June 2013

Learn to Change the Way You Think About Money

Any time you talk about money and personal finances it can quickly become an emotional and super-charged debate. Millions of Americans stress over the amount of debt which they owe. But the money problems don’t just end there. People are worried about losing their jobs and how they will survive if that occurs. They are worried about staying current with their mortgage payments and holding onto their homes. They spend many sleepless nights wondering how they will ever afford to send their children to college. And don’t even bring up the subject of retirement! Most people have no idea how they will ever accumulate enough funds to comfortably retire.

The cold, hard facts are that many people are living quite literally from paycheck to paycheck. They spend every dollar they earn and “extend” their income by using credit cards for everyday purchases. They have little or no savings. If a financial emergency were to arise, they have no emergency fund with which to pay for the unexpected money need. Not a very pleasant picture, is it?

The truth is that someone who drives an expensive, fancy car or lives in an enormous home may not be wealthy at all. Appearances can be quite deceiving. Even an individual who commands a big salary is not immune from being financially over-extended and may, in reality, be cash-poor. Situations such as these are very common and people who are trapped in this never-ending financial nightmare usually have a very difficult time breaking the cycle of poor money management decisions.

Facts You Should Consider

To begin with, don’t think that you have to make a lot of money to have a lot of money. The key is to spend less than you earn. Another way of saying this is to live below your means.

Nearly everyone worries about money. Your goal should be to not be one of those people. Money problems can quickly overtake all the positive and good things in your life. Financial woes can create sleep problems, eating difficulties, and health issues. Severe money problems can come between you and your partner or spouse and tear apart families.

Wouldn't you like to follow a different financial path? It all begins with changing the way you think about money. Once you start thinking about money in a different way, you will begin changing what you do with your money. It’s not about how much salary you earn or how much education you have... it’s all about how you think about money.

There are some common traits among people who build wealth that differentiate them from the millions of other individuals who consistently struggle with money issues. These are:

  • They have little or no debt.
  • They live well below their means.
  • They relentlessly save.
  • They have specific financial goals, both short-term and long-term.
  • They never make financial decisions based on emotion. They are always calm and clear-headed when making decisions involving money.
  • They start saving very early in their careers.

What You Can Do

Most wealthy people didn’t start out with vast sums of money. Very few inherited their fortunes. Determination, ambition, business acumen, and probably some good old-fashioned luck all played a role in their success. Many self-made millionaires (and billionaires) experienced failures, sometimes more than once. But they never gave up.

This may be due to the fact that wealthy people tend to look at money from a different perspective than the average consumer. And the rest of us can learn and benefit from their views about money.

Here are some great suggestions for you to consider that should help you change the way you think about money. And in the process, you should be able to get more of it!

  • Don’t think of money as something you earn. Think of money as a tool. Most people think of money as the result of working hard and earning a salary. We gain it for work done. We lose it when it’s spent. But truly wealthy individuals consider money as a tool- a way to acquire more of what they really want. When you begin to see money as a way to grow your wealth and do more of what you want in life, your entire mindset will change. Financial decisions will now be based on the sound idea of accumulating wealth. Constantly purchasing the latest technological gadget or foolishly spending money trying to keep up with everyone else will no longer seem important.
  • Stop focusing on your debt and begin focusing on saving. Yes, it’s important to pay your bills on time and reduce your outstanding debt. And most people probably consider getting out of debt their number one financial priority. But you need to change your approach if you want to be successful at building wealth. Many experts suggest that when you only focus on paying off your debt, you become distracted from creating wealth. Your focus (while still continuing to pay your bills) should be on saving, growth, and prosperity. The bottom line is: pay your bills and decrease your debt but let your mind be centered on savings and growth.
  • Take the emotion out of dealing with money. This may be easier said than done. It’s very easy to tie your own self-worth to how much money is in your bank account. Or what type of car you drive. Or what neighborhood you live in. Or where your children go to school. Don’t let money define who you are. Remember, money is simply a tool. Some of the worst financial decisions ever made are the ones based on emotions, not sound financial judgment. Learn to control your money rather than having it control you. This will move your mindset in the right direction- towards the creation of wealth.