Guest Post by Robert McMillen – Billionaires from Wall Street and top entrepreneurs had to transform their relationship with money at some point in their lives.
Most of them own luxurious cribs, posh yachts, and some of the most expensive cars in the world. From the outside, it always seems like they have the perfect relationship with money. While many others continue to struggle with earning enough to cover their essential needs.
Sometimes it looks like there is some kind of a secret or a trick that rich people know and others do not. Arguably, there is no such secret but there sure are some simple and practical ways to improve your relationship with money.
When it comes to finances, everyone has a complicated relationship. How you acquire, spend, and manage money is primarily determined by two factors.
- The money and value education you got
- How you structured this knowledge in your head
7 Ways To Transform Your Relationship With Money
Here are the top 7 simple but life-changing practices that you can follow to improve your relationship with money.
1. See Money as a Tool
When we approach money as the ultimate objective, we seek it at the expense of our energy, time, health, and the things we love, leaving us fatigued and depleted; we frequently experience worry and distress, since how much we make never equals how much we desire.
Ironically, the negative energies of fear and discomfort associated with money prevent it from entering our lives.
Money does not have intrinsic worth; it is what money can buy that makes it appealing. Seeing money as one of many means to an end in return for happiness puts you back in the driver’s seat and in command.
Instead of fearing your bank balance or postponing bill payments until the last minute, you may finally embrace your financial condition with comfort.
When you recognize your power over money and your capacity to make it work for you, you will be able to devise ways to better your financial situation.
2. Change Your Money-Limiting Beliefs
Building a healthy relationship with money also entails removing negative and restricting money attitudes. It is no easy task, but it is necessary to go through it.
The 3 most common beliefs are:
- Money is a limited resource
- Generating money is difficult
- Certain jobs will not make you wealthy
If you grew up with parents who frequently clashed about money, you may unconsciously feel that money causes difficulties and attempt to avoid it as much as possible.
These conflicting thoughts about money perplex the Universe, which then asks, “Do you like to have more money or not?”
Money is only one expression of energy, which is eternally plentiful and available to everyone.
Our incorrect attitudes about money are what restrict us from experiencing wealth.
Work on letting go of these judgments and seeing money as neutral and something you can have without question if you want it.
3. Understand that Money is Not Always the Solution to All Problems
Before jumping in for solutions it is important to understand what causes the problem.
Often when people think about why they do not have good relationships with money in the first place, they blame it on not earning enough.
But think about it this way, who has a better relationship with money; a person who earns $10,000 but spends $15,000 every month or someone who earns $5,000 but spends $4,000?
Start tracking your costs and see where you can make some cuts. There is always room to reduce your spendings to put some money aside.
4. Improve Your Relationship With Money By Spending Smart
Make sure you know the difference between your needs and wants.
Cover your needs and then assess your wants smartly.
You might want an expensive car you cannot afford. Is taking credit to buy it a smart idea? Don’t forget about other car spendings such as maintenance, gas, and taxes, which are going to cost a lot as well.
Spending smart also includes managing your relationship with other people.
For example, if you want to be better with your money, lending money to a friend or a relative might not be the best idea. You might not get your money back, or in some cases can even risk your relationships.
5. Have a Clear Plan for Saving Money
Saving money is a pillar when it comes to better money management.
There are many methods for doing this. The most popular one comes from “The Richest Man in Babylon” book. It says that you should save at least 10% of your income.
This has proven to be the perfect amount to save. It neither makes people suffer from too many cost cuts nor is too little to turn into a tangible asset.
This is a very simple method, but you surely can come up with another plan that may work better for you.
6. Make Sure the Money You Save is Not Sleeping
Saving money is great but hiding it under your pillow for years is not sufficient.
This way your money loses its value over the years due to inflation and other economic factors that you cannot control.
The money you save should multiply as you invest your savings.
Stocks, bonds, or even deposits in banks can be options for you depending on how much time, and energy you want to spend on this.
The point is to always increase your assets and have more of those than liabilities such as financial obligations or commitments.
7. Diversify Your Income Sources
As the famous saying goes “do not put all your eggs in one basket”.
If you have a chance make sure your income is diversified and comes from different sources.
COVID-19 is one of the most recent examples of how drastically things can change and how important it is to not be fully dependent on one sector.
If you work in one sector, buy stocks from another sector, and invest money in completely different sector businesses. A similar approach will keep you on the safe side and in situations when one thing suffers the other one will continue supporting you.
Final Thoughts On Transforming Your Relationship With Money
These practical and simple steps will help you improve your relationship with money in the long run.
If you manage to implement them there is no chance of you not getting along with your money.
Just be sure to control the whole flow your money goes through. From the sources that it comes to you, to how it is utilized, to how successfully you use it, and what you manage to save.