We’re headed into the New Year and I’m sure that goal setting is at the top of your mind. Many of you are thinking about how you want to lose weight, work out 5 times a week, drink more water, declutter your house from top to bottom…
And probably also on that list… getting your money together once and for all. So I created this series entitled, #newyearnewmoneychallenge to help you get your financial freedom journey off to a great start. So if you’re interested then keep reading!
Money mindset is a critical, yet often overlooked, part of achieving financial freedom. We have to have our minds right before we can get our money right.
Tip #1: Let Go of the Past
I know that this is probably easier said than done. In the past you have probably started a budget…and then quit. Begun saving…and then spent the money on a whim.
Maybe charged some things on your credit card that you regret. All of us have made mistakes with our money in the past. But we can’t let those mistakes define our futures.
Let the past be the past. Don’t dwell so much on the past that you are unable to move forward in the present.
Now that doesn’t mean that we shouldn’t learn from our mistakes. It’s a great idea to reflect and learn from the past. I love the idea of starting a money journey and reflecting on lessons learned.
But once that reflection is over and done, leave the regrets in the past. The mistakes of 2015, 2016, 2017, 2018…leave them all behind. You might even be holding onto mistakes you made in 1989. Sis, it’s time to let that one go! Let’s move into the new year with a fresh start!
Tip #2: The timing will never be perfect.
Don’t wait for the ideal set of circumstances because they will NEVER come. For example, you might be waiting for your husband to get on board with the finances so that you can get started. It’s awesome if your spouse is as excited about this journey as you are because two heads are better than one. But having your spouse on board isn’t a pre-requisite to getting started.
It might be 3 months or 3 years, before your spouse jumps on the budget bandwagon. In the meantime, start where you are, with the resources at your disposal. And keep praying that one day he or she will get it. But don’t waste valuable time while he or she figures it out.
Another thing that I often hear is that people are waiting to earn more money or get a better-paying job before getting better with their finances. This is faulty thinking!
This line of thinking assumes that we will automatically be better with money once we have more of it. What typically happens is that the lack of money management skills becomes exponentially worse as we earn more money.
If we never take the time to acknowledge our issues with money and change the behaviors (i.e. emotional spending, impulse shipping, not valuing the habit of saving), earning more money will only compound the money problems.
Instead, commit to moving forward and doing better with your money now, even if you don’t earn much. Because when that increase comes, you’ll be better prepared to handle it.
Tip #3: Be careful with your words.
I often hear people engage in a lot of negative self-speak when it comes to money. They say things like… I’m bad with money. I’m bad with numbers. I’ve never been good with money. I don’t know how to budget. I’ll never get out of debt.
But if you have that mindset, and you’re constantly speaking those words over yourself, then you probably will fail. Words have power. So make a commitment to only use positive words as it relates to money.
Even if you’ve made mistakes in the past, don’t beat yourself up. Instead, tell yourself that today is a new day. And this time around, things will be different.
As you do so, your relationship with money and your attitude and outlook towards it will improve in the process.
Tip #4: It’s About Progress, Not Perfection
If you take the time to put together your first budget, then that’s progress! It will not be perfect the first time, and that’s totally ok. A budget category might be overlooked, or a bill amount underestimated. You might even forget to reconcile your purchases a time or two.
But it’s ok. Every good budget needs tweaking. As long as you are getting back up after you fall, that’s all that matters. On this journey, we will all have setbacks periodically. So focus on making progress, not achieving perfection.
Tip #5: Don’t wait until you are out of debt to start living your life.
This is a lesson I had to learn for myself. In fact, every one of these tips has been relevant in my own life. But I feel very passionate about this particular tip.
Please don’t wait until you’re out of debt to begin living your life. There is value in mastering the concept of delayed gratification, particularly if you have gotten into money trouble because of a YOLO (You Only Live Once mentality).
But when we take delayed gratification too far, we can inadvertently slip into a mindset of deprivation. If you cut out all things fun and remove all enjoyment from your life in an effort to be debt-free, you run the risk of making yourself (and your family) miserable in the process. That level of deprivation is not sustainable and quitting becomes the easier option.
Instead, pace yourself, enjoy life, and make room in your budget to live a little. Practically, for me in my life, embracing this concept meant that my husband and I continued to travel as we paid off debt. We took nearly a dozen trips while we paid off 6 figures of student loan debt and two car notes.
We made the decision to do so because we get a ton of value from being able to travel and have new experiences. Could we have paid off the debt faster if we had cut traveling?
Yes! I could have shaved off a year or more. But travel wasn’t something that we were willing to give up. So we chose to cash flow trips while still making extra principle payments to debt.
And guess what? We still paid off the debt! Student loans…gone. Two car notes…gone. We got to the finish line and in the process we still have all of the memories and experiences that we had on those trips. Now, you may not be a travel junkie like me, maybe you enjoy your to-go coffees, or those $5 smoothies, or your mani/pedis.
Whatever it is, it’s OK to hold some things sacred if you get enjoyment and value from them. Just don’t make yourself miserable in the process. Even though we’re currently debt-free (other than the mortgage) I have to always remind myself of this and remind myself to enjoy the view along the way to financial freedom.
Don’t be so focused on the destination that I miss out on the beauty of the journey. I’m keeping an eye on tomorrow while remembering to enjoy today.
Tip #6: Move from a paycheck to paycheck mentality to a wealth accumulation mentality.
Somewhere on your journey, this shift should happen. The moment when you’re no longer waiting in anticipation of your paycheck and no longer penny pinching (although those pennies do add up!)
But you go from a scarcity mentality to an abundance mentality. I was born into a lower-income family to two teenage parents who were just trying to figure out how to be adults.
As I transitioned into adulthood and into my working years one of the things that followed me was a scarcity mentality. It didn’t matter how much money I earned, I never felt like I had enough.
I was unconsciously afraid to ‘be without’. So making the shift to a wealth accumulation mindset has been difficult for me.
If you grew up in a similar context, you too may struggle with this. And if so, you may need to take it upon yourself to learn what wealth is, to learn how to invest, and to study the habits of wealthy people.
Develop the wealth curriculum for yourself. You may need to go to the library and get some books, get a mentor, or coach. Get yourself a journal or maybe go to therapy! Whatever it takes to work through the money issues and adopt an abundance mentality.
In the comments below let me know which of these money mindset tips you have struggled within your own life!