There are lots of factors that could affect your relationship with money. While habits and influences can be hard to break, that doesn’t mean you can’t change your mindset to boost your finances and work towards your goals.
How you view money is often shaped by a complex range of factors, such as how finances were handled in your household as a child, past experiences, and even cultural influences. Sometimes these factors might lead to a money mindset that harms your wealth and ability to secure your aspirations.
Yet, your money mindset isn’t set in stone. Embracing these four positive money mindset changes could help you get more out of your finances.
1. Forgive past mistakes
There will certainly be times, with the benefit of hindsight, that you realise you’ve made a financial mistake. It could be something small, like not shopping around before making a purchase and missing out on a better deal as a result. Or it may affect larger financial decisions, such as investing in an asset that lost you money.
It’s often useful to reflect on mistakes so you can learn from them. However, dwelling on them could mean you overlook opportunities in front of you or cloud your judgement next time you’re making a financial decision.
A common financial mistake people often regret is not saving enough for their future when they’re younger. In fact, according to a report in IFA Magazine, half of Brits expressed a regret over not saving more in the past. While recognising an opportunity missed isn’t necessarily bad, there are times when it could hold you back.
You can’t change past financial mistakes. So, accepting them and focusing on what you can do now could help progress towards goals.
2. Recognise your financial flaws
Everyone has some financial flaws. Learning to recognise these could help you take steps to minimise harmful behaviour.
For example, if you know you’re likely to splurge when you’re feeling down, having a separate account that holds only your disposable income could prevent impulsive purchases from affecting your long-term objectives. Or, if investment volatility means you’re tempted to make changes, limiting how often you check the performance of your investments could reduce knee-jerk reactions.
Recognising that past experiences, personal views, and emotions will affect your decision-making skills could help you identify when behavioural bias could influence you.
3. Stop comparing yourself to others
It’s often easier said than done, but focusing on what you have, rather than what other people have, could make you happier and boost your finances too.
Whether you’re worried your falling behind because you don’t have as much saved for retirement or a friend seems to have more disposable income than you, comparison really can be the thief of joy.
Focusing on what you’re lacking could lead to you overlooking the positives and the bigger picture you’re working towards. As you typically don’t know all the financial details of other people, you’ll often be comparing your situation with just a snapshot of theirs. What’s more, their long-term goals could be very different to yours.
So, as difficult as it might be, remember everyone is on their own financial journey.
4. Focus on what brings you happiness
Getting the most out of your finances isn’t always about building wealth. Indeed, considering how you could use the money to create the lifestyle you want may be far more valuable.
So, if you often focus on the number in the bank, shifting your perspective to think about what the money could do for you could be positive. The steps you’re taking might enable you to spend more time with your family, retire early, or enjoy splurging on hobbies now.
Striking the right balance between short- and long-term goals can be difficult. A financial plan that starts with your happiness could help you enjoy life now and in the future.
Contact us to talk about how we could work with you
As a financial planner, we could work with you to foster a positive money mindset and help you understand how your financial views could be affecting your long-term finances. Please get in touch to arrange a meeting to discuss how we might work together.
Please note:
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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Approved by Best Practice IFA Group on 29/11/2024.