Managing your finances should be a simple matter of doing a few simple sums. Work out your income, deduct your outgoings, plan how you will use the surplus to create wealth. But things are not that simple.
It can be that you have money mindset that gets in the way.
Are you afraid of money?
Many of us grow up wary of anything to do with money. We can probably spend it without too much trouble, but when bills come in, we might start to be anxious. Anxiety can turn to panic if things go wrong.
The wrong money mindset means that money becomes an emotional subject. It can be a source of anxiety, or even fear. And it gets in the way of proper money management.
Your money mindset is usually established early in life. If you were surrounded by adults who found money stressful, the chances are that you will have the same worries whenever you start thinking about finances.
A healthy money mindset not only ensures you can deal positively with a bill coming through the door without that sense of panic, it will help you make the most of your money for the future. At Continuum we are looking at money mindsets and how you can make sure yours is positive.
Do you have an unhelpful money mindset?
Here are some warning signs:
- You don’t like to talk about money
- You think it is a source of worry
- You believe that you’ll never have enough money
- You don’t understand your finances – and would rather not think about them
- You panic when a bill comes in
- You sometimes leave bills unpaid
- You have no reserves to deal with an unexpected bill
- You don’t have any long term financial plans
With a bad money mindset it can be difficult to face up to things, which only makes matters worse,
Money should not be frightening. You need to find ways to control it – and that means you need to start changing your money mindset.
There are simple steps you can take.
Get things in writing
How much do you have coming in each month? What are your financial commitments, your rent or mortgage, your car finance, your regular bills?
If you don’t know exactly, your mindset is probably to blame. It may be painful, but you need to know the answers, and start to develop some healthy habits.
It is surprising how much difference simply having everything on paper -or screen – can make. Being able to see the challenges is better than being afraid of the unknown. The chances are things are not as bad as you imagined, and you may even find that you have money – and more financial freedom – than you thought.
A hint – your bank might have an app that will let you see exactly where you are spending money and tell you your balance minute by minute. Alternatively, download our Personal Finance Portal, giving you 24/7 access to your finances all in one place.
Time to take control
Taking control of your finances – and changing your money mindset – starts with this awareness of what you have coming in and going out each month.
When you know that, your second step is to develop a budget to help you deal with them. See where your money is being used wisely – and where it is being wasted. Use our useful budget planner to help you get started.
You can see where you may be able to change your spending habits, how you can free up money, and how you can use this spare cash to deal with debts. Credit card debts are particularly dangerous. They are very easy to build up, but because of the very high interest rates involved, very hard to get out of.
Make it a priority to pay them off.
Discovering that you are able to make sensible decisions about money – decisions that will improve your financial position – is a major step to changing your money mindset.
With debt out of the way you can build up a reserve of cash. Having a reserve of money for emergencies and knowing that something like a car breakdown does not have to mean financial disaster is another great help when it comes to avoiding money worry.
Building real confidence
With a cash safety net in place, you can start to think about possibly investing some of your money but that does depend on a number of factors, in particular your attitude to investment risk.
You don’t have to put in a cash lump sum. In fact, putting in a regular amount each month can be a very sound strategy to smooth out the impact of market highs and lows. Schedule a direct debit to leave your account on the day you get your salary will help ensure you don’t miss it and you’ll find your investment nest egg may start to grow, however investment returns are not guaranteed and you should regularly review investments to make sure they remain within your attitude to risk and the returns are hopefully remaining positive.
Suddenly money may not seem as frightening as it was. Hopefully you may feel more in control and your money is working harder for you. Hopefully you have started to build the positive mindset you need.
Get an expert to help
Changing your money mindset is vital for a positive financial future, and it can be a great deal easier with expert help.
At Continuum we can help you at every step of building a positive money mindset. Advice on budgeting, getting on top of savings, starting to invest pensions – whatever help you need to make the most of your money we are just a phone call away.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of an investment can go down as well as up, Capital is at risk.
Equity investments do not afford the same capital security as deposit accounts.
Your home may be repossessed if you do not keep up repayments on your mortgage.