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Money Mindset Influences: What You Didn’t Know!

Money Mindset Influences: What You Didn’t Know!

Your success depends on your mindset .Let this sink into your mind for a moment. If you let your mindset run your show, you’re pursuing the surest route to long-term suffering!

The reality is: every decision you make is influenced by your mindset. Your mindset—good or bad—pilots what you do, whom you associate with, where you go, how you solve issues, how you view life, how you vote, and what you want to hear or watch.

Think it this way- the currency notes you brag of or spend sleepless nights looking for is nothing but a printed paper. It has no value at all other than the assigned value. Period! So why would you want to compare your personal worth to a printed paper with no value?

Sadly, millions of people have adopted this ill and feeble money mindset. If you value yourself, change your mindset. Here is how you can go about it:

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1. Never entrust your financial decisions to others.

Money management tools like Quicken is informative and beneficial, but it’s vital to believe in your own ideas and take a complete control over your financial decisions .Any financial advice from somebody else is often not as secure as executing your own productive ideas. If you have been dreaming about a certain business idea, rise up. Implement it. Go out there and act swiftly. Draft a business plan. Never allow limiting beliefs about your abilities throttle your money making creativity. Remember, you can achieve even if you aren’t an expert at something!

2. Dare more.

Never operate from scarcity Instead, catapult yourself into the abundance. Reject the normalcy/regular and predictable life. Instead, release yourself into the world of inconvenience and opposition. The safety of normal is the enemy of success.

Try and try. A mindset of hoarding resources is the surest route to creating scarcity. Jump into the ring. Punch yourself into the championship of financial success instead of wallowing in the stands with your negative mindset that is governed and driven by the outcomes of other people’s financial games. 

3. Save. But enjoy your life and money!

Yes, you can plan for your retirement .But this is not as powerful as living in the present while being aware of the future. Postponing enjoying life is similar to pushing away the present prosperity. You’ll be doing yourself a great disservice if you decide to delay enjoying life until your circumstances improve. A financial mindset that is pillared around postponement is likely to link your emotional happiness to the financial future.

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4. Money won’t solve everything.

Get this into your mind and peel off that mindset from your life once and for all. Money is not the only ingredient as far as financial happiness is concerned. Maintain a clear emotional-money separation. Money won’t transform your life into a more meaningful one. Neither will it improve your relationships with the loved ones. Simply put; money will only solve financial problems. Simple!

5. Burry that limiting financial belief!

Never believe that money is the root of evil. Believing in this myth is likely to block your prosperity. There is no harm to living modestly, but there’s nothing gracious about being broke. Embracing a positive mindset that enables you to be respectful of, but psychologically detached from real money will go a long way in helping you to make wise and better decisions as far as your financial life is concerned.

6. Chart your own path.

Don’t be afraid. You’re the driver of your own destiny .Remember; scarcity is a product of negative mindset influence. Human creativity, from science, can solve any problem including financial ones. Embrace positive but different thinking to that of the struggling masses. Then wait for the results!

7. Treat yourself better.

Practical spending is important and prudent. But it’s vital that you enjoy the fruits of your hard work. Buy something that makes you feel good. This will encourage a positive financial mindset and give you the urge to even work harder.

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8. Don’t be a slave of money.

Being too obsessive of large amounts of money can cultivate unhealthy responses such as greed and untruthfulness. Whether you have a little or a lot, this kind of obsession can make you a slave of money.

If you form a positive mindset that views money as just a tool and desist cultivating an emotional attachment to it, you’re in control. You’ll never be a slave. Remember, money is just a printed paper and has no intrinsic value whatsoever. You, unlike money, is extremely precious. The more you let the world know that you’re valuable, the more you gain self-esteem and abundance.

What you need to know?

As far as money is concerned, your mindset has a great bearing on the level of care, the degree of stewardship, and the extent to which you value it. Positive financial mindset results into a protected financial stability dominated by good savings, sound financial management, and careful planning. On the other hand, a negative mindset is the root cause of appalling debts and unsupportable lifestyles.

