Financial Comfort Zone: Part 1 of a 3 Part Series
If you’ve been researching how to improve your relationship with money, you’ve most likely heard the term “financial comfort zone”. You may be wondering, “What is a financial comfort zone? Why does it matter? And what in the world does that have to do with my financial growth?” Today, I’m going to tell you.
The Financial Comfort Zone
Your financial comfort zone deals with familiarity. When it comes to money, we want to look at what is familiar to you. You want to know what you are comfortable with when it comes to spending, saving, earning, and debt.
The subconscious brain is in charge of all your actions, habits, and feelings. It loves what is familiar. The number one priority of the subconscious brain is keeping you alive every single day. This part of your brain knows you can survive when you’re in a familiar emotional or physical space. It keeps you in your comfort zone.
Oftentimes, when we’re trying to make changes in our lives, we get outside of our comfort zone. About every personal development book, podcast, or Ted talk mentions it. Everybody is saying, “You have got to get outside of your comfort zone!” And they’re right. This is where the gap begins.
Every single one of us has a gap between our programming and our potential. Our programming deals with what is “normal”. Our potential deals with the largest amount of prosperity we could have. Your comfort zone is your current bit of programming. Your potential is where you want to be. This gap causes us to be outside of our comfort zone. It’s the treacherous feeling of discomfort between getting from where you are to where you want to be in all aspects of our life.
How to Close the Gap
It is possible to develop an awareness between where you are and where you want to be. I want to take you through an activity I use with my clients.
What you’ll need:
- 1 Piece of Paper
- Pair of Scissors
1. Using the scissors, cut the paper in four equal pieces. (you may need some folding skills to help decide where to cut.)
2. After you cut the paper, label each piece with one of the following:
3. Starting with the piece of paper labeled “Earning”. Write down the answer to each of the following questions.
- What’s the most that you’ve ever made?
- What are you currently making?
- How long have you been at your current salary?
- Are you comfortable making this amount?
- Are you making the amount of money that you should be?
As you answer the questions, remember that we are trying to uncover your financial comfort zone. You can be uncomfortable with what you make. You might be under earning. Or you’re right where you should be. We want to uncover what we have made in the past and what is familiar.
Think of your comfort zone like an electric dog fence. You’re fine as long as you stay in the yard. But once you cross over, there’s a strong possibility you’ll get zapped. Look over your earnings and answer the following.
- What’s the smallest amount you can even imagine showing up for?
- What’s the largest amount you can imagine making?
You might say, “Oh God, that doesn’t even make sense!” If you do, it’s time to reevaluate your financial comfort zone around Earning.
4. Next, take the paper that says “Spending” and place it in front of you. Answer the following questions.
- What percentage of your income goes towards expenses?
- Does money go out as soon as it comes in?
- What does it feel like to spend money? Do you love it? Hate it?
- Are you able to hang on to money?
- Do you find it uncomfortable to spend money? Does it feel like a scam or you’re being taken advantage of?
Spending is interesting. Oftentimes, the more people make, the more they spend. They maintain a very tight relationship with their cashflow. Even when they have the potential to have free cash flow, they don’t take it. It’s not within their financial comfort zone.
5. Next, take the paper that says “Savings” and place it in front of you. Answer the following questions.
- What’s the most that you’ve had in your savings account?
- What’s the least that you’ve had in your savings account? Little by little over time vs. receiving a windfall (settlement, inheritance, large tax return, stimulus check)
Oftentimes, the money you save yourself will get treated differently from a windfall. You want to think, “Yes, I can save a couple of hundred dollars a week. I can build a savings account up to a certain level.” Most of the time, we will get to a point in our savings account where we will constrict our spending to be able to save more. This happens when we dip below the amount we are comfortable having. We will find emergencies for our money if we have more than we are in the habit of keeping. We’ll feel extra generous. Or buy something for ourselves we wouldn’t justify. We need this or that. We tell ourselves, “It’s an emergency. I must have it.”
6. Next, take the paper that says “Debt” and place it in front of you. Answer the following questions.
- What’s the smallest amount of debt that you’ve had?
- What’s the largest amount of debt that you’ve had?
You most likely have a go to number. This is the amount our debt tends to hover around. If the balance creeps up above that number, you feel have to do something about it. Or if it goes below that number, you may be willing to put something on credit again. These are things that you want to think about.
We will do things to get back into our comfort zone.
I had a client take out a home equity loan to pay off her credit cards. Her comfort zone was $30,000 in credit card debt. She paid it all off at once. There was no time to stretch. There was no time to mentally adjust. She went very far out of her comfort zone and acquired a home equity loan. She ran the credit cards right back up to $30,000.
Now that you have completed the activity, I want you to think about the numbers. Think about any stories that you can remember from growing up that match the numbers. These can also be significant incidents in your personal past. Each story contributes to your comfort zone.
Think about those stories and make notes of them on the paper they correspond with. As you’re doing this, I want you to check in with your body.
- What does it feel like to imagine earning less than what you’re currently making?
- What does it feel like to imagine earning more, saving, more, spending more?
Check in with your body because your body is going to give you clues on what’s going on in your subconscious. Remember, your subconscious brain is in charge of your emotions. It’s in charge of your feelings. Sometimes, you can’t hear your subconscious brain. It doesn’t have a voice, but you can feel the feels.
Check back next week to learn how we self-sabotage when we’re in that gap. I will be giving you tips and tricks on overcoming self-sabotage when increasing financial capacity. Don’t forget, you can ask questions in the comments below.
Live the Dream,