How To Change Your Attitude Towards Personal Finance

The majority of our education during our upbringing focuses on teaching us skills that allow us to get into the workforce and develop our place in society. We follow that path blindly because most things we wish for require us to have money and to get money, we have to work. 

However, the skills that we learn in school generally don’t teach us properly about how to build wealth and stay out of financial trouble. So, unsurprisingly, many people develop bad money habits, which quickly develop into problems with overspending and excess debt. Overall creating an extremely negative money mindset. 

Positive and Negative Attitude Towards Personal Finance

Attitudes are based on perceptions, which, in most cases lack real substance. When it comes to money, people are either overly optimistic about their source of income or spendings. Or pessimistic and constantly worrying about reducing expenses and striving to make it to the end of the month. Both these perceptions aren’t productive, especially in the long run.

“Attitude is a little thing that makes a big difference.” - Winston Churchill

If we have a pre-programmed mindset, is it impossible to alter it? 

No, of course not. 

But, we can change our money mindset if we follow some simple steps. All you need is some consistency and clarity on what you want. Our visions and missions should be based on clear understanding rather than vague ideas. We must obtain sufficient and appropriate evidence before formulating a financial strategy. Our knowledge must be based on information that is extracted from reliable data. 

To reduce negativity towards our personal finance, we should first know about the roots of it so that we can find a solution for it. To figure out the root cause of financial stress, we must seek clarity.

Money is Just a Means to Happiness

To kill some of the negativity associated with money, remember that money isn’t everything, but it is an essential tool to get you the life you have dreamt of. 

Money is just a means to happiness. 

“Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants” - Benjamin Franklin

You should only value money in terms of how happy it can make you and that should be your sole attitude towards it.

Get Clarity on Your Finances

Why do we need money? We all have some goals and ambitions to meet no matter how ridiculous or profane they might be. 

To begin with, you must clearly think about what you want. Take a piece of paper and write down the goals (financial goals) that you want to achieve. If you are having a problem thinking about it, imagine yourself in 5 or 10 years. 

Don’t think about what you would practically be doing, think about what you want to do at that time. Figure out your wishes and write them down.

Now that you have clarity on your goals, compare them with where you stand right now. You might see yourself in a bigger house, expensive cars, or lots of valuable assets.

Define your destination before you look for the path. Setting your goals will help you recognize and reduce the gap between your present vs your future. This is a simple yet effective way, to begin with.

Managing Your Finances

After you have written down your financial plans and see a visible difference from where you are now, to where you want to be, it’s time to take some practical steps. Calculate an estimated amount you need to get from point A to B. Try your best to get an estimation.

Think about how much you will make in the following years until you see yourself in your dream job. 

For example, if “point B” is in 5 years, you should calculate your income per month and multiply it by 60 (5 years x 12 months). Is your income enough to get you from this point to the other? 

If yes, then you are on a perfect path!

But, in that case, you would likely not be here reading this. If you feel that your current income will not get you the lifestyle you need, it’s time to move further.

Create a Saving Plan & Budget

If you haven’t opened a savings account yet, it’s time to do so. You must carefully list your expenses and save a reasonable portion of your income for your future. Whether it’s for getting a bigger house or paying for your child’s tuition fees, list it and make a budget.

“Beware of little expenses; a small leak will sink a great ship.”- Benjamin Franklin

The minimum amount in your savings account should be your rainy-day budget. 

Your rainy day budget is an emergency fund that you can utilize if you lose your job, get a medical emergency, or face a business crisis, etc. Your rainy-day budget should be roughly 3-6 months of your income. 

Consider this a point 0. Everything you save on top of the rain-day budget is your actual savings for the future.

Develop Multiple Sources of Income

More often than not, you’ll find your savings unable to meet your requirements. The next wise step would be to develop additional sources of income. 

They won’t only help you get to your goal faster but will also help you rely upon a secondary source of income if you wish to retire earlier.

You may want to start that business that you always dreamed of, or try and make some extra money online through affiliate marketing, or selling products. Whatever interest you have, if you put enough time and effort into it, it can be your sole source of income. 

Learn Financial Literacy

Investing is a profitable yet risky line of business. That is why it is unpopular among the majority. They don’t have that much to invest and if things go south, they might lose everything they have. 

If you are looking to scale your income; you should spend a bit of time going through some of the well-known financial literacy books. Even reading these 8 financial books alone, will provide you with a better understanding of finance compared to anything that you have learned through school. 

"The biggest risk of all is not taking one." - Mellody Hobson

As a starting point, you could look into testing your ideas and practice trades through paper trading or other virtual accounts. This way you can learn how it all works and get a feeling for the stock market before you commit your own money. 

Final Thoughts

If you are caught up in your past history with finances and possible shortcomings, you need to forgive yourself and move on. You need to think about the path ahead, and your plan to reach your goal. This new knowledge will create a positive attitude in you, which will lead to a feeling of control and security about your financial future.

Ensure that you keep learning about personal finance. Read more books, and surround yourself with like-minded people. Even finding a good financial blog or two can help you tremendously. 

Always note that money is just a means to happiness. Focus on how you can make yourself and everyone around you happier by using money. 

This shift in perspective topped by your multiple sources of income will make you feel even more positive, and create a better money mindset.

Author: Matt | thewahman

Matt is a stay-at-home dad and business owner who has been able to create his dream life while working at home. With a master's in business, Matt lives in Sweden and is interested in helping others find ways to save money. He writes about finding new income streams and increasing passive income on his blog thewahman. 

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