You might not think your attitude has much of an impact on how much you spend and save, but that is not necessarily the case. The way you view the world, as well as yourself, can have a profound impact on your finances. Improving your outlook could improve your financial situation.
Here, DiversyFund reviews some strategies you can use to enhance your well-being and your wallet:
What type of financial person are you – a spender or a saver?
If you believe in retail therapy or have identified yourself as a shopaholic, you probably fall into the “spender” category. You might have a hard time settling for anything less than instant gratification.
On the other hand, a saver is someone who dislikes shopping or swiping a debit card; seeing money in your bank account is more satisfying than spending it.
Identifying where you fall between the two categories is a good starting point to developing a proactive mindset. Spenders can choose to control their damaging financial impulses by using techniques such as physically taking cash out of the bank per every purchase or thinking twice before buying an item.
Seek Financial Education:
In adulthood, blaming your parents or the standard education system for your lack of financial knowledge and management skills is not an option. However, the instinct to blame these areas is common.
Vicki Bogan, the director of The Institute for Behavioral and Household Finance at Cornell University, stated that people who lack financial literacy often reflect fear or emotion when financial decisions come into play.
If financial education is something you need, consider researching topics such as budgeting and money management. Practicing newfound strategies through education can help break negative mental ties to finances that trigger poor habits.
Identify and Avoid Detrimental Emotions:
Besides fear, there are other common, destructive reactions that individuals face when addressing finances. These money-sabotaging emotions can keep your wallet empty.
To avoid conflicting emotions that confuse money decisions, first practice self-awareness. Identify what emotion money commonly triggers, why that emotion is triggered, and how to reframe your reaction. For example, if you have worked tirelessly to get out of long-term debt, you might develop anxiety trying to avoid ever getting back in it. Unfortunately, developing money-related worries can keep you from taking the necessary financial risks that bring value to you and your bank account.
Reframe your harmful perspective by practicing constructive ways to control your emotions. If you struggle with anxiety, consider creating a time limit for over-thinking or making calendar notifications, so you never miss a bill or payment due.
Adopt a Money Growth Mindset:
Changing your financial attitude for the better can be challenging, but it is attainable. Create a habit of controlling your thought processes to instill a growth mindset.
What is a growth mindset? It is the rational belief that an individual is not limited to natural situations nor talents and can develop intelligence and skills through continuous learning.
Adjusting your thought patterns to reflect a growth mindset can assist in shifting your focus away from negative feelings and false expectations. This mindset also directs your outlook toward self-improvement and learning when a financial failure inevitably occurs.
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