Money is the bedrock of modern daily life, but for some, thinking about financial matters can be a source of stress or anxiety. For others, money is just something earned and spent without a second thought. Building a relationship with your money is like connecting with people: It takes time and effort to succeed. Learning how to manage your finances may require a little hard work, but the potential returns are well worth it. Here are some tips for improving your relationship with money.
Understand Want vs. Need
Before you make your next purchase, consider if it’s a must-have or maybe something you could live without. Take the ego out of the equation and be honest with yourself. By cutting spending on what you want today, you’ll have more money for the things you need tomorrow. There are a few ways you can separate essential expenses from everything else:
- Make a budget: Create a comprehensive weekly or monthly budget and stick to it. Even if you overspend once in a while, a budget provides a concrete goal to work toward.
- Watch your spending: Monitor your bank account to ensure you’re spending less than you earn. Compare your bank balance to where it was a month ago to gauge your progress.
- Get organized: Put money aside for bills the moment you get paid. After taking care of the essentials, you’ll have a more accurate idea of what’s left for savings or other investments.
- Don’t get emotional: Reconsider making any big-ticket purchases or buying anything on impulse. Companies know how to make their products seem irresistible, but try not to let emotions influence your buying decisions.
Seek Clarity & Awareness
Staying in control of your financial situation requires a willingness to confront yourself. Sometimes this can mean accepting an ugly truth or understanding that a spending habit needs to change. It’s also necessary to have the discipline and focus to confront financial obligations head-on without jumping to conclusions. When it comes to developing a better relationship with money, it helps maintain a calm but attentive sense of awareness.
Avoid Money Fog
Don’t let yourself become overwhelmed by your financial situation. Balancing debt, bills, rent, and groceries can be challenging, but slipping into a money fog is not the answer. It’s easy to lose track of where your money is going if you’re not paying attention. For help motivating yourself to remain committed to your financial goals, try out some of these ideas:
- Focus on paying down your oldest debt first
- Write down your future financial objectives and how you plan to get there
- Do a complete review of your finances to put it all in perspective
- Try a money management app to track your spending habits in real-time
- Avoid distractions getting between you and financial success
Check Your Attitude
Maintaining an optimistic outlook will help you make better financial decisions. Approach making and spending money with a healthy, positive attitude. Take a deep breath before checking your bank balance and avoid negative, distracting thoughts that could throw you off track. Expecting things to work out well often has unexpected results, but getting angry or frustrated isn’t helpful.
Prioritize
Instead of searching for ways to cut costs, consider exploring new approaches to making extra money. A part-time side gig may provide the income boost you need for more financial flexibility. If you’re on a fixed income, consider putting money aside each month to invest in equities or your rainy day savings. Everyone’s financial goals are different so stay focused on prioritizing what’s most important to you.
Be Open to Advice
Don’t be afraid to ask for support with managing your money. CPAs, financial advisors, and other professionals offer valuable insights that will help guide you in the right direction. You may be eligible for tax deductions or exemptions you didn’t know you could claim. Financial professionals have considerable experience preserving wealth for people, and their advice can put more money back in your pocket.