Financial Planning and Mental Well-Being

Financial stability is much like laying a solid foundation for your yard, or maybe in an even clearer example a sturdy house. When you look at your yard, you just see grass (the result) you don’t really thing about what goes underneath. What layers of soil, sand, clay, and rock are engineered to provide a spot large and stable enough for your home to sit on top of and your grass to grow out of.

In order to get to that point, you (or someone) would have to had thought through the whole situation. They would have to think about the various factors affecting your yard (ground water, rain, weather, erosion, etc.) and they’d need clarity of mind to do so. Being clear about what to expect (even when you don’t know the future) and when to change (when that future isn’t what you expected) are all part of creating that stability.

So with you money, its really similar. It's not about “saving” (the grass) as much as it is about creating a stable, predictable environment. When you're not losing sleep over bills or sudden expenses, there's a palpable lift in your mental state. Financial security instills a sense of empowerment, allowing you to make choices that resonate with your values and long-term goals, ultimately leading to a fulfilling life. It also allows you to switch gears when necessary, and survive any adverse changes to your situation.

Think about this hadith. The Prophet said “If I were to have the size of mount Uhud in gold, I wouldn’t sleep for 3 nights except I’d try to give it away as charity to anyone that would take it, expect for some that I’d keep to pay off debts.” (Sahih al-Bukhari) I think this hadith illustruates and important point about mental clarity: you have to have a clear picture not only of your money, but what you would do if you made money in the future. And even with future wealth, its not enough to say “I’ll be really charitable” you still have to think about the rights that others have over you (like paying debts, for example). What this takes is a clear and healthy mind open to the possibility of wealth, the trajectories it can take you, and what your rights and responsibilities are along the way.

A clear and healthy mental state is a powerful ally in managing your finances. With a calm, focused mind, you're better equipped to make sound financial decisions. This mental clarity is a must in the complex financial world we navigate today. You either develop that mental clarity in its entirety, or you parcel it out to others who can do it for you.

Three Married Couples and Money

Let’s illustrate what I mean with an example. Here’s what I mean in the form of three couples:

Couple #1: Fatima is meticulous with her money, she knows what she and her husband earns, where it is spent it on the household, and how much is invested into retirement and savings. Ahmed goes to work, earns, and has a grasp on what his finances are, but he doesn’t have the time to do all the other stuff. Instead, he trusts his wife Fatima to manage the mental work and the money, because he knows she is more qualified to do so, despite his mental clarity about earnings and his career.

Couple #2: Khalid on the other hand is not only mindful of his earnings and career, but is also meticulous with his finances, keeping close track of what he and his wife earn, the household expenditures, and their investments into retirement and savings. Sarah, his wife, is out to lunch. She kind of knows what she makes, but doesn’t have much of any understanding of their financial situation; she doesn’t delve into the details. In fact, she doesn’t really think about the money at all! Instead, she sidesteps any mental clarity and just leaves it to Khalid to handle the financial planning.

Couple #3: Abdullah and Najwa are both working. They are busy with their careers, they sign whatever documents for company benefits come to them, and they try to pay off their credit cards monthly. Other than that, they figure that things are taken care of! Abdullah things Najwa has it handled, She things the same about him, and they both think their companies have their best interests in mind. They’ve left any mental clarity about their money to someone else, although they’re not too sure who that is.

Analysis of the Three Couples

Let's take a look at each couple and what they may or may not be doing right or wrong: 

Couple #1 (Fatima and Ahmed): What they get right is that they they exhibit shared responsibility and trust. They have the mental clarity that they have money, something needs to be done with it, and they give that to the person who is best to do it, without Ahmed ceding his responsibility to know whats happening generally. 

Couple #2 (Khalid and Sarah): Khalid is proactive and has clarity about their financial situation, ensuring their expenses and investments are well managed. Sarah however poses a risk: her lack of clarity could lead to problems if Khalid is unable to manage their finances. 

Couple #3 (Abdullah and Najwa): These two get it all wrong. Their lack of communication and misunderstanding about who is managing finances is a significant issue. Neither has taken responsibility, and there’s a lack of mental clarity and focus, leading to potential financial instability. This is the kind of relationship and money situation that ends in disaster.

The Key Principles To Remember Here

There a a few key principles related to financial stability and mental health that we can take from this:

1- Be Proactive: Like preparing a yard or building a house, financial stability requires thoughtful, proactive management, by you or someone you trust.

2- Seek Clarity: Clarity about financial goals and situations is crucial. This means being aware of income, expenses, savings, and investments. 

3- Be Adaptable: Adaptability to changing circumstances is key to not letting your mental health and clarity get upended. You don’t know the future, but when the future arrives you know that you can deal with it.

4- Mental Clarity and Focus: A clear and healthy mental state aids in making sound financial decisions. It's about either developing this clarity oneself or delegating it to a more capable partner or professional.

5- Having optimistic resilience: It's about trusting that good things are on the horizon and what's meant for you won't miss you. So even when there is a bad outcome or an upsetting development, you’re big picture doesn’t change; even if it might shift slightly.

This last point, optimistic resilience, is something I want to discuss in more detail. Perhaps when we meet again next week I’ll find the opportunity to.

Wa Salam

Joe