Money is a sensitive topic for many people. It can make you feel anxious, worried, and even ashamed. But it doesn’t have to be this way. In this article, we will explore how to change your mindset about money and the ways you can make more of it.
Owning your money mindset is the first step in changing it. We all have different perceptions of what money means to us and how much we should have. Some people feel that if they don’t have much money, then they are not worth anything or good enough. Others may see having a lot of money as being greedy or selfish, so they don’t want to make any more than they need to survive.
The truth is that there are no right or wrong ways to think about money.
This study gives some insight into how most Australians view and manage their finances, and helps them manage their money more effectively.
Dollar-stretchers closely monitor their spending and frequently struggle to make ends meet.
Goal-driven savers strive to meet their savings goals, but their habits may change once they reach their goals.
Impulsive spenders seek out experiences but have no interest in long-term planning.
Habitual savers are pleased when their savings grow, and they feel safe and secure when they see their savings grow.
Dollar-stretchers are acutely aware of where their money goes. They spend most of their income on food, rent, transportation, and debt repayment, leaving little to spend on discretionary items. They have excellent budgeting skills. Additionally, they frequently use credit to cover day-to-day expenses, and their finances may worry them.
Dollar-stretchers should first consolidate loans. Pay off the smallest debt first and get new loans with lower interest rates. Starting early on, they should also start saving regularly for an emergency fund. An emergency fund is also available to them when necessary.
Goal-driven savers can easily set aside money for a specific purpose, such as a holiday. When highly motivated, they will cut their expenses while increasing their income through extra shifts or side hustles. Additionally, they boost their savings with financial windfalls, such as bonuses and tax refunds. However, they may be hesitant to commit to a long-term savings goal, such as a down payment on a house. Also, unexpected expenses can prevent them from reaching their target if they do not have a savings buffer.
Goal-driven savers should create a savings plan as well as a savings goal. If they use fee-free accounts, it can be beneficial to separate the savings goal account from other accounts, such as an emergency fund and everyday accounts. When they get paid, they may either deposit a portion of it straight into a savings account or set up an automatic transfer. This will be based on what’s leftover at the end of the pay period.
Impulse spenders give priority to discretionary spending and instant gratification. In some cases, they can even forgo paying their bills. They are unlikely to have long-term financial goals and are generally motivated to reward themselves. Interestingly, they can become goal-driven savers if a goal is appealing enough to them.
Impulse spenders should refrain from making any unnecessary purchases. This is especially important during the first week of a monthly pay cycle to ensure that they have cash at the end. They need to separate their savings account from their discretionary funds. They should also leave items in their online shopping cart for three or five days to determine whether they truly want or need them.
Habitual savers live frugally and seek bargains because they want to control their lives and be secure. They allocate savings at the start of the pay cycle and are likely to “bucket” funds. They can, however, over-commit and run out of funds for day-to-day expenses. Likewise, they are most likely saving for a down payment on a house or own property and have an investment strategy. They access personal finance tips from various media and have financial role models.
Habitual savers must plan the month not to overestimate their savings. When possible, they should identify major one-time purchases to avoid unexpected expenses. A goal should be set to help them achieve their next step, such as investing.
Chase Edwards offers fully integrated Financial Strategy Services – including home loan reduction, tax reduction, debt consolidation, retirement planning, property investment.
To learn more about who we are, what we do, and how we do it, complete how Complimentary Financial Assessment and talk to the team today!