What’s up beautiful people?! This post is a continuation of the Literacy Month podcast series for April 2021. Before you skip over this series, I dare you to take a listen first. In this series we discuss practical and hopefully fun ways to challenge your money mindset in a positive way.
Listen to this episode instead here or on your favorite platform.
Episode one was an introduction with a few nuggets of advice. Episode two was all about creating a real budget (and no, simply paying your bills on time and spending the rest is not a budget), and last week’s drop focused on best practices for spending, saving, borrowing, and investing your money.
So today we’re diving head first into money mismanagement. If you’re someone who knows that you could and should be doing better with your coins, read on and take your notebook out. I can feel the golden nuggets will be flowing today, so you don’t want to miss them when they drop. So, let’s get to it!
Swiping Like It’s Second Nature
So, money mismanagement is when you repeatedly make bad decisions with your money that causes you to be in a poor situation such as overdrawn on your accounts, late on bill payments, having little to no savings, and no plan for your financial future. Now to fall into this category, you don’t have to be deficient in all of these areas. It may just be one, and then you’ll see that you mismanage your financial priorities that affect just that area.
So, how do we tackle these so that we’re not dropping the ball in any of these areas?
Firstly, let’s dig into crazy spending because it is closely linked to how we view money. Someone who freely spends their money with no regard doesn’t have the best relationship with money. They are either totally loaded having put in no effort in acquiring the money, or poor or middle class but lack the discipline to make their money for them (instead of the other way around). I understand it’s a spectrum and anyone who struggles with spending may fall somewhere in between.
Finding financial health with spending is first getting to a place of discipline. It’s as simple as knowing what is essential versus what is not, and what do you have funds for versus what you don’t. Over time, these decisions can be hard to make or require lots of mental capacity.
What I do to combat this is come up with a strategy or rules to quickly decide if something is worth buying or not. When it comes to spending, you always want to make an effort. It should be intentional, but the quicker the decision can be made, the better!
You have to get to a place where swiping the card or whipping out the cash isn’t second nature. It should be a contemplative process. And this isn’t just good for your bank account, but also your willpower. Have you heard of the concept of exercise doing more for your mental than physical state? I’ve experienced it many times myself. When I’m dedicated to a specific workout routine and schedule, I find that I have more energy, mental clarity, and discipline to make tough decisions. I may be getting the same amount of rest and eating the same foods. But with exercise, I get that boost in other areas of life.
The same can be said for your finances. With a consistent routine of budgeting and strategy, it will be easier to resist frivolous spending and making poor money decisions. You’ll soon notice that you enjoy passing on money wasters and watching your savings or investments grow.
Right now, are you putting intention behind your spending? Do you treat it like a well planned workout session or an impromptu McDonald’s run? Strive for the former.
Making Conscious Decisions without Exhausting Yourself
The only bad part about making a conscious decision to make healthy financial decisions is that willpower is a finite resource. I say that because we only have so much willpower each day. And as your hard money decisions start to pile up, you’ll make worse decisions and then end up hating your money situation, how you got there, and then hating money in general.
This is a concept that is supported by behavioral psychology and that’s why productivity experts encourage people to tackle their hardest tasks at the beginning of the day, or only focus on 3-6 important things per day. Our minds decrease in will power to tackle the hard things as the day goes on. It’s also the reason why we find ourselves doing daily things such as showering, brushing our teeth, and even driving to work (when we were going to the office) on autopilot. This is conserving your brain power for more intense decision making.
Your money has to be put on a routine, on autopilot just like your daily mundane tasks. This is the best way to maintain a positive outlook on your money and make good money decisions all day, all week, and all pay period long.
Now I hinted at it earlier and I hope you didn’t roll your eyes. It’s important to leverage an easy to follow budget to make these automations work! And no I’m not talking about autopay subscription services like Netflix or your utility bill. I’m referring to budgetary rules you set for yourself to make sure you’re not going overboard with your spending.
For example, I have a set clothing budget each quarter. I can choose to set that money aside and spend it each check or each month, or I can wait until the new season rolls around to shop my complete capsule wardrobe at once. I normally go for the latter, but the key is that I chose an option. This way, I’m not purchasing the first thing I see on an Instagram ad. They target me so well and I’m often falling for the trap. However, my budget or spending strategies save me from wasting my money. Just as quickly as I’m interested, I remind myself that there is no money in the clothing budget. I can’t do anything about spending money I don’t have, you know?
