If you ask most people, the tedious process of getting your financial house in order is the last item on the bucket list. No one relishes the idea of spending their precious time crunching numbers. We’d much rather stay in a state of avoidance or outright denial rather than take the time to confront reality and rehab our finances. Still, ignoring our personal financial health can ultimately be disastrous, so why not change the way we perceive this chore and develop a new positive mindset around money.
What is Positive Money Management?
Too many of us are guilty as charged of practicing subpar money management habits. We carry too much credit card debt, have little to nothing saved, and habitually cave into making those hard-to-resist impulsive purchases. In the long run, these poor financial practices can come back to haunt us in a big way, as we watch our credit scores plummet or freak out when the car needs new tires.
Putting on blinders and ignoring the warning signs might help us to temporarily dodge our financial reality, but deep down inside we are very aware of the precarious situation we are in. And it’s there, in our subconscious, that the damage to our mental health is done. Inevitably, as money problems compound, stress and anxiety levels rise.
As unsexy as it might sound, getting financially healthy is just as much about our mental health as it is about the balance in our bank accounts. By becoming better stewards of our money, we not only shore up our personal financial security, but we’ll also sleep better and reduce those cortisol levels.
5 Steps to Achieve a Positive Money Mindset
If you’re ready to achieve financial peace of mind, you have come to the right place. Here are five steps that will help you attain that positive money mindset:
- Make a game plan. Grab a notebook and jot down your short-term financial goals, your long-term goals, and then (the hard part) create a monthly budget to help you achieve them over time. Your budget should be both comprehensive and realistic, otherwise you won’t stick to it. Place your monthly budget in an accessible place where you can refer to it often to you keep you on track.
- Flesh out those short-term goals. If your credit card balances are too high, paying them off is the first step toward achieving financial health. Doing so launches your positive money management plan while raising your credit score. Calculate your game plan. For example, if your credit card balance is $5,000 and you’ve set a goal to pay it off in twelve months, divide $5,000 by twelve and include that $425 payment as a line item in your monthly budget. If it’s easier to make two smaller payments per month that equal $425, that works, too.
- Plan your long-term goals. Saving for retirement can be accomplished in various ways. Many employers offer a 401k plan and some even match monthly contributions, which is the easiest way to save for your retirement. If your long-term financial goals call for a larger nest egg, consider increasing your monthly contribution. If you don’t have a 401k plan, a financial advisor can guide you toward other retirement savings instruments.
- Start saving. It’s easy to find excuses for failing to save money, but positive money management calls for you to overcome the excuses and start a monthly savings plan. Start by building an emergency fund that will carry you through a financial setback for at least six months. To do this, set up automatic deposits into savings every payday to slowly but surely accumulate a sufficient rainy-day fund. Once you’ve accomplished that, open up a money market that pays interest and continue making monthly deposits.
- Reward yourself. One of the payoffs of getting your personal finances in order is rewarding yourself when you hit a benchmark. Paid off your credit card? Why not gift yourself with something special, like treating yourself to a concert or taking a little road trip? Keep yourself motivated along the way by rewarding yourself as you meet each of your financial goals.
Establishing good financial habits has big payoffs. It’s a wonderful feeling to be free from credit card debt, to have an ample emergency fund, to increase your savings, and to build your retirement nest egg. Shifting to a positive money mindset can be very empowering, as it provides peace of mind while also relieving a great deal of stress. Now, go and set those financial goals – and don’t forget to reward yourself when you hit them.
