We all want to achieve our financial goals. From retirement to sending helping our children and grandchildren through college. Having the right money mindset is the first step to helping you achieve your goals.
Your money mindset is a combination of what you learned about money when you were young and how you make financial decisions today. Some of us tend to be spenders who can’t say no to anything on sale. Other’s want to save everything and are willing to sacrifice the joys of today for the uncertainty of tomorrow.
The good news is that we can change or shift our money mindset. The bad news it takes a lot of focus and work.
Why is it so hard to follow through on financial commitments?
I looked at new phone cases on Amazon a few weeks ago. Ever since then I see phone case ads wherever I search for something online. These clever ads are not a sign from above; it’s a marketing strategy called retargeting, and it’s making it harder and harder to stop our bad spending habits.
The money and power behind marketing in today’s society is jaw dropping. Marketing is getting more innovate, sneaky and downright “big brothery.”
If you don’t have a healthy money mindset, then now is the time to start working on it.
In today’s fast paced world of internet commerce, it has become harder to follow a sound financial plan. Your temptations come up every time you open your web browser. You can find anything you want with the click of a few buttons. Your money mindset is under constant attack.
Want to be in control? Start with a financial plan.
Having the right mindset when it comes to your spending and savings habits is critical to your ability to meet your long-term financial goals. The first step is creating a financial plan that inspires you to be a better person.
When you start your financial plan, it’s critical that you take the proper steps to make sure your plan matches up with what’s most important to you. Your financial plan needs to inspire you to achieve your deeply held life goals. Your financial plan can motivate you to become a better saver. It can also teach you how to spend money without regret. For more information on making changes, I recommend Chip and Dan Heath’s book: Switch: How to Change Things When Change Is Hard.
Chip and Dan believe that to make a significant change in your life; you need to have the right long-term goals in place that make the difficulty of change less impactful than the result. Individuals who set goals that have deep meaning for them have a greater chance of successfully making changes in their lives.
Having a financial plan that is meaningful to you will allow you to make changes to your money mindset to achieve those things which are most important to you. I have a client who had been spending money without abandon since her husband passed.
When she allowed herself to look toward her future, she was able to set goals that were important to her. With her goals were in place it was easier to ignore the clearance rack and focus on making her goals a reality. It didn’t’ happen overnight, but in time she learned to put her money into the things that were most important to her.
The biggest takeaway wasn’t the extra money, but the confidence and belief in herself to accomplish what is important to her.
Plan with the end in mind.
When it comes to traditional financial planning, we tend to spend too much time focusing on growing our assets. What we need to concentrate on is what you value most.
I had a client come to see me after years of following the financial plan that she had created years earlier. She had diligently saved to be able to retire at age 60. I could tell that she wasn’t as excited as you’d expect someone who was about to retire. When we started talking about what she was looking forward to in retirement, I could tell she hadn’t thought much about it. I asked her why she decided to retire and her answer was all too familiar. She didn’t want to retire as much as she felt that she should because all of her peers had retired at this age.
She had saved for 30 years to have enough money to retire at age 60, only to find out it wasn’t what she wanted. I asked her what her life would be like if she didn’t retire. The switch flipped. She had never even thought about the possibility of continuing to work. She loved what she did, and it was a huge part of who she was. It was something that she wasn’t ready to give up.
By working together, we were able to come up with a plan that enabled her to continue to work and gradually phase into retirement. We diverted the money she had been saving for retirement at 60 into a trip to Italy she never thought she could afford.
You can have the best financial plan and still never accomplish your goals if you don’t plan for what’s truly important to you. When you are planning for retirement, it’s important to plan for a retirement you will cherish.
Education is the key to changing your behavior.
“An investment in knowledge pays the best interest.” – Benjamin Franklin
Our society lacks financial education. According to the FINRA Investor Education Survey in 2012, only 39% of adults surveyed scored better than 80% on their 5 question financial survey.
The best way to improve your money mindset is to educate yourself. By becominge educated, you can start to understand the mindsets you inherited growing up. You can begin to understand how you got to where you are now and make the changes necessary to be successful in the future.
Raise your hand if you have ever heard any of these phrases:
- Money is the root of all evil
- Never let anyone think you don’t have money
- He who dies with the most toys wins
- Playing the stock market is gambling
- You can never have enough money
- Without money you are nothing
These sayings are just a small sample of the things many of us learned about money growing up. By educating yourself on the basics of finances, you can begin to unearth the reality of these messages and start to change the behavior that is holding you back.
By creating a solid financial plan with the end in mind, and educating yourself on the importance of money in your life, you can begin to build a healthy money mindset. It’s much easier to say “no thank you” to the ever-expanding material temptations of the world we live in if you are confident your choices today are leading to a better tomorrow.