Changing the way you manage your money may just be your smartest 2020 move. Improving your money mindset is the first step to better financial management. So how can you do that? Change the way you think about money and budget.
Let’s take a look at a few ways to improve your money mindset.
1. Analyze and understand your current mindset
The first thing to do is to analyze the way you currently manage your money and pay attention to what your mindset is like. In order to improve, you need to understand the areas needing improvement. From there, you can work out steps to take to change the way you think.
Ask yourself questions such as:
- How do I feel about my financial situation?
- What’s the first thing I do when I get my payslip?
- Have I considered what my financial future may be?
- Do I regularly spend unnecessarily?
- Do I know how to budget?
- What does money mean to me?
2. Forgive yourself
Forgiveness is the best lesson you can learn in life to move forward. With that in mind, it’s time to forgive your past-self for financial mistakes you’ve made.
If you are in debt, stop blaming yourself or the situation, and rather, make peace with it and forgive yourself. To change your money mindset, you need to change the way you think about all your finances.
3. Take time and create a plan
Make time to look into your finances and understand where your money goes. Do you have debt that’s taking longer than you thought to pay off? Are you asking yourself the question, “Where does it all go?”
It’s time to think about the way you manage your money and why. Create a plan. Start by prioritizing the needs. A good rule of thumb to follow when budgeting your finances is the 50/30/20 rule – 50% goes to needs, 30% to wants and 20% to savings. However, if you have a debt to pay off, it’d be wise to put the 30% for wants toward debt first.
4. Practice gratitude
Be grateful for what you have. This is one of the most important mental changes you can make, plus, its solid financial advice! Do not compare yourself to others and what they have. Whatever your earnings, you made that. Practice gratitude for what you have, what you make, how you save and where it’s gotten you.
5. Set goals
Setting goals to work toward is about as encouraging as you get. Some people think about a goal, but then set far too many and get easily overwhelmed or discouraged if it takes longer than expected. Remember to not set too many goals, otherwise, you will have less time to focus on each and they’ll become unachievable.
Set financial goals that can help give you a clear indication of what you need vs. what you want for your future. Do you need to save up for a trip? Perhaps you’d like to retire by 50 and spend the rest of your life travelling the world. Do you still have debt you’d like to pay off in the next year?
Set goals and reread them regularly to remind yourself what you’re working towards.
Improving your money mindset could be the key to your financial independence. Change the way you think about money and the way you budget it. Always remember to prioritize!
Do you really need those new shoes? Is that sale worth it? No. Just because it’s there and you have the money, doesn’t mean you should spend it. Understand needs vs. wants and create a plan with goals that’ll help you improve your money mindset.
When it comes to managing your money, don’t skip out on important payments to splurge on that black Friday sale. Rather, organize your budget accordingly. Pay off the important expenses first, such as your bills, food, medical, insurance etc. This will help give you a better idea of where your money goes and how you can learn to save more!