Ramit Sethi: 7 Questions To Ask To Determine If You’re Trapped by Your Own Finances

In a recent newsletter, financial coach Ramit Sethi explained that many people don’t realize they’re trapped by their own finances. He said these people are “ostriches” — they have their heads in the sand when it comes to their financial situation.

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Think you could be an ostrich? It might be time to take a hard look at your finances. Instead of ignoring the problem, the best thing you can do for your personal wealth and happiness is to acknowledge when you’re struggling. That way, you can start to make smarter decisions with your money.

Here’s how to tell whether you’re actually trapped by your finances , along with seven questions from Ramit Sethi to help.

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Content vs. Trapped

What does it mean to be financially content? It doesn’t necessarily mean you have everything you’ve ever wanted — financial contentment is about being comfortable in your current situation, steadily growing your wealth and looking forward to a bright future.

In a 2023 Gallup poll , 50% of Americans reported that their financial situation was declining, not improving, and 55% described their personal finances as “poor” or “only fair.” Considering the recent economic challenges in the wake of COVID-19, including rising inflation and mortgage rates, it’s not surprising that many Americans feel disappointed.

You’re in charge of your own financial well-being, even when economic times get tough. In his newsletter, Sethi explained that many Americans make huge decisions, such as buying a home, without first examining their budget and making sure they can afford it. That leads to an unaffordable lifestyle.

If you’re trapped by your personal finances, you may be anxious, afraid of overspending and unable to enjoy things you used to love. Reassessing your budget and getting rid of unnecessary expenses can get you back to a healthier financial status.

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Are You Trapped by Your Finances?

It’s hard to judge your own financial situation from the inside. After all, you’re working toward your goals and making smart investments — right?

Sethi explained that it’s totally normal to ignore hard facts when it comes to your finances. Everyone wants to feel like they’re doing alright, even when they’re struggling.

To get a new perspective on your financial situation, Sethi suggested asking yourself these seven questions:

1. Do you hesitate before ordering appetizers, drinks or desserts?
2. Do you check your bank account balance daily?
3. When your alarm goes off in the morning, are you flooded with anxiety?
4. Did you leave your work phone, Slack account or email inbox on or open during your last vacation?
5. Do you resent people who have “more” than you?
6. Do you wish you could be working on something you love instead of working just for the paycheck?
7. When you think about spending the next five years doing what you’re currently doing, are you tempted to leave it all behind and flee to the forest, a van or a Tibetan monastery?

Let’s take a look at each of these questions in detail, and then break down what a “yes” answer might mean for your personal finances and what you should do about it.

Nickel-and-Diming When You Go Out

Sethi phrased this as hesitating to order appetizers, desserts and drinks, but the concept applies to other habits as well. Do you feel guilty about spending a little extra money on something fun?

It’s smart to avoid overspending. That said, consider the 50/20/30 rule: 50% of your income should go toward essential spending, 20% should be saved for your financial goals and 30% should go toward things you want. Using that 30% for the occasional splurge can help make your budget more sustainable in the long term.

If you said yes: Take a look at your budget. Do you have room for a fun outing at least once a month? If not, you may need to make a change to give yourself more wiggle room. If so, relax — as long as you’re setting aside at least 20% for savings, you’re doing great.

Obsessing Over Your Bank Account Balance

Banking apps make it easy to keep an eye on your finances. However, if you find yourself glued to your online account, you might be under financial stress.

According to a recent survey conducted by CNBC and SurveyMonkey, around 65% of Americans live from paycheck to paycheck. Checking your balance every day might give you peace of mind as you wait for the next payday, but it can also impact your mental health, especially if you feel overwhelmed when the numbers get low.

Breaking the paycheck-to-paycheck cycle is the best way to stop stressing over your balance and put the phone down.

If you said yes: Next time you open your online account, pay attention to your automatic withdrawals, including streaming services, news subscriptions and paid apps. The more subscriptions you cancel, the bigger the financial cushion you’ll have each month. Eliminating automatic payments also means you won’t have to worry about your account suddenly becoming overdrawn.

Waking Up Anxious

Morning anxiety can be a sign of excess stress. If you’re worried about your finances, you might wake up with a sense of dread or fear. That’s no way to start your day — and it won’t help you make smarter decisions.

Whether you’re stressed about debt, an upcoming expense or simply making ends meet, something has to change. Don’t ignore physical signs that your current situation is taking a toll on you.

If you said yes: It’s time to address your financial situation head-on. If you share household expenses with a partner, sit down with them and discuss ways you can cut your costs. That might include canceling expensive subscriptions, selling a car or walking away from an investment that isn’t paying off.

Struggling To Step Away From Work

Having trouble unplugging when you’re out of the office? A lack of a work-life balance is another sign of financial anxiety.

You might feel like you’re going to disappoint your boss or coworkers if you don’t respond. Or as an hourly worker, you might worry that you’re losing out on valuable income if you don’t clock in. Either way, your work is getting in the way of your well-being.

As Sethi put it, “If you can’t toss up a carefree OOO message without spending your whole trip worrying about the mountain of work waiting for you, you’re more trapped than you think.”

If you said yes: Ask yourself — are you at risk of losing your job if you don’t stay in touch 24/7? If so, consider looking for a new position. A healthy work-life balance is more important than climbing the ladder at a company that doesn’t treat you well.

Feeling Jealous of Others

It’s natural to be a little jealous of people who seem to “have it all.” But if you regularly feel resentful of other people in your life, that means you aren’t satisfied with your own situation.

Take note of how you feel when a friend tells you about their new promotion or home purchase. Frustrated? Embarrassed? Those negative reactions could be a sign of deeper unfulfillment. You don’t need to make new friends — you need to make big changes.

If you said yes: Instead of asking yourself why you aren’t in someone else’s shoes, ask what changes you can make to feel better about your current position. You should feel like you’re working toward your own achievements instead of being stuck in place.

Working Only for a Paycheck

Only around half of Americans are satisfied with their job, according to a 2023 report from the Pew Research Center. Many people feel like they go to work just for a paycheck, instead of working on something they really love. In fact, a poll in Sethi’s newsletter showed that 90% of respondents want to quit their current job and start their own business.

Part of financial freedom is choosing how and when you earn your income. Changing your career path to something you’re more passionate about might mean taking a temporary financial hit, but it could be worth it if it brings you more freedom and greater satisfaction in the future.

If you said yes: Take some time to consider changing career fields. Plan a budget , search for potential jobs or training programs and calculate the potential costs of pursuing something you love. It might be more achievable than you think.

Wanting To Escape

Do you often think about buying a van and leaving it all behind? That appealing fantasy may not be a healthy one. Escapism is a type of coping strategy that involves ignoring unpleasant situations instead of confronting them.

Remember, your debt follows you around the world — and life in a remote mountain cabin probably won’t be as comfortable as you think. If you find yourself dreaming of getting away instead of working to solve your financial problems, it’s time to change your mindset.

If you said yes: Don’t buy that van just yet. Set aside some time every day for serious financial planning and problem-solving. Try to imagine realistic scenarios in which you pay off your debt, find a career you love and finally achieve your financial goals.

This article originally appeared on GOBankingRates.com : Ramit Sethi: 7 Questions To Ask To Determine If You’re Trapped by Your Own Finances