Even if you have taught yourself a great deal about personal finance, your money mindset may be getting in the way of making good financial decisions. What is your money mindset? It is how you approach and think about financial matters. This mindset is often influenced by how your family felt about and dealt with money when you were growing up. It is important to understand these influences and make adjustments in your thinking if necessary, so that you can have a healthier relationship with money matters.
Understand Your Background
When you think back to your childhood, what was your family’s attitude toward money? Were they big spenders or big savers? Was there never enough? Was it a constant source of conflict, or was it something that they didn’t talk about at all? What did they teach you, implicitly and explicitly, about money and personal finance? These questions can help you think about how your ideas may have developed.
Identify Your Attitude
Thinking about your past may have provided some revelations. For example, perhaps your family never really had enough, and worries about paying rent or putting food on the table were a constant concern that they shared with you. This might mean you became an adult who is always anxious about spending, even for necessities. Perhaps you are overly thrifty, making choices that are not good for your overall well-being because you are so worried about making sure that you have a much bigger financial cushion than most people consider necessary. On the other hand, perhaps one or both parents were stingy and denied you things you needed or wanted despite being able to provide them. This may have made you something of a spendthrift. Once you have put together your past and your present, you can move toward making more positive choices.
Make Empowered Choices
It is common for people to think about their money situation as something that happens to them rather than something they have control over. By drilling down to the origins of your attitudes about financial matters, you can take that control back and begin to make choices that improve your situation. For example, you might assume that paying off student loans and similar debts are an insurmountable goal, or that you have little control over your monthly expenses. However, there are a number of things you can do to mitigate this. For example, you could refinance all of your student loans with a private lender, leaving you with a single lower monthly payment. You can set goals to save more or pay off other debts as well. If you are in a relationship, this process can be particularly important since finances are often a source of conflict. Talking to your partner about their background and mindset and working together on a plan can be a healthy solution. If you have or plan to have children, this can also lay the groundwork for giving them a better financial education and tools than you had.