Do you want to know how to improve your relationship with money? Money plays a major part in most people’s lives but too often the relationship is far from idyllic. However, no matter what your current relationship with money is, you can turn it around for the better. Keep on reading to find 7 different ways to improve your relationship with money.
7 WAYS TO IMPROVE YOUR RELATIONSHIP WITH MONEY
1. Identify your current beliefs around money
If you want to improve your relationship with money you need to first acknowledge what your current relationship with money is. Your current relationship will be based on your behaviours in relation to money and your beliefs about money. So often our beliefs around money have existed for years and we are oblivious to them. Thankfully there are now lots of resources (books, podcasts, courses, coaches etc) that focus on the area of money mindset.
2. Understand your current financial situation
In addition to understanding your current beliefs you also need to understand your current financial situation. I’m pretty sure if you want to improve your relationship with money then it is probably because you want to change your financial situation in way shape or form. It is very common to not really understand what your current financial situation is.
To really understand your current financial situation, you should work out two things:
- Your net worth – Your net worth is basically how much you as a person are worth at the moment you do the calculations. To work this out you’ll all to add up all of your assets (everything you own that has a value such as cash in the bank, property, etc) and subtract all of your liabilities (everything you owe to someone else such as a credit card balance, loan or mortgage). Then the figure you are left with is your net worth.
- Your monthly income and expenditure – Whilst your net worth is looking at your current situation right now, understanding your income and expenditure helps you to plan for the future. You can look at your income and expenditure over any time frame, but I find monthly is the easiest. For a few months track everything you receive in terms of income and everything you spend in terms of expenditure. Then review the numbers and see if right now you are spending more than you receive, receiving more than you spend or balanced.
3. Regularly review your personal finances
Taking the time to really understand your current financial position is important, but if you are going to improve your relationship with money then you need to regularly be reviewing your personal finances. Get into the habit of regularly reviewing your personal finances. Now regular will look different for different aspects of your finances. You might check your credit card and bank accounts on a monthly basis, but only review your pension on an annual basis. Decide what frequency makes sense to you and then add it into your diary.
4. Set money goals
By now you should be fully aware of your current financial position. With this knowledge, you can now set money goals. If you are someone who has previously struggled to clear debt, save or invest you might be telling yourself negative stories about yourself and this is having a detrimental impact on your relationship with money. By setting a realistic money goal, based on understanding your financial situation, you can actively take steps to achieve that goal and in the process rewrite your story about yourself and money.
Depending on where you are at your money goal could be:
- Clear £5,000 of debt
- Pay off all my student loan by X
- Create a £9,000 emergency fund
- Open a Stocks and Shares ISA and invest £50 each month
5. Improve your financial knowledge
In addition to improving your money beliefs and money mindset, you should also look to improve your financial knowledge. No one is born knowing everything about money and in most countries managing money isn’t taught in schools. However, it is never too late to learn and by taking the time to improve your financial knowledge based on your current financial situation you can start to learn about how to move along to the stage in your financial journey. This can be anything from learning how interest works on credit cards and mortgages, how to create a budget or how to invest.
6. Surround yourself with people who have a good relationship with money
Whilst improving your relationship with money is a personal activity by surrounding yourself with people who have a good relationship with money you’ll make your life easier (especially if they are open to talking about personal finances). Being in a circle of people who have a good relationship with money will normalise it. In many circles, it is acceptable to be bad with money. It is acceptable to not really know what your financial situation is and to not be doing anything actively to change it for the better. However, by surrounding yourself with people who have a good relationship with money you’ll be able to see good role models and also be part of conversations that will help improve your knowledge and encourage you to take action.
7. Forgive yourself for your previous money “mistakes”
There is a high chance that you have made a money mistake in the past. In fact, it is likely as you improve your financial knowledge that you’ll uncover mistakes you made in the past that you weren’t even aware of. You have to remember that in most cases you made what you thought was the best decision at the time with the information you had so don’t beat yourself up. Acknowledge the mistakes you made in the past and forgive yourself. Appreciate the lesson the mistake has taught you and vow to learn from the mistake and never repeat it.
There you have it. You now know 7 ways to improve your relationship with money.
No matter what your current relationship with money is, there is always more work that can be done to strengthen the relationship.
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In the comments, I would love to know which of the tips you are going to try.
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