The best part about this is that I know whether I really want something after having time to think about it. I also feel good about my decisions and relationship with money when I see my savings growing at a steady rate with little effort. It makes those quarterly shops all the more rewarding.
I also learned from other financial experts and took on this philosophy for myself, that daily or weekly indulgences are not to blame for poor money management. Consistent impulsive spending is to blame. As long as my (used to be) daily Starbucks pit stop is in the budget, and I’m still meeting my savings and investing goals, it is not a guilty pleasure. It is an enjoyable inclusion on my budget.
This thought process helps you view money as simply a tool to enjoy life on your terms. I enjoy my coffee in the present while also enjoying saving funds for a rainy day to lessen the stress when that time comes. A healthy balance with both sides makes a world of a difference in your mindset.
The Power of the Budget
So as I said before, the budget is your friend. It literally saves you from yourself and it has done that for me multiple times. Be sure to make it as tailored to your situation as possible. This will ensure a healthy relationship with money and ultimately with your future self that may need to rely on funds you set aside for an emergency.
To give a bit more perspective on the budget, I’ll give another example. I understand that this may sound extreme, but these budget categories keep me in line when I’m ready to waste a ton of money on entertainment or online shopping. My bi-weekly transportation budget consists of smaller categories that include my car note, insurance, maintenance, gas, and tolls.
I know this seems like overkill to have these all separated, but my budgeting has saved me when I had random car maintenance needed when I thought I only had an oil change to cover. Or when I spontaneously purchased a new car, but flawlessly worked out the new budget while at the dealership because I factor these numbers separately. This near brainless activity isn’t because I love budgeting, but because I had a system that I routinely follow.
Listen, this takes the anxiety and stress out of money management. I remember my later college days when I was in the thick of things with my credit card debt, but also not making enough money because I was a full time student. I would look at my paycheck and instantly feel anxiety because I only had $20 to my name after paying bills. I couldn’t play around with stocks, take extended spring break trips, or start investing early because of my poor money decisions. Now I relish in the fact that I can buy something I truly want and won’t regret because I’ve put my savings for it on autopilot. It’s freedom within discipline and I love it here. Living life on the financial edge is not where it’s at.
An Abundance Mindset
So, I’ll get off my soapbox but reiterate the main goal of this all. Finding ways to automate your budgeting, free up your money decision making, and still live your best life is a part of an abundance money mindset. I believe this mindset is living in a place of contentment because you’ve made the best, well informed decisions you know how to make with your money. It’s not having anxiety every time you have to pay your bills or check your account. It’s having faith that you will be fine if you lost your job, got in a major car accident, incurred home repairs, or a huge medical bill. And believe me, there is always still room for growth. I’m not saying that right now I could fully cover all of these things without making additional concessions. However, I do have it in my willpower to move things around, make some temporary changes, and still enjoy life while I navigate that lean season.
When you’re in an abundant money mindset, you know the difference between an abundant season and a lean season. You always live with the faith that an abundant season will never end, but also with the actions of navigating a lean season that will never end–all while still having a smile on your face and gratitude for what you have. I tend to slip into church speak, so let me give a practical example of this. For the first few years post college, I lived on a salary that was frankly too low for my experience and education level. Somehow, I still paid my credit card bills on time, enjoyed my time out with friends, and met all my obligations. Yes, money was tight but I strived to always be responsible. Now that I am in a more abundant space salary wise, I try to spend within my means and save rigorously because I never know when things will change. Hello coronavirus somebody?! Both times I was working towards a positive money mindset, but simply within different money ranges.
That is the goal of this month’s financial literacy series. To get you to a place of abundance in how you view your money. You may be there already, but just looking for more efficient ways to handle your money. I encourage you to check out my simple budgeting workbook. Or maybe you need a full overhaul of your habits and mindset. I encourage you to book a free 1:1 consultation with me to discuss my coaching program. And the last person, maybe you want to start from scratch in building your own sustainable budget system. I also encourage you to check out my Basic Budgeting Skills eBook or online course to jumpstart your progress also on my website’s shop. Any of these options are easily attainable and workable.
Let’s make progress together this month and work towards our best money mindset so that we can build and build to the next level of financial stability and wealth for our futures.
We’ll talk next time but until then save/share this post and subscribe to the show for alerts on upcoming heat I’m bringing to these streets.