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.

Navigating the Back-to-School Transition

Transitioning from a relaxed summer schedule to a busy, hectic school schedule can be stressful for parents and their children. There are some children who can ease into a change with no problems and others who have tremendous struggles around the smallest changes. Most children reside in the middle ground between those two extremes.

Heading back to school is the most frequent transition children make in their lifetime. For parents, it may be a welcome transition, but some parents struggle to transition as much as their children. There are teachers to meet, routines to re-establish, backpacks to pack, and school supplies to buy. There are shopping trips for school clothes, after-care decisions, and scheduled physicals. Overall, everyone has a lot on their plates this time of year.

Here are several helpful tips to remember during this time of transition.

First, children need to know that feeling nervous is normal. Adjusting to a new environment, new teacher, and new friends is uncomfortable and overwhelming. Parents can address these worries by reminding their children that, while most things feel uncertain or uncomfortable when you haven’t experienced them before, they are likely to feel better over time.

Second, parents and children both need a schedule that is consistent, reliable, and that works for the family. These kind of routines eliminate stress for everyone involved and create a sense of comfort for children to rely on. Routines can be established around the morning time, after school time, and dinner/bedtime. It can be challenging to implement several routines at once, so try picking one part of the day that feels particularly stressful and implement a routine for that time period.

Third, children need room to express their feelings about transitioning back to school. Children often look to their parents to create an environment where this can happen. Ask your children what worries them. Ask them what they are looking forward to doing, seeing, accomplishing this school year. Ask them if there was anything from last year that could be done the same by their parents. Anything different? Some children may struggle to articulate answers verbally and may benefit more from working out their feelings by playing. Let your children guide you and tell you what they need – verbally or playfully!

Last, remember your resources. Children have parents, teachers, guidance counselors, mental health counselors, and even friends to help them with these transitions. Parents have many of the same resources, but they may not know when to utilize them. Remember parents- you can be your child’s biggest resource by getting to know what your resources are. Teachers are your go-to for questions about academic performance, peer relationships, classroom routines, and any day-to-day questions you have. Guidance counselors are helpful for those moments during the day when your child is a little emotional. They are also there to aid in decisions about exception plans your child may need. Mental health counselors can provide support for your child to sort out what changes in behavior or thoughts at home, along with appropriate expression of emotions. Friends are helpful for advice, opinions, and sharing stories of experience.

The transition of a new school year will happen every year for about 13 years, but it can be done smoothly and without many hiccups. Remembering these tips will help ensure a peaceful, stress-free return to ringing bells, recess, tests, and homework!

 

Kristina Owens, LMHC, RPT

 

 

Photograph courtesy of John S. and James L. Knight Foundation, Flickr.