5 Steps to Transforming Your Relationship with Money

Do you ever feel like money is controlling you instead of the other way around? You’re not alone. For many people, money is a source of stress and anxiety – but it doesn’t have to be that way. By following these five steps, you can begin transforming your relationship with money and start enjoying financial freedom. Continue reading to learn more.

Why is your relationship with money important?

In today’s world, money has become a necessity. It is often used to measure success and is essential for achieving most financial goals, often life goals too. For these reasons, it is important to develop a healthy relationship with money. This can be done by learning to budget, living within your means, investing money wisely, and avoiding debt. However, when your relationship with money is out of line, it can be a challenge to achieve these things. If you’re struggling to accomplish your financial goals, then it may be time to consider transforming your relationship with money.

When you have a healthy relationship with money, you will be less likely to experience financial stress and will be better equipped to achieve your long-term financial goals. These could be anything from buying a house to early retirement to upgrading your car.

Furthermore, developing a healthy relationship with money can lead to improved mental and physical health, as well as increased happiness. Therefore, it is clear that taking the time to develop a positive relationship with money is well worth the effort.

Related Reading: How Our Personality Types Can Affect Attitudes Towards Risk and Decision Making

What is a toxic relationship with money?

So what exactly does a toxic relationship with money look like? Before you can work on transforming your relationship with money, you need to assess the situation first. Here’s some key indicators that your relationship with money is not the greatest.

1.    Emotional spending

It’s hard to resist the lure of buying something new when you’re feeling down. Hello retail therapy! Emotional spending can provide a quick mood boost, but it’s often followed by regret and a hole in your wallet. If you find yourself regularly overspending when you’re upset, it might be helpful to find other ways to cope with your emotions. Journaling, exercise, and reaching out to friends are all healthier ways to deal with your feelings than spending money. Plus, your wallet will thank you!

2.    High debt

Carrying high debt can be a burden for individuals and families. It’s also an indicator that your relationship with money is out of control. In addition, the constant reminder of due payments can weigh on you over time and takes away from your ability to plan for your financial future. When debt gets out of control, it can be difficult to make progress in paying it off. This downward cycle is not easy to manage and is often a sign that change is needed.

3.    Living pay cheque to pay cheque

It can be really tough living pay cheque to pay cheque. When you’re constantly scraping by, it’s hard to make any headway on your finances. You never know when the next unexpected bill is going to come in, and you can’t seem to save any money. It’s a constant struggle just to keep your head above water.

4.    Blaming others for financial struggle

When people find themselves in a difficult financial situation, oftentimes they find themselves looking for someone or something to blame. It’s easy to place the blame on others when things are going wrong, but this rarely solves anything. In fact, it usually makes things worse. If you’re struggling financially, take a step back and look at your situation and decision making. What can you do to improve things? There may be no easy answers, but only you have the power to make a positive change — not others.

5.    Avoiding managing or dealing with money

There are a few reasons why people may choose to avoid managing or dealing with money. For some, it can be overwhelming and complicated, especially if your finances aren’t in great shape. Others may feel like they lack the necessary skills or knowledge to handle money matters effectively. Furthermore, there may be a fear of losing money or becoming indebted. Whatever the reason, if you’re avoiding your financial problems, it’s a sign that something is wrong. The longer you put it off, the worse it will get. It’s best to face your problems head on!

What is a healthy relationship with money?

If you identified with one or more of the above indicators, transforming your relationship with money may be necessary. At this point, try not to be hard on yourself. You’ve identified the problem and now it’s time to make a change, that’s a positive thing! Here’s some indicators of a healthy relationship with money that you can work towards.

1.    Intentional spending

Spending money on things we don’t need is one of the biggest causes of financial problems. It’s important to be intentional with our spending and make sure every purchase is worth it. Before swiping your card on an expenditure, ask yourself, does this purchase align with my higher financial goals? If there’s any doubt, it’s best to wait until you can be sure the purchase is worth it. By waiting, you might discover the purchase wasn’t needed after all!

2.    Low debt

Removing your reliance on debt is an excellent route to financial freedom. This means you should try to keep your credit card balances as low as possible and make monthly payments on time and in full. You should also avoid taking out loans you don’t need. If you need to take out a loan to buy something, chances are it’s not a necessary purchase. Also, many successful investors preach that if you can’t buy something twice, you can’t afford it. Taking out debt to buy something definitely means you can’t buy it twice.

