Money Mindset: Why it is so Important
Written By Jay
Hey everyone! Today I’d like to talk about having a proper money mindset and why it is so important to your financial success.
When I was a kid I wanted nothing more than to play basketball and I knew that someday I would play in the NBA. Obviously, I did not make it to the NBA, so why am I using this as an example? Because my mindset was exactly where it needed to be to succeed and, in a very meaningful sense, I did succeed.
I practiced every day, multiple times a day, for as long as I could get away with, usually hours. I practiced dribbling, shooting, jumping, and basically lived and breathed basketball. And I got really good.
My mindset was right. My focus was on my goal and I made progress toward that goal, every day, every week, month, and year.
So how does this apply to your financial success?
I think a lot of us, myself included, tend to let our finances take a back seat in our minds. Sure, there is stress when things are tight and those unexpected bills pay us a visit, but day to day, finances drift to the back of our minds.
Bills, paychecks, savings, debt, and investments become a little less important. Perhaps worse than this, our financials can start to feel like something that we don’t control but just are. Something that controls us.
Not good and not true.
Money Mindset: Table of Contents
Set Goals
First off, we need to set goals. Are you saving for retirement? Paying off student loans? Wanting to buy a house or land? Knowing what you are trying to accomplish is the first step to actually accomplishing it.
Know the “Why”
Knowing why you want to accomplish something can be useful. This can help clarify if something is really as important as you might think, and if it is, this can help motivate you to stay the course and face any and all obstacles knowing that what you are trying to do is worth it in the end.
When things get difficult, knowing that your goal is worth it is everything.
Know the “When”
Just as important as setting the goal itself is putting a timeline to your goal.
Deciding to save money isn’t a goal. Deciding to save $1000 is closer but still not quite there. Deciding to save $1000 by the end of the year is a goal, however there is still one more piece missing.
Know the “How”
You have the goal, what it is, when you’ll do it and the reasoning behind it but you still need to come up with your plan.
How will you achieve your goal?
Earn more money or reduce spending? Both? How exactly will you do those things? Ask yourself these questions and write down the answers.
Now you have your goal.
So what goals should you set? This is up to you but a good guiding principle is to set challenging yet achievable goals and adjust as necessary.
Take Charge/Responsibility
When endeavoring to change anything in your life, be it your financial situation or your diet, one the most important things you can do is accept and embrace the fact that it is your responsibility to succeed.
Taking responsibility means acknowledging that what you are doing is in your power to change and you have control over the outcome to a large degree.
Sure, things happen that are outside our control, but when it comes down to it, we are in a position to change our own circumstances. We are not solely at the mercy of fate.
Realizing and accepting this is an important and powerful thing. It means that your decisions and actions matter.
Forgive Yourself
Now that we’ve assumed all of this responsibility it must be acknowledged that we are imperfect and that we will all make mistakes. This is okay.
It is also important to understand that there is not always, probably rarely, a perfect action to take in any given circumstance. It is usually a matter of making the decision that is as close to ideal as possible, balancing pros and cons.
Believe me, I have made and will continue to make mistakes and so will you. Forgive the cliche, but what matters is learning from our mistakes.
When taking this perspective, suddenly mistakes are so much more valuable.
Be Patient
Despite what some may tell you, achieving your financial goals will take time. There is no miracle solution, even winning the lottery (and yes, I would love to win the lottery). Just like dieting, the solution to success is creating good habits that will work for you over time.
A quick Google search will bring up countless examples of lottery winners with no money because the money was mismanaged. It is imperative to create a solid foundation for financial success that can be built upon such as reducing (eliminating) debt, reducing spending, saving and investing.
A quick word on investing: when investing in the stock market, it can be expected to be able to double your money every 10 years. This is a very rough and conservative estimate that will vary but is a relatively good rule of thumb, or more specifically, the Rule of 72.
The Rule of 72 is a quick way to estimate the amount of time to double your investments. Simply divide 72 by the rate of return expected from your investment.
Fundamentals
The world can be a complicated place. There are countless seemingly qualified experts with conflicting advice on how to handle everything and an endless sea of opinions. Thankfully, there is a solution.
The fundamentals are the things that hold true in the face of almost everything. Things like making sure you have a safety net in place, reducing debt, saving, investing, and living within your means by following a budget.
Not many people would argue that these fundamentals are not sound advice no matter your situation and are always there to fall back on when things get overwhelming. If advice goes against the fundamentals, take a long, scrutinizing look at what is being proposed.
Let the fundamentals guide you. In a sea of conflicting currents and uncertainty, they are the lighthouse showing you the way to financial wellness.
Be Creative
This is where financial fun can be had. Patience is difficult and the fundamentals are boring (but important!) but getting creative with improving your circumstances can be challenging and yes, fun.
Side hustles, finding creative ways to save money on everyday things, and finding creative ways to minimize tax liability are just a few examples of where to get creative and I find that these things can be incredibly rewarding in their own right.
Imagine that you are a money detective and you need to find a certain amount of money extra for savings each month. It could be 50 dollars or it could be 500 dollars. There are two ways to do this.
You could increase the amount of money you take in each month or you could reduce the amount of money you spend each month. Either one will accomplish your goal.
So, any ideas? This is a good brainstorming exercise that could lead to finding a lot of unnecessary spending that could be cut out and could also lead to creative ways to make some extra money each month.
Also, don’t overwhelm yourself. Remember, with patience, persistence, and a positive mindset you’ll be well on your way to reaching your goals.
DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS AND/OR PAYED PLACEMENT. PLEASE READ MY DISCLOSURE FOR MORE INFO.
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