It’s Not About the Numbers
I know that’s a weird thing for me to say as a Money Coach and lover of numbers. I see everything in numbers, even colors, shapes and days of the week. It’s a quirky thing about how my brain works. However, personal finance is not really *just* about the numbers.
Financial decisions are often made based on emotion and our money mindset. This is influenced greatly by how and where we were raised, our cultural background, the people we surround ourselves with and past experiences. People may view money as security, success, a tool for enjoyment or as something negative or dirty. Understanding your money mindset and where you are coming from is a big part of making financial choices that line up with your goals and values. For example, if you were raised with the people around you saying that rich people are greedy and selfish and more money causes more problems, you may actively push money away or spend it as soon as it comes into your hands.
Understanding feelings about money and learning how to manage them can be a big step toward building a healthy relationship with money. This can empower you to make better decisions that take you closer to your goals. Emotions such as fear, greed and impulsive decision-making can lead to excessive risk-taking in your finances, spending without thinking through the consequences or avoiding financial tasks completely.
Having a spending plan (also known as a budget) is more than just an exercise in putting the numbers down on paper. It gives us a chance to reflect on our choices and bring clarity to our spending habits, identify areas of financial stress and help us prioritize what things are important to us. It can be a tool that brings mindfulness about where we want our money to go and make sure that aligns with our values. We can make more intentional choices that lead us to being financially secure once we have a plan.
Understanding the emotional motivation behind our financial goals will help you stay the course when the journey gets hard or boring. If your goal is to buy a home, maybe your motivation is having a safe and secure place for your family that is all yours and nobody can raise your rent or sell the property out from under you. If your goal is to pay off your credit card debt, your motivation might be having the peace of mind that you don’t owe a creditor that can often raise your interest rate costing you more money and to be free of the crushing weight you feel when you open your statements.
Having a growth mindset and developing resilience in the face of challenges will help you bounce back from setbacks. Life is unpredictable and nearly everyone has financial setbacks. Taking these hardships as learning opportunities and trying not to repeat the same patterns will help you be stronger going forward.
Personal finance is about more than just the dollars and cents. It’s about building a life that aligns with your aspirations. Understanding your money mindset, emotions and goal-setting based on your values, this will be the key to your financial success. The numbers only tell part of that story.
