Our attitude to money will have a tremendous impact on our lives. It determines whether we spend to impress or invest to conserve. It determines whether we become independently wealthy or live on a government pension. It determines whether we stay in the workforce or start our own business. And it determines whether we retire young or work to old age.
Louise Hay, the well-known New Age guru, has said that our attitudes to money are more dysfunctional than our attitudes to sex. She may be right. Certainly, our attitudes to money are not discussed as often, or with the same level of passion as sex.
In some respects, talking about how much we earn and how we spend our money is taboo. An honest discussion about our attitude to money is rare. That may be, in part, because we are not aware of our personal attitudes to money. We usually do not examine such attitudes unless we have a good reason to do so, such as bankruptcy or some other devastating financial crisis.
In any case, our attitude to money is manifest every day in the decisions we make about its use. We can continue with our current, unexamined attitudes to money or we can put effort into understanding these attitudes and change them where necessary. Your long-term financial future depends on it so, if you are interested, let’s start right now!
- Define money. What do you think money represents? Those with a healthy money mindset see it as stored energy. They know how much effort they expended to earn it.
- Calculate the time it takes you to earn one dollar. If you earn, after tax, $20 an hour, then your dollar earning rate is 3 minutes. When shopping you can determine the true cost of an item. An outfit at $120 actually costs you 6 hours of work. Remember half or more of the hours you work each week has already been used up in fixed expenses.
- Say, “I deserve to be wealthy” and see what happens. Do you believe it? Or do you get a reaction? You need to have an attitude of entitlement to be able to earn good money and keep it. The winnings of most lottery winners are gone within a year or two. The reason? They don’t really believe they deserve to be wealthy.
- Realise there is no such thing as easy money. So called easy money always comes with risk. Sooner or later, you pay. Believing that money comes easily will misdirect you. Your focus will be on the quick deal or the great financial windfall. Eventually, you will be disappointed.
- Notice that, generally, older people are better off than younger people. Why? Because they have been earning money consistently over a longer period of time. This is how you become wealthy; you consistently exchange effort for money and accumulate assets over time.
- Consider what having money will get you. Some people want money to feel safe and secure, some because they hope to impress others and some want freedom from having to work.
- List your parents’ and grandparents’ attitudes toward money. Where did their attitudes come from? Do you subscribe to the same views? Begin choosing what you believe and affirm these new beliefs regularly.
- Avoid retail therapy. Sometimes, we spend money to make ourselves feel better. Retail therapy compensates for a hard week, a nasty argument, or a loss of some sort. Instead, confront your feelings of disappointment, and release them.
- Set financial goals. Ensure that part of that goal includes a set amount of money to spend any way you wish. The “spending money” is your reward for achieving your goal.
- Realise that spending to impress is motivated by a desire to feel better about yourself. People with a healthy money mindset have a feeling of inner satisfaction and self-acceptance that endures regardless of what they possess. If you don’t have this feeling, search to find it. Seek help if necessary.
- Calculate your net worth and compare it with what it should be. Net worth is all your assets fewer liabilities. To determine what it should be multiplying your age by your annual gross household income and divide by ten. It is best to leave all inheritances out as this exercise is about determining your accumulation record. Have you accumulated as much as you could have? Aim to improve your net worth if you fell below.
- Realise that stereotypes about money are often inaccurate. We assume that people who live lavishly are rich, while those who are thrifty are less well off. These assumptions may be false. Over one-third of millionaires buy second-hand cars. Many people with showy possessions have a low net worth.
- Determine your fixed expenses and your discretionary spending money. Fixed expenses include rent, electricity, rates, loan repayments, car expenses and insurance. If you have a healthy money mindset you know the amount of your monthly, fixed and discretionary expenditure.
- Remember that a healthy money mindset is a habit. Developing that habit, like accumulating wealth, takes time and effort.
Struggling with your mental health? North Brisbane Psychologists can help. Book an appointment today!