Money Mindsets
Money mindset fascinates me. It’s so interesting to understand why people behave the way they do with money. Some are super savers, some big spenders, some are so scared they will loose it all they can’t enjoy it and are excessively frugal, others are so ashamed they are wealthy they spend to get rid of it! Other’s are so intimidated by it they try their best to ignore it’s existence!
Every person is so different, each with their own experiences with money that plays out in their relationship with their finances. When it comes to women, I have thought about what are the most common negative associations with money we tend to have. This is just based on my experience of course, this list is endless!
1) Allowing it take over your life and be the driving force behind all your decisions – money is so often a significant cause of stress for us all. It plays a huge part in our lives, our decisions, our relationships and often our health. We think having more money will improve our lives. Too often we fall into the trap of more is better and we spend our lives chasing the next salary increase, promotion, big investment. As a result we are not enjoying the present or what we have now and all we have achieved to get to where we are now. I help my clients to understand their values and ambitions in life and retirement and use that understanding and knowledge to drive how they approach their financial life. Giving them freedom and confidence to live their lives in the present while also consciously planning for their futures.
2) Allowing it to make you it’s slave – it’s a bit of a cliché now but it’s true - our money should work for us, not the other way around. Saving and investing are two very important skills to implement in our financial lives. But also be smart with what you are investing in, think long term and look for ways to generate passive income where you can. It’s important to understand fully what risk level you are comfortable with, what you want to achieve in your lifetime and apply that knowledge to how you save and invest your money.
3) Believing more is always better, at the cost of other parts of our wellbeing - Being mindful allows us more freedom with our lives and our money. We can decide if that higher paid role or promotion is actually good for us and our families. The higher salary is of course very attractive and can bring many benefits to our lives but what about the travel, extra hours and additional responsibility it demands? Are they good for our health, our relationships and does it sit within our value system? Are we living comfortably, saving and investing with our current income? If yes, then maybe more money is not the best thing for us?
4) Locking all your money up in investments - have liquidity for that rainy day. This is an oldie but a fundamental part of our financial habits. Emergency funds should be kept in liquid accounts where you can access it quickly and easily. Anything over and above this fund should be put to work making more money for you while you enjoy living your life. I call mine a security fund as security is what it represents for me. Others call it a rainy day fund, sanity fund, freedom fund – use whatever makes you feel positive about it.
5) Spending on things that are not within your value system and benefiting your longer term view, life, family, ambitions and purpose. In my experience there aren’t many who don’t fall into the trap of consumerism or keeping up with the Jones at some point in their lives. And that’s ok, as I say, we pretty much all do it at some point but if it’s constant and the driving force behind how you use your money then maybe it’s something to be addressed. This again comes back to knowing your values, and purpose in life. And then assessing if your spending habits are in line with those values and purpose. When they are, it’s incredibly freeing and for me, it also allows for those so called frivolous purchases. When you are living within your values and have clear goals in place you can spend without guilt or shame, even if it’s something someone else thinks is indulgent or unnecessary (hello to my ‘weakness’ - designer shoes!). It matters less to you what others think or do when you are clear and confident on what's important to you.
6) Feeling intimidated by it – We are constantly bombarded with advice and opinions on what we should do with our money - you should invest in this, you shouldn’t spend on that, you should save 40% of your income every month. The stream of advice is endless. It usually all great advice but it's also often confusing, conflicting and rarely takes the person's personal situation and values into consideration. Listen to all the advice, understand it and take it on board – and then decide for yourself what you ‘should’ do with your money. What are your values and are they aligned with how you are using your money, investing, how much you save etc? Be the master of your own money, don’t give that power to someone else. Which leads me on to my next point!
7) Giving the responsibility to someone else to manage it for you. In my experience, this is especially pertinent to women. We give our power away too willingly sometimes. We work so hard for our money, it’s such a significant part of our lives – why do we give it to someone else to make such important decisions as how it should be invested or best utilised? We can 100% manage it ourselves. Yes it may not feel easy at first but with some research, practice and confidence it is absolutely doable. It’s so empowering and in my experience, changes from something we once feared to be something enjoyable, fun and fulfilling in our lives.
8) Ignoring it- we often have a tendency to bury our heads in the sand when it comes to our money. When things are going well, we spend unnecessarily. Then when life throws us curve balls and we find ourselves with less income, we often also don’t face up to the reality of needing to be more clever and conscious with how we are using our income. Or swing to the other extreme – we impose overly strict restrictions on ourselves and stop living. We need to develop a healthy conscious relationship with our money so that when life throws us those curve balls, we are ready for it and the stress and unease that curve ball induces is reduced as we have our ducks in a row with our finances and are ready for whatever life throws at us.
Do any of these resonate with you? Possibly more than one. You are not alone! If you ‘d like to discuss how you can change these habits and have a healthier and more positive relationship with your money, reach out for a free call!