Carefully evaluate practical examples around you and rethink about your financial life by answering the following questions:

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  • What is your money/financial mindset?
  • Where do you fall- a saver / spender?
  • Is money the sources of conflict in your relationship or you’re having an exclusive control over it?
  • Are you worried about money or you are much secured with the path you’re taking?
  • Do you evade tackling money issues or you always try to pursue the answers?
  • Does your mindset often result in a restful night sleep or they are always dominated by worries and fear of your unpaid bills?

Mindset is like software!

If you have already invested in how your financial life is proceeding, congratulations. But if yours is characterized by challenges and constant worries that often lead to stress as well as unhappiness, something is amiss and you need a quick fix immediately.

Remember, the mindset is like software. Your mindset dictates which route to take work every morning, whether you feel like going to the gym or cling to your blanket. Your mindset, just like computer software, can be altered, adjusted, programmed and reprogrammed, or replaced with money mindset 2.0, 2.1, or 3.0. The will, effort, awareness, and desire to make your life better need mindful, intentional, and positive upgrades.

However, the main problem is when you don’t believe that you can change. Mindset upgrades are not magic and don’t happen automatically. It takes will, determination, positive attitude, and action to effect real changes.

How to get clarity about your mindset?

To get a clear picture of your money mindset, ask yourself the following questions:

  • Is your current lifestyle getting closer or further away from your dream future life?
  • Does your decision support your long-term financial happiness?
  • Is your spending operating in the “autopilot”?
  • How do you feel about your money life: good or bad?

If the answers to the above questions make you feel that all is not well in terms of where you want to be, then until you outgrow this negative money mindset, you’re still in the kindergarten of financial freedom and vast money mindset. The difference is not in your abilities, it’s in your mindset.

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Rahis Saifi

Entrepreneur

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Last Updated on August 20, 2019

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. And that’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways on how to set financial goals and then actually meet them with ease.

5 Steps to Set Financial Goals

Though setting financial goals might seem to be a daunting task but if one has the will and clarity of thought, it is rather easy. Try using these steps:

1. Be Clear About the Objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream. And this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore if you are saving today, then you should be crystal clear about what it is for. It could be anything like kid’s education, retirement, marriage, that dream vacation, fancy car etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives, however small they may be, that you foresee in the future and put a value to it.

2. Keep Them Realistic

It’s good to be an optimistic person but being a pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going out of the line will definitely hurt your chances of achieving them.

It’s important that you keep your goals realistic in nature for it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said – “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman”. And this quote sums up the best what inflation could do your financial goals.

Therefore account for inflation whenever you are putting a monetary value to a financial objective that is far away in the future.

For example, if one of your financial goal is your son’s college education, which is 15 years hence, then inflation would increase the monetary burden by more than 50% if inflation is mere 3%. So always account for inflation.

4. Short Term vs Long Term

Just like every calorie is not the same, the approach towards achieving every financial goal will not be the same. It is important to bifurcate goals in short term and long term.

As a rule of thumb, any financial goal, which is due in next 3 years should be termed as short term goal. Any longer duration goals are to be classified as long term goals. This bifurcation of goals into short term vs long term will help in choosing the right investment instrument to achieve them.

More on this later when we talk about how to achieve financial goals.

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5. To Each to His Own

The journey of setting financial goals is an individualistic affair i.e. your goals are your own goals and are determined by your want to achieve them. A lot of times we get on the bandwagon of goal setting only to realize later on that it was not meant for us.

It is important that your goals are actually your goals and not inspired by someone else. Take a hard look at this step at all the goals you’ve set for after this step, you will be on the way to achieve them.

By now, you would be ready with your financial goals, now it’s time to go all out and achieve them.

11 Ways to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a 2 step process –

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough; and invest those savings wisely so that they grow over a period of time to help you achieve goals. So let’s get down to ensuring healthy savings.

Ensuring Healthy Savings

Self realization is the best form of realisation and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your monthly expenses. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you would be surprised to see how small expenses add up to a sizeable amount.

