by Shannon Lee Simmons

Money can be stressful. I work with clients from all walks of life and I know that it doesn’t matter if someone makes $20,000 or $120,000 – we all get worried about money.

The problem is, when you worry about your finances, you feel broke, unhappy and guilty every time you spend money. When this happens, you’re more likely to give up on financial plans, throw in the towel, and say, “Why bother?” This is why you need to make and keep your finances fun and happy. You need to fall in love with your financial life. You need Worry-Free Money. To me, this is the ultimate act of self-love.

Three steps to achieving Worry-Free Money:

1. Stop (traditional) budgeting!

Traditional budgets are the worst. You know the ones: you categorize your spending into these small categories – coffee shops, clothes, takeout, groceries, and so on. Then, you forecast what you think you’ll spend each month and try to live within those parameters. Ack! This type of budgeting keeps money at the forefront of your brain all the time, keeping you constantly in scarcity mode.

Our lives change from week to week. One week, you may need more cheese (“Oops! Overspent on groceries again!”), while next week you may need to buy a new a pair of pants (“Yikes! Overspent on clothes.”). You can’t know exactly how you’ll spend money each week, so these types of budgets set you up for failure. When you fail at budgeting, you think you are bad with money and it stresses you out. But you’re not bad with money. No one is. Budgets are broken.

When you fail at budgeting, you think you are bad with money and it stresses you out. But you’re not bad with money. No one is. Budgets are broken.

The only “budget” you need is to figure out something I call your Hard Limit. Your Hard Limit separates the money you can and cannot spend each pay period. The money you can’t spend is the money you set aside for your fixed expenses and savings. That’s it. Fixed expenses are things like housing, utilities, transit, loan payments etc. The things you cannot get out of each month. Savings is the money that you are putting towards your goals such as debt repayment, down payments, retirement savings etc.

Once you know how much money needs to go towards these items each pay period, you also know the amount left over. That’s your spending money—the money you can spend. Once you separate the money that you can spend each pay period, you can spend it however you’d like – guilt free!

2. Spend money on things that make you happy.

The money that you are allowed to spend within your Hard Limit should be spent on things and experiences that give you a high Emotional Return on Investment (EROI). In my book, I call this Happy Spending. Happy Spending is all about giving yourself permission to spend money on things that make you happy. What a concept!

We all get an Emotional Return on Investment when we spend money. Sometimes spending money feels great. You’re stoked, excited and proud of your purchase. That’s Happy Spending. But, other times your purchases make you feel like garbage. Maybe you feel resentful, or embarrassed or guilty. That’s Unhappy Spending with a low EROI.

For example: Let’s say two people both spend $10 per day on takeout lunch. Person #1 loves it. It makes her happy. It’s time out of the office, she gets to try new foods, and she don’t really cook much because it’s just her and she works long hours. She gets a very high Emotional Return on Investment from that $10 takeout lunch. But Person #2 hates it. He feels frustrated and irritated after spending $10 on lunch. It makes him feel lazy. This is a low Emotional Return on Investment, Unhappy Spending.

Therefore, only Person #2 should cut back and reduce spending on takeout lunches. Person #1 should reduce spending elsewhere to make room for takeout lunches to ensure that she can keep spending $10 per day on lunch.

The key is to reduce Unhappy Spending to make room for Happy Spending. The more Happy Spending you have in your life, the less likely to give up on financial plans altogether because living within your means won’t feel restrictive and unrealistic for the way you live your life.

3. Don’t give up

Remember that a little bit goes a long way. Whether it’s $100 to debt or to an emergency account, take action. A few small wins will get you excited about your money again.

Tackling your finances is the greatest form of self-love! Find your way to fee-good finances. You got this.

Shannon Lee Simmons is the founder of the New School of Finance. Check out Shannon’s new national bestselling book Worry-Free Money.

Image by Madewell, featuring the Small Transport Crossbody Bag.