How to Redefine your Relationship with Money
15 September 2023 2
15 September 2023 2

Enriched Academy Staff

It’s easy to go online these days and get more free financial advice than you know what to do with. There are blogs like this one, hundreds of financial gurus on YouTube, and plenty of online tools and calculators to help us with for everything from credit card repayment to retirement planning. So why then is it so difficult for us to actually implement some of these ideas and techniques and make meaningful changes in our financial life? Are we predestined to be bad with money, or is just that our money mindset is so engrained that it blocks change and continuously holds us back? We all know that our mindset is an important part of acquiring new skills or succeeding at a given task, and when that task is managing our money, a positive money mindset is more important than ever.

How does your history with money affect your money mindset?
A person's history with money can have a significant impact on their beliefs, attitudes, and behaviors related to money. Your upbringing and early experiences with money, such as how your parents managed finances, their attitudes toward spending and saving, and any financial struggles or privileges you experienced as a child, can influence your beliefs and behaviors as an adult. For example, if you grew up in a household where money was tight, you may develop a scarcity mindset and be more frugal or risk averse. Conversely, if you grew up in a financially comfortable environment, you might have a more relaxed attitude toward spending and saving.

Exposure to financial education or the lack thereof can also impact your money mindset. If you were taught the importance of budgeting, saving, and investing from a young age, you may have a more positive and informed money mindset. On the other hand, if you never received any financial education, you might struggle with financial literacy and make less-informed decisions.

Money Myth

Your past financial successes and failures can shape your beliefs about your ability to manage money. If you've experienced financial setbacks or made poor financial decisions in the past, you might develop a fear of financial failure or become overly cautious. Conversely, if you've achieved financial goals or made successful investments, you may have more confidence in your financial abilities.

What role does mindset play in achieving financial goals?
Cultural and societal factors play a role in shaping your money mindset. Different cultures have varying attitudes toward money, savings, debt, and wealth. These cultural norms can influence your beliefs and behaviors regarding money and can perpetuate some damaging money myths. For example, some cultures may prioritize saving for the future, while others may emphasize conspicuous consumption and status. Your money beliefs can also be influenced by the financial behaviors and attitudes of your friends and social circle. If your peers are big spenders and prioritize material possessions, you may feel pressure to do the same. Conversely, if your friends are financially responsible and encourage savings and investments, you may adopt similar habits.

Major life events, such as a windfall inheritance, a job loss, a divorce, or a significant medical expense, can dramatically impact your money mindset. These events can lead to shifts in your financial priorities, risk tolerance, and overall outlook on money. It's essential to recognize that your money mindset is not fixed and can evolve over time. By reflecting on your financial history and identifying how it has influenced your beliefs and behaviors, you can work toward developing a healthier and more balanced approach to money management.

How can I identify and challenge my own money misbeliefs?
Analyzing and changing your relationship with money is an important step toward achieving financial well-being and making more informed financial decisions. Start by reflecting on your past and current financial behaviors, attitudes, and beliefs. Think about how your upbringing, cultural background, and life experiences have shaped your relationship with money. Consider questions such as: What are my financial goals? What are my spending habits? How do I feel about saving and investing? Am I comfortable with financial risk, or am I risk-averse?

Look for recurring patterns or behaviors in your financial history. Do you tend to overspend during certain times of the year? Do you avoid discussing money with family or friends? Recognizing these patterns can help you understand your money mindset better.

Money Management

Are there any practical strategies to improve my money mindset?
Your starting point should be to identify and write down your short-term and long-term financial goals. These could include getting out of debt, saving for retirement, buying a home, or starting a business. Clearly defined goals drive motivation and direction for your financial decisions.

The next step is to create a budget and track your income and expenses. It’s tempting to focus on earning more money as the solution, but effective money management of the income you have now will have a much greater impact on your financial situation. You need to first understand where you are spending your money before you can start trying to implement solutions. If you identify unhealthy spending habits, take steps to change them. There are lots of online tools and applications to make expense tracking a simple task that requires very little time.  It also pays to invest time in learning about personal finance. There are many books, websites, podcasts, and courses available that can help you improve your financial literacy. We offer free, informative webinars every week on a variety of personal finance topics. Understanding financial concepts will instill confidence and teach you the best ways to manage money.

What are negative financial mindsets?
If you hold negative beliefs like "I'll never be good with money" or "Money is the root of all evil", challenge yourself to turn them into positive and constructive beliefs. Ensure your financial goals are realistic and achievable and break larger goals into smaller, actionable steps. Setting unrealistic goals can cause frustration and disappointment that can sap motivation.

Money Management skill

Create a comprehensive financial plan that include ideas to budget and save money, manage debt, and start investing. This could include cutting expenses, setting up automatic savings, or seeking professional help for debt management. Make sure to regularly review your financial progress and adjust your plan as required. Recognize your achievements even if they seem small and stay motivated. You may also want to consider working with a financial coach to get you started, and don't hesitate to seek support from friends or family. Discussing your financial goals and challenges with others can provide valuable insights and encouragement.

Changing your relationship with money takes time and effort — there are no shortcuts to getting good with money. Remember that your relationship with money is a journey, and it can evolve over time with conscious effort and self-awareness. Setbacks are a natural part of the process so be patient with yourself. By regularly analyzing your financial behaviors and beliefs, and taking proactive steps to make positive changes, you can build a healthier and more sustainable relationship with money.

Leave a reply
Jan 19, 2024 04:35:36

I could not agree more. I feel like I am looking back at my past, seeing what I went through and now able to feel good about where I am now.

Hazel Phillip
Sep 22, 2023 12:27:15

I lack discipline regarding spending as I do save but find myself always needing to take money out of it regularly. I have seek help a number of times but my feelings of shame stop me from continuing. I desperately need help.