How Your Attitude Drastically Affects Your Finances
Many of you already understand this, but your attitude towards money determines your success. Recently, Stuart and I attended a finance class that talked about this concept. It had some great points, and I wanted to elaborate on them. Changing our mindset about money has been the biggest impact on our financial success.
It’s not about how much money you make.
The first point to drive home is that financial success is not about how much money you make. According to a recent study by Investopedia, If you make $32,400 annually or more, you are considered to be in the top 1% wealthiest in the world. Where do you fall? Does that put things into perspective for you? The more money you make, the problems you had are just multiplied. Instead, it’s about managing the money that you do have, and managing it well.
Check out this resource. This is a Family Budget Calculator provided by the Economic Policy Institute. It calculates how much your estimated expenses per year should be, without debt, based on your metropolitan area.
Stuff doesn’t matter.
Often times, our finances like to make us believe that more stuff equals happiness. The biggest car, the best toys, the next best phone or computer, all of that will equal happiness. In reality, more stuff just equates to more discontent. Think of the last thing that you bought. How did you feel when you bought it? Was it an item that you needed? Or was it an emotional purchase that fulfilled an emotional need in you? Often times, purchases we make are not a need, but rather fulfill an emotional desire in us, and trigger an emotional response rather than a physical need. These purchases cause financial unrest in our lives, and if we can learn to combat them in a healthy way, we can develop healthy financial habits.
How?
How do you make good financial decisions when the emotional decisions override the logic? Well, first it takes time. It takes time to learn to evaluate each of your purchases. You need to look at them as a want vs. a need. Did you need it yesterday? If the answer is no, don’t buy it! Will you need it tomorrow? Again, if the answer is no, don’t buy it. Try waiting 30 days before buying it, see if you still want it at that point.
Another thing to keep in mind – live YOUR life, not THEIR life. So often, I find myself discontent with what I have because I am comparing myself to what my neighbor has. I am looking over the fence, no longer happy with what I have because my neighbor has the Wobble 8 and I only have the Wobble 6. My 6 works perfectly fine, and I was perfectly content until I started comparing myself to someone else. Read more about gaining contentment with your life in this post.
Live your life differently.
The culture will try to tell you to live your life a certain way – that you need to have a car loan, to buy a new phone every year when it comes out, to use credit cards to buy what you want when you want it. When Stuart and I explain to people our budget system, how we live on a budget and have a system of accounts to keep track of our expenses, we get looks like we have 3 eyes, But that’s because society says you don’t have to manage your money, you can spend it how you’d like. When we don’t spend money freely, don’t go out to eat because it’s not in our budget, we get questioned, or sideways looks. But it doesn’t bother me, because I am living my life how I want to, and I am happy with it. We are financially free, and we are able to spend money freely within our budget.
When you live your life differently than the society, you will get pushback from others. But you aren’t living for them, you are living for yourself, and following the path that will lead towards financial freedom.