When it comes to managing money, developing a positive mindset is key to making sound decisions. However, individuals of all ages sometimes struggle with making the most of their financial resources due to negative biases or unthoughtful decision-making. But, do not fret, as in this article we'll explore some common negative biases and the best ways to overcome them. Additionally, well discuss the steps you can take to create a positive money mindset, helping you to achieve your goals by making prudent decisions.
Recognize & Overcome Negative Biases
Given the sheer amount of information we are exposed to in today's digital world, it is easy for individuals to develop negative biases toward money. For instance, watching online influencer's or celebs consistently flaunting possessions can develop a bias of spending money to assert one's financial strength.
However, this leads to chasing immediate gratification rather than learning how to develop and follow long-term goals. The best way to overcome this bias is to conduct an honest assessment of your financial standing and make realistic goals that can be achieved over the long term.
For instance, rather than splashing cash eating at expensive restaurants each week, consider investing it into a high-yield savings account that contributes towards saving up for your home's downpayment!
Develop a Positive Money Mindset
Creating a positive money minder involves understanding your emotional prowess towards managing money and taking corrective action to improve it. Past financial mistakes act as a common barrier to developing a positive money mindset, as individuals often end up dwelling on the past rather than focusing on what can be done next, as reported by Yahoo. Additionally, making comparisons with others is a common barrier that one needs to overcome in order to become comfortable with managing their own money.
The best way to overcome these drawbacks is to recognize your comparison biases and hone in on what sets you apart from others. For instance, your goals might be to put yourself through college or buy a new car, while others might have friends or family helping them achieve those goals. Your journey is bound to be harder and longer. However, by focusing on your goals rather than others, you'll be able to manage money better and develop a comfortable relationship with it.
Find Avenues to Earn & Save More
As reported by the Open Access Government, 67% of Americans are worried about the rising costs of living. This comes as no surprise as over the last few years, the cost of necessities, fuel, and real estate has skyrocketed.
The best solution to counter this current predicament is to earn and save more money, which can be achieved in the following ways:
* Consider Downsizing: If your current expenses are taking a toll on finances, it's best to cut down costs by moving into a cheaper and smaller accommodation. Not only will this reduce your rent, utilities, and maintenance costs, it'll put more money into your savings and spending accounts, helping you to counter the rising cost of living. When shortlisting new homes, consider using this online affordability calculator, to determine your mortgage payments.
* Try Day Trading: This involves buying and selling financial instruments over a short period of time. When done right, day trading can be a great way to supplement your income. However, before starting it is important to ascertain the amount of financial risk you're willing to take, the maximum amount of money you can invest, and create an investment plan that will help you reach financial goals.
Creating a positive mindset involves understanding your emotions, letting go of past mistakes, and avoiding comparisons that lead to the creation of unhealthy biases toward money. Additionally, when it comes to tackling the current increase in the cost of living, day trading and downsizing are prudent solutions to explore for the short and long term.
Courtesy of Lauren McGee
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