Also categorize those expenses into different bucket so that you know which bucket is eating the most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pump up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classical mistake which almost everyone of us do. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world i.e. we should be taking out the planned saving amount first and then manage all the expenses from the rest.

The best way to actually implement is to put the savings on automatic mode i.e. money flowing automatically into different financial instruments (for example – mutual funds, retirement corpus etc) every month.

Taking the automatic route will make us lose control of our money and hence will compel us to manage in what’s left with us thereby increasing the savings rate.

3. Make a Plan and Vow to Stick with It

Budgeting is the best to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be made.

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Nowadays, several money management apps and wallets can help you do this automatically. It’s easy and who knows, you may just end up doing what people fail to do.

At first, you may not be able to stick to your plans completely but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Rise Again Even If You Fall

Let’s be realistic. It’s not like the world will come to an end if you made one mistake. This isn’t called leniency but discipline.

If you fail to meet your budget for a month, don’t give up the entire effort just like that. Instead, start again.

Remember that flexible plans are the most realistic plans. So go forward and try to follow your financial goals as planned but if for some reason, the plan gets out of hand for you, do not give up on it just yet. This has a lot to do with your psychology rather than any material commitment.

All you have to do is to stay on the road and vow to stay on it, no matter how much you fall down.

5. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make Savings a habit rather than a goal. While it might seem to be counter intuitive to many but there are some deft ways of doing it. For example:

Always eat out (if at all) during weekdays rather than weekends. Usually weekends are expensive. Make it a habit and you would in turn be saving a great deal.

If you are travelling buff, try to travel during off season. Your outlay will be much less.

If you go out for shopping, always look out for coupons and see where can you get the best deal.

So the key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice which will be harder to sustain over a period of time.

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6. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission. And it would be rather easy to lose the grip over your discipline.

Therefore in order to stay the course, it is advisable that you keep yourself surrounded with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

7. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

So if you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

Use this journal to write down all essential points such as your short term, mid term and long term goals, your current sources of income, your regular expenses which you are aware of and any committed expenses which are of recurring nature.

When you have a written commitment on paper, you are going to feel more energised to follow the plan and stick to it. Moreover, it is going to be a lot more easier for you to follow you and track your progress.

At this point, you should be ready with your financial goals and would be doing brilliantly with savings; now it’s time to talk about the big daddy – Investments.

Making Smart Investments

Savings by themselves don’t take anyone too far. However savings when invested wisely can do wonders and we are at that stage where we will talk about making smart investments.

8. Consult a Financial Advisor

Investments doesn’t come naturally to most of us therefore rather than dabbling with it ourselves, it is wise to consult a financial advisor.

Talk to him/her about your financial goals and savings and then seek advice for the best investment instruments to achieve your goals.

9. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about them.

Just like “no one is born a criminal”, no investment instrument is bad or good. It is the application of that instrument that makes all the difference.

Do you remember we talked about bifurcating financial goals in short term and long term?

It is here where that classification will help.

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So as a general rule, for all your short term financial goals, choose an investment instrument that has debt nature for example fixed deposits, debt mutual funds etc. The reason for going for debt instruments is that chances of capital loss is less as compared to equity instruments.

10. Compounding Is the Eighth Wonder

Einstein once remarked about compounding,

Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.

So make friends with this wonder kid. And sooner you become friends with it, quicker you will reach closer to your financial goals.

Start investing early so that time is on your side to help you bear the fruits of compounding.

11. Measure, Measure, Measure

All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments; taking stock of how our investments are doing.

If there is one single step where everything (so far) can go wrong, it is at this step – Measuring the Progress.

If we don’t measure the progress timely, then we would be shooting in the dark. We wouldn’t know if our saving rate is appropriate or not; whether financial advisor is doing a decent job; whether we are moving closer to our target or not.

Do measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

The Bottom Line

This completes the list of tips for you to set financial goals and actually achieve them with not so great difficulty.

As you can see, all it requires is discipline. But guess that’s the most difficult part!

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Featured photo credit: rawpixel via unsplash.com

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