Changing your Money Mindset
As someone who spends large amounts of time thinking about money, one of the most fascinating aspects I find is the relationship people have with money.
Money is such a personal concept, that it can be taboo enough to where you do not ask your coworkers how much they make, or how much something costs, yet we all need it to survive.
However, that is changing. It is becoming more mainstream to talk about how much you make (take a look at Salary Transparent Street ) and the importance of negotiating your salary. Laws like the California Equal Pay Act (if you're in CA) & the National Labor Relations Act make it perfectly legal for employees to discuss their wages with one another.
Our perspective about money vastly influences our spending habits. I do not mean that in the “I am about to shame you for buying a $7 coffee,” but more in the way that our previous experiences with money, shape our core values, beliefs, and narratives around money and what we do with it.
Here are some of the questions that personally helped me shape my money perspective:
First thing first. Move on from the past.
Whether you were an impulse shopper who accumulated thousands in credit card debt or began investing in your 40s, there is no point in dwelling on the past and carrying that baggage with you. It will only hold you back from creating a different future.
2. What is my personal experience with money?
Growing up with limited resources created a scarcity mindset for me, where I was afraid of not having enough. Funny enough, once I had enough buying power, I began spending the money I made as a way to fill the void of “not having enough.”
As someone who grew up with a single mother, while we always had food on the table and a roof over our heads, this idea of scarcity was always looming over our heads. As soon as I began making money and had enough expendable cash to spend, I would spend it. One of my most memorable purchases, a Michael Kors watch (for my millennial peeps) that retails at $275 makes perfect sense as a college student making $9 an hour.
This is where assessing your spending habits comes into play. Are you a spender or a saver? Whichever you may be, does this align with the type of relationship with money you want to have & does this aid in your long-term goals?
3. Identify your triggers.
As a past impulse shopper, I realized I used shopping to deal with my anxieties about my own life. Not only does buying create an instant serotonin boost, but it also makes us feel like we accomplished something. I am not saying shopping is the problem, I think avoiding might be.
4. Set Bigger Goals:
It is about directing our focus.
For me, the antidote to cut back on spending was to focus on what I ACTUALLY want to do with my money. Surprisingly enough, my scarcity mindset and fear of not having enough money diminished once I started tracking my spending and setting a budget.
Seeing where my money was going allowed me to visually see how much I could save. As a result, I was able to create bigger goals . I do believe that budgeting my monthly take-home pay of $1,978 in 2018 set the stage for future loftier savings.
5. What are some of my biggest financial obstacles?
One of my earliest financial obstacles was my expenses. It was hard to have enough money left at the end of the month. Other times I have been my own worst enemy. It can be hard to make progress if you do not believe you can stick to the plan.
For others, this might look like debt or higher expenses (car loans, student loans). Planning for expenses can go a long way in tacking future goals.
Long story short:
I would like to believe that it was my scarcity mindset and fear that propelled me to want to get serious about my personal finance situation. While fear can sometimes be useful, I think the solution falls in creating an intentional balance where you can decide where your money goes. It is about having a choice. Oftentimes, this requires us to asses where we are and determine where we want to be.
Until next time,
ED
