Depending on which psychology magazines or research you read, or mindset podcasts you listen to, the general consensus from the well-being community is that at least 70 per cent of our financial decisions are made emotionally. The trouble here is that if you’re not in a healthy and strong state of mind, your emotions can drive poor financial decisions. If you’re not feeling your financial best, apply these three money tips to your life.
Give yourself a break
Your past financial mistakes belong in the past. Treat today as the first day of your financial transformation. Learn from your past mistakes, but forgive yourself. As an example, did your passion or your moral compass get you into this financial pickle to begin with? Okay, well, you’ll need to draw on both that passion and dedication to doing the right thing to get out of this financial pickle, too.
With this step you’re also trying to interrupt any unhelpful comparisons you might be making consciously or subconsciously. Pump the breaks on scrolling social media, too.
Form stronger money habits, and put your own spin on them
Money mindsets improve only if you take smart financial actions. The three systems I recommend are budgeting, spending and net-worth tracking.
Budgeting: Whether it’s a template you download from Google or an app like YNAB (ynab.com), budgeting is a mindful, monthly practice of identifying the money you have coming into your accounts and planning where it needs to go. The goal is to ensure that your cash inflows equal your cash outflows, and nothing more. Otherwise, a trimming exercise has to happen. My pro tip: Ensure that you have money allocated for joyful activities too. That’s what spurs motivation to stick to your budget, long-term.
Spending tracking: This means keeping tabs on all your expenses; automatic payments, cash or debit/credit purchases. Every dollar needs to be accounted for. Some banks offer a notification system or transaction downloads to help you monitor, or you can keep a spreadsheet. I have a student who uses voice memos on her phone to track, and it works for her.
Now, compare your budget to the spending that actually happened. Did you stay on track or fall off your plan? Can you identify opportunities for improvement and celebrate what went well?
Net-worth tracking: This is an accounting of all your assets and liabilities. The individual accounts, loans, investments, mortgage; all the balances need to be noted on a monthly or quarterly basis. When the liabilities are subtracted from assets, that’s your bottom line. When that bottom line is improving — even just a little — each month, it means your budgeting and spending tracking systems are working. If it’s going down, your budget and/or spending behaviours are broken and require fixing (pssst — a money coach can help with this).
Saving is the magic ingredient to a mindset transformation
Saving money for your future and for short-term emergencies is an act of self-love. It’s got the power to help you overcome overspending habits and get you excited about what’s down the road.
Even a small amount of money — five dollars a week — saved into a rainy-day fund is better than nothing. The same goes for investing consistently into a well-balanced portfolio. Consistency with saving supports great long-term habits, which will make you feel financially fabulous quickly.
