We all understand the benefits that come along from being financially healthy. And we also know what we’re expected to do to reach this point: be mindful of your spending, build your savings, and invest wisely. However, all of these can sometimes be easier said than done. Achieving financial freedom doesn’t start with having more than enough cash in your pocket. It begins with having the right money mindset.
Just like the rest of the goals we want to achieve in life, getting to a point where you can say you have financial freedom requires a lot of discipline. The journey isn’t going to be easy. There will be hiccups along the way. But don’t worry. Here are some relatively simple steps and habits you can establish to cultivate a positive money mindset.
Identify what your views are toward money
One of the reasons why a lot of us make poor financial decisions is that we aren’t aware or we don’t understand what our views are toward money.
Try to think about the kind of relationship you have with money. Ask yourself how you look at it and the kind of mindset you have when you use it. Do you view money as something you work hard for? Do you value it too much because you think it’s a scarce resource? Do you feel guilty when spending it or do you splurge like there’s no tomorrow because you can replace it anyway?
Look back at the decisions you’ve made in the past surrounding your spending and saving to be more aware of your attitudes. The deeper your understanding of the kind of mindset you have toward money, the easier it will be for you to create better and healthier goals and plans.
Keep your emotions and goals aligned
Have you already decided what goals you want to achieve financially? While goals are crucial to financial success, it’s equally important to make sure to keep your emotions and goals aligned. This means that we all need an emotional reason to keep us motivated and to fuel us into taking actions to achieve our goals.
It’s not enough to simply desire to be wealthy at a certain age. Or look forward to investing in properties in the next 2 years. Or wish for comfortable retirement. Your emotions should be involved in your goal setting. This is where the question “why do you want to make these goals happen” comes in.
Avoid comparing yourself with others
In this age of technology and social media where it’s easy to keep tabs on other people’s lives, it’s also easy to get sucked into comparing our lives with others’. We can’t help it. It’s hard not to compare with the seemingly perfect lives of our friends, family members, celebrities, influencers, and TV characters. This is dangerous.
When you make comparisons, you’re only magnifying the things lacking in your life. This will result in creating unrealistic goals. This will also distract you from focusing on your own aspirations and even compel you to spend on unnecessary stuff only because you want to keep up with someone else’s lifestyle.
Establish good habits
Once you have set a clear financial “finish line” and have your eyes on the prize, the next step would be to establish goals that will help you get there. If you have never taken a good look at your budget, income, and expenses, now is a good time to do it.
Create a list of the things you spend on a daily, weekly, and monthly basis. Write down your income, too. How much room do you still have for savings? If your income is just enough for your expenditures, determine if there are any items you can eliminate to make room for savings.
Understanding where your money is spent will help you identify areas where you can trim down. It will also help you establish goals that are achievable and realistic.
While it may seem obvious that the more you can save or invest, the better, less obvious is that any amount will help you move toward your goals. Even if you put aside only $1.00 per week, by the end of a year you’d have saved over $50. If you had been investing that money and earning only a 5% return (about half the long-term historical average of the US stock market), you could have as much as $245!
(Please note that the above example makes a lot of assumptions about return rates, payout frequency, and compounding. This is meant only to illustrate the dramatic difference between saving and investing and is not a guarantee of a certain result.)
Achieving financial fitness may not be easy. But it all starts with the right money mindset.
If you’re ready to finally start on your journey toward financial freedom, choose the right financial institution to help you – Calcite Credit Union.