Financial abundance requires the willingness to change your mindset and take action. Here are my favorite tips from The Psychology of Money, to re-frame your financial thinking and take small steps to change.
1. The hardest financial skill is to get the goal post to stop moving.
Beware of lifestyle creep. The first thing to do to avoid lifestyle creep is track your spending. You can’t change what you can’t see. From there, start to build up savings incrementally. Set-aside an emergency fund, save for your goals, and invest.
2. Planning is important but the most important part of every plan is to plan on the plan not going according to plan.
Every financial plan needs a margin of safety built in. Although there is a technical mathematical definition of margin of safety. Housel defines it as, “a frugal budget, flexible thinking, and a loose timeline–anything that lets you live happily with a range of outcomes.”
3. Controlling your time is the highest dividend money pays.
When I begin working with a client on their financial vision, a crucial step is getting clear on their life values. When we spend our money intentionally and in line with our values, we tend to be more satisfied overall. What we often discover is that control over our time brings more happiness than being able to acquire things. We innately crave autonomy over our time.
It can be liberating to build our finances around this, by prioritizing things like:: reducing or eliminating your commute, letting go of resistance to outsourcing tasks like house cleaning and maintenance, or improving work/life boundaries to be more present.
4. Wealth is what you don’t see.
What would you say if I told you stuff is the opposite of wealth? What you see is money spent, and the material things that money bought. Wealth isn’t worn or driven. Wealth is what you quietly build so you can sleep better at night, knowing your financial future is secure.
5. You don’t need a specific reason to save.
I really believe in saving for saving’s sake, no matter what the economic outlook. All of the global events in the last few decades that have triggered periods of economic downturn and uncertainty were a total surprise. We don’t know what the future holds. That’s why it is important to be consistent and build healthy financial habits that will serve you well in any economy. You don’t want the added pressure of having to change your financial habits when you are suddenly facing challenges.