By: Jovan Johnson, MBA, CFP®, CPA/PFS
Want to know the truth about managing your money? Surprisingly, it’s a process that doesn’t require a lot of number crunching and math. In fact, the most important factor that affects your money is your mindset.
Now hear me out on this. Yes, a budget will show you exactly what all your expenses are; however, it will not answer one very important question: Why is my money being spent this way? It is crucial to evaluate the “why” of your spending habits to maintain full control of your finances. Managing money is a very psychological process, meaning that the way you think about your money can dictate your financial outcome. We’ll share with you a few key money mindsets that will help you achieve your financial goals.
Money Mindset #1: Gratefulness
Gratefulness is a great mindset to have to ensure that you are not living above your means. Most people establish their self-worth through materialistic items. Often, we tend to compare ourselves to others in a destructive way. With the money mindset of gratefulness, we can re-frame our thoughts to appreciate our current financial situation, understanding that we could be in a worse situation. Gratefulness empowers us to no longer feel the need to impress others through materialistic items; in fact, this way of thinking shifts our focus from ourselves to serving others. The more thankful you are, the less you feel the need to achieve a certain salary, buy brand name clothes, or even purchase that Lamborghini you don’t need.
Money Mindset #2: Discernment
Have you ever been shopping for a luxury item, but you knew in the back of your mind that you didn’t have the funds to afford it? Your judgment was the only thing that was holding you back from making this purchase so quickly. At this point, you had to use discernment about the consequences that would result from this purchase. It is important to weigh your options because a lack of discernment is one of the fastest ways to incur excessive debt. Discernment could really make or break your financial well-being because every purchase comes with its own pros and cons.
Money Mindset #3: Resilience
The quote “Fall seven times, stand up eight” is widely known, but rarely used. When you get off track with your financial goals, are you able to recover quickly? There are many internal and external factors beyond your control that are going to cause your finances to fluctuate. These are the moments you must decide if you will let these factors control your money or if you will be in control of your money. An emergency fund is an easy way to regain that control. Resilience is all about using your inner will power to stay on course throughout your financial journey.
Money Mindset #4: Discipline
Discipline is really the cherry on the top of the cake. It is always easy to claim that you will start your financial goals today; however, “faith without works is dead.” Despite how much money you make, if you lack the discipline to build your wealth, you will find yourself in the same financial situation. Don’t expect this mindset to come overnight. Discipline requires you to be intentional and consistent with your financial decisions every day.
Fulfillment is all about using money as a tool to achieve the goals that matter most to you in life. Money is just a commodity until it is used to fund the life you truly desire. Most people assume that the more money you have, the happier you will be; however, fulfillment is not something you can put a price tag on.