3.    Having a budget, emergency fund and insurance

A budget is important because it allows you to keep track of your spending and allocate money to saving. If you have a holistic budget that you can comfortably follow, you have a healthy relationship with money. An emergency fund is also important because it can help you cover unexpected expenses in the event of a financial emergency. Setting aside an emergency fund that you aren’t tempted to spend is a great indicator as well. In time, insurance is important because it can help protect you financially in the event of an unforeseen circumstance. Also, having insurance means you’re taking appropriate steps to preserve your wealth.

4.    Able to work towards financial goals

Nearly everyone has financial goals, may it be buying a home or saving for retirement. However, working towards those goals requires discipline and conscious effort. Sometimes that means delaying immediate gratification now for higher gain in the future, which of course is easier said than done. If you’re taking steps on a regular basis to achieve your financial goals, that’s a healthy relationship with money.

5.    Realistic goal setting

Make sure you’re working towards what is actually achievable and within your ability to achieve. Unrealistic goal setting can lead to frustration and impulsive spending when you don’t achieve what you wanted to. Rather, it’s better to set achievable goals. Then when you reach them, you’ll be confident in yourself and begin working towards the next goal. This upward spiral is how you can build wealth over time.

5 Steps: How do I change my money mindset?

If you’ve identified a problematic relationship with money, don’t beat yourself up. Accepting that there’s a problem is the first step, you’re already initiating change. Ready to start transforming your relationship with money? Here’s 5 steps to get started!

1.    Remove emotions from money

Money is not something to be emotional about. It is simply a tool to get what you want in life. When you focus on the emotions that money brings up, such as greed, temporary satisfaction or status, it can prevent you from attaining wealth. Instead, think of money as a way to get more of the things you want in life. This positive mindset will help you achieve your financial goals. Remember, you don’t need to keep up with the Jones’. Focus on your own goals and being objective with money, you’re sure to go far with this mindset!

2.    Exercise the laws of attraction

The scarcity mindset focuses on what is not available, while the attraction mindset focuses on what is available. In order to use the laws of attraction, you must have an attraction mindset. When you focus on what is not available, you are sending out a signal of lack. This will only attract more lack into your life. Instead, focus on what is available to you and be grateful for it. The more grateful you are, the more you will attract good things into your life. Also, when you become financially abundant, you will be prepared to handle the wealth you have attracted.

3.    Change your lifestyle and surroundings

When making a change to your finances, it can be helpful to change your lifestyle and surroundings too. By building a new way of being, it’ll be easier to change your financial habits and stick to those changes. In addition, your existing lifestyle and surroundings is probably feeding into an unhealthy relationship with money. For instance, if you have friends who always buy into the latest fashion trends or always part take in expensive nights out, you are likely to do the same. It’s not to say you can’t enjoy these things, but if it’s causing you financial distress, removing yourself from this lifestyle might be necessary. Who knows, maybe you’ll even discover a new hobby or group of friends that better align with your financial goals!

4.    Commit and monitor

Commit to making a change. This means acknowledging that your current relationship with money is not working for you and that you’re ready to try something new. Once you’ve made this commitment, it’s important to monitor your progress. Keep track of your spending and saving habits, and be honest with yourself about where you need to improve. If you find yourself slipping back into old patterns, don’t be discouraged. Just remind yourself of your commitment and start again. With time and effort, you can change your money mindset and create a healthy, positive relationship with money.

5.    Accountability

Talk about money with friends and family. For many people, money is a taboo topic. But talking about money can actually help to improve your relationship with it. When you’re open about your finances, you can gain valuable insights from others about how to better manage your money. Friends and family are there to support you and they may have constructive criticism to help you improve, keep an open mind! Plus, when you’re accountable to someone else, it can be easier to stay on track with your financial goals. So don’t be afraid to talk about money with the people closest to you. It could make a world of difference in your relationship with money.

Working towards a new mindset

It’s not easy to form a new habit and you shouldn’t convince yourself that it is either. It takes dedication and hard work to change your money mindset, but it can be done through commitment. If you’re tired of being stressed out about money, tired of living paycheck to paycheck, tired of being in debt, then it’s time to make a change. It’s time to start transforming your relationship with money and make your finances work for you. It all starts with changing your mindset, you got this!

Read More: How to Find and Choose a Financial Coach

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