Mental Heath Counselor Intern and CFP®

Finances and Feelings

Finance Money

Number crunching. There is no doubt that managing your finances involves working with numbers. Tallying expenses, projecting income, calculating and comparing rates of return, balancing budgets, and analyzing cash flows are just some of the number crunching steps in the financial management process. However, if you are one of many Americans who reported experiencing anxiety when working with numbers, then managing your finances may be the chore that is perpetually at the bottom of your to-do list. Take heart, math phobics! You are not alone in your anxiety. Studies show that even those who are knowledgeable about financial matters and competent in math-related activities struggle to effectively manage their finances. Researchers have found that the connection between knowledge about finances and financial behavior is not as straightforward as it is often assumed.
So if knowledge isn’t the factor, what is?
Let’s get more to the heart of the issue. While the concept of budgeting is highly valued and promoted in our society, less than 1/3 of Americans prepare a detailed written or computerized household budget each month. The dollar amounts on a budget are not just numbers. They represent values, traditions, expectations and, sometimes, dreams. To create a balanced budget, number crunching is useful. But, to create a useable budget, feelings about each income and expense category must be considered. The loan from your relative may be smaller and at a lower interest rate than your other debts. However, feelings associated with that loan may lead you to incur higher costing debt in order to pay off your relative’s loan.

Similarly, if your feelings influence your spending (such as during a trip to the mall after a stressful day), then taking steps to reduce your debts may be like using an air freshener in a locker room; only the symptoms are temporarily treated. Being financially healthy may depend more on your feelings about money than your ability to calculate compound interest, differentiate between leasing and buying a car or create a diversified portfolio.

So whether you are a number cruncher or math phobic, take a moment to consider the following steps to getting in touch with your feelings about finances.

Step 1. Recognize your feelings about finances. Being able to identify your underlying feelings is a necessary step to making changes in your financial behavior. Which of the following words capture these feelings? How do these feelings contribute to patterns of behavior that you want to change or continue?
Worry Fear Jealousy Insecurity
Contentment Envy Panic Hope
Frustration Happiness Anger Disappointment

Step 2. Think about the feelings you learned about finances as a child. Was money a source of happiness or a cause of conflict within your family? Focus on your earliest memories of interactions with money. The influence our families have on our feelings about finances can be automatic and subconscious. However, since this finances/feelings connection is learned, you can choose to change it.

Step 3. Share your feelings and early memories about finances with a trusted friend, family member, partner or financial therapist. When you understand the underlying feelings that drive your financial decisions you can become empowered in the decision-making process.


Jean Theurer, CFP®, Registered Marriage and Family Therapist Intern