My Money Disconnect

If you had asked me in my early to mid twenties about my financial situation, I would have told you I was doing just fine. After all, I had an excellent credit score. I had no problem getting mortgages and other loans on my own. I had a job, made a living wage, and was always able to support myself.

Still, I always had the feeling I could be doing better, and would occasionally pick up a book about personal finance, with the hope that it would help point me in the right direction. Most of the books I read concentrated on people’s relationships with money, how they feel about money, and why. I’m not going to say that I didn’t learn anything from these books; It was great to look into my relationship with money. But, understanding isn’t an action plan, and in the end, I never really felt like I got anywhere.

It’s been about a year since I’ve really gotten serious about my money situation. I know exactly where I stand financially, and have a much clearer picture of my overall financial situation. I have a budget. And, most importantly, I have goals and a plan. Oddly enough, the more involved I become with my money, the more I’m learning about my feelings, and why I feel that way. It’s almost like I was doing it backwards before; I couldn’t understand how I felt about money until I really dug into my finances. One of the things that’s starting to occur to me: I have a serious emotional disconnect with some of my assets!

For example: For the last few years I’ve participated in my company’s Flexible Spending Account. I only contribute a small amount, right around $300. This money is taken from my paycheck each week on a pretax basis. I can then use this money to be reimbursed for eligible medical expenses. That money is mine; It comes directly out of my paycheck each week. And yet, somehow, I always feel like I’m being “given” something when I get the reimbursement checks, like I’m getting “free money”. True, I am saving on taxes with that money. And it’s a form of forced savings, so I have some money set aside that is specifically ear-marked for medical expenses. But even still, it’s my money! I’m just gaining access to it.

I feel an even larger disconnect with the money in my retirement accounts. The Roth IRA is especially bad. In my twenties I opened the Roth and made a few contributions, totaling $3,000. I left the money sit for a few years, and then withdrew all of the $3,000 I’d put into the fund. The interest, which was about $300 at the time, has remained in the account, slowly growing. It’s now almost $1,000. I watch the account with interest, but feel oddly disconnected to it. Like it’s not really my money. The $3,000 that I initially put in the account I earned, working long hours at a job. The interest? That just “appeared” in the account, without me having to do anything at all. I’m not upset when it loses money, and I’m not really excited when it gains. I find it interesting, but in a very disconnected way. Like it doesn’t really affect me.

Up until recently, I felt the same way about my 401 k. True, that is money that I earned. But I never actually had that money. It was never in my bank account. After my initial investment decision, I never had to make a conscientious decision on whether to spend or invest that money. At first I didn’t even pay much attention to the money. Sure, I’d check my quarterly statements with vague interest. But it was almost like monopoly money; Fun to watch it grow, but it really didn’t have any affect on my “real life”.

I say up until recently, because over the last month or so, my feelings about the money in my 401 k are starting to change. I think it’s a combination of things that are making that money seem more real to me. For one, figuring my net worth each month has helped me to realize how big of a role my 401 k plays in my overall financial picture. When you’re barely in the positive, having an almost $8,000 asset is a big deal. Even if you can’t touch that asset anytime in the near future.

I think the fact that the balance has grown to almost $8,000 has also changed my connection to the account. Each week, $51.35 from my paycheck gets deposited into the account, pretax. My employer matches that amount. It seems like such a small amount, and in the beginning it grows so slowly. But then, the larger the balance, the larger the interest earned. If things go as planned in the next few years I’ll be upping my contributions. And hopefully, I’ll be getting raises in the mean time, which will also raise the amount that both my employer and I contribute (currently 6% each). But even as my contributions slowly trickle in, the balance grows. And a bigger balance equals more interest earned. After all, 8% of $10,000 is much more than 8% of $1,000.

Now that I realize I’m disconnected to some of my money, I’m trying to explore why. In some ways, it could be a good thing. After all, if you don’t feel like your retirement accounts are “your money”, you’re less likely to cash them in at an early age. Is it the fact that I’ve never “touched” this money that I feel disconnected to it? Or, as my 401 k would indicate, do I feel disconnected because they are such small amounts? That could potentially be a bad thing. After all, every little amount counts. And I want to make sure that I’m doing my all to grow my worth, and taking advantage of every dime. Whether it be $300, $1,000 or $8,000, every penny counts!

What do you think? Do you have money you feel disconnected to? Do you feel like you aren’t using that money to its advantage because of that emotional disconnect?

– Cindy W.


  1. I think it’s good to feel disconnected from your retirement accounts. People who still feel connected to them end up borrowing against them…or worse! I like to pretend that that money doesn’t exist.

    1. I definitely think some disconnection there is a good thing. After all, I’ve already made the cash out mistake once. Well, technically twice, since I cashed out both an IRA and a 401 k. But I did it at the same time, so I count it as one incident;) I just don’t want to become so disconnected to those accounts that I don’t put the efforts and attention that I should into them. There’s being on auto-pilot, and then there’s just plain ignoring it (like I’ve been doing with my little Roth IRA for all these years!).

  2. i agree with the first commenter. if there was a like button. It’s how i feel about my e-fund. It’s not really my money. Thus i NEVER dip into it.

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