Building a healthy relationship with money can be essential to financial well-being. Money is often seen as a source of stress or worry, but if you approach it with the right mindset, you can build strong and positive relationships that will help you manage your finances in the best way possible in the long run.
Step 1: Know Your Situation
The first step to building healthy relationships with money is understanding your current financial situation. Taking the time to assess where you are financially and what your goals are will give you a better idea of how much money you have available to work toward those goals. Understanding your current financial situation also helps you have more realistic expectations about what is achievable with your budget and resources.
Now it’s time to create a plan for managing your money. Establishing good spending habits and learning how to save money can help ensure you have enough cash flow each month to reach your financial goals. A great way to do this is by creating a budget or using apps like Mint or Rocket Money, allowing users to track their spending and income to better manage their finances over time.
Step 2: Understand Your Values
Before you take steps toward managing your money better, it’s important to identify what values and principles motivate you. Take some time to reflect on what matters most to you in life and how money impacts those things. What do you want from life? What do you need money for? Knowing the answers to these questions can help you make smarter decisions about how you use your resources.
Step 3: Learn About Investing
Another key step in building healthy relationships with money is learning how to invest wisely. This is mainly the job of your wealth advisor and where I come in to advise, but if you are a young professional, newly married, or just beginning to dip your toe into investment management, a small amount knowledge can go a long way. Whether it’s stocks, bonds or mutual funds, understanding different types of investments and how they fit into your overall financial plan will help you make smarter decisions about which ones are best for your individual goals and needs.
Step 4: Create Habits
Establishing good habits is key in developing a healthier relationship with money. Pay attention to the spending decisions that cost you the most; are there areas where you can cut back? Also focus on setting aside “fun” funds so splurging doesn’t become an issue down the line – this includes adding small amounts into savings each month, too. Finally, track progress towards financial goals by monitoring income and expenses regularly and adjusting accordingly as needed so there are no surprises along the way.
Remember that no matter what amount of money you have at any given time, it doesn’t define who you are as a person or how much value you bring to the world around you. Small disciplines make huge impacts when it comes to managing and growing your wealth. Building healthy relationships with money involves understanding its true purpose – to be a means by which we can live our lives most fully rather than simply a means by which we may attempt to accumulate wealth without purposeful intent.
Blog by Aaron Waters, Wealth Advisor, Shareholder