“What would you do if money was no object?”
It doesn’t matter how you answer this age old question. It could be a sailing trip in the Mediterranean sea, building your dream home in the woods, going back to school to get your MBA, or something completely different.
The problem with this question is that it makes us think these grand visions are so far away and seemingly untouchable that we don’t know how to reach these goals, producing stress and negative emotions around money.
Then that makes us think we can’t reach the goals, but in reality, we can take small steps toward the goals, even the ones that seem impossible, by saving and investing our way there.
How do we go from worrying about what we can afford to feeling confident with little stress as we build a fulfilling life? How can make good financial decisions with our money based on value-driven goals?
It starts by discovering and repositioning your money mindset.
How your money mindset guides your financial decisions
You may not realize it, but you already have a money mindset. Even if you’ve never thought about how your view of money has influenced your spending and saving decisions, it’s already at work.
Your money mindset is something that can be shaped by your upbringing and your current environment. It can also be influenced by authorities in your life, like your parents, family members, and even teachers.
There are two extreme types of money mindset, which are called scarcity and abundant money mindsets, and most of us fall somewhere on the spectrum between the two.
Scarcity and abundant money mindsets
A scarcity money mindset is the belief that there isn’t enough money to go around. This produces a feast and famine cycle that makes us believe we cannot receive what others have already received.
A scarcity mindset can affect us in different ways depending on our behaviors. We could shape the belief into an excuse to only live for today because we don’t know when the money will run out, or save all of our money because we don’t believe we’ll ever have enough.
The stress level associated with the scarcity money mindset is very high because money always seems to be in fluctuation with each person having little to no control over their financial well-being.
On the other side, we have the abundant money mindset. This mindset is rooted in the belief that there is enough money for everyone to enjoy. Comparison and competition do not motivate people with an abundant mindset.
The stress level for people with abundant money mindsets is relatively low because they know the way someone else spends, saves, and invests their money doesn’t have to affect how they handle their own. Unsurprisingly, this is the healthiest of all mindsets.
Many of us may find that aspects of both mindsets are at play in our financial decision making. The tension of these two mindsets can also create added stress around your finances, but today we want to focus on how to de-stress your money.
5 simple ways to reframe your money mindset
No matter if you feel closer to scarcity or abundance, we all can benefit from reframing our money mindset. We have a few steps to help you get a headstart.
1. Take a deep dive into your money story
Like we mentioned above, your money mindset is often influenced by your environment, upbringing, and experiences with money. This produces habits that we pick up at a surprisingly young age and continue into our adult lives.
All of this factors into your money story. Your money story simply refers to how you view money.
2. Redefine what money means to you
With your money story in mind, you can start to redefine the role money plays in your life. Our users tend to define money in different ways, but each person finds themselves centered on how they view and use money.
Becky said, “Money is a source of stability and comfort, and causes more happiness. It’s a motivating factor for me.” When we look at money as a way to fuel our goals rather than add stress to our lives, we take back the power.
Money can also be a source of freedom and flexibility, which are two of the most common values people have in their twenties and thirties. Josh said, “Money is freedom and the opportunity to do what you want to do without feeling tied to something else, like a schedule or a job.” This is often why people will start side hustles and work to turn them into full-time gigs.
The most common response we’ve heard have to do with money being a means to travel and experience new things. We loved how Amy said, “Money enables me to travel, which fuels me and replenishes me when I’m wiped out.” By experiencing new cultures and create memories that last a lifetime, we bring a new perspective into our work.
Just like our users, you can start redefining what money means to you by putting it into words. It’s also a great thing to do with a partner because you may find you have similar ideas that go beyond major purchases, like wanting to travel for an extended period of time. You may be surprised about what comes out of the exercise.
3. Do your own research
The best way to reframe your money mindset after you discover its core is to actually do something about it. Taking time to journal and reflect on prompts can give you a jumping off point, but it’s important to translate everything you learn into real action.
Instead of only following a financial advisor’s advice, do your own research before you save, spend, and especially before you invest. This will help you take control of your finances and budget based on what you think is important.
A good place to start is by browsing through online forums or joining online communities are focused on money topics that are relevant to you. You can also search for top rated podcasts, books, and blogs that cover money management, investing strategies, and saving tips. Make sure that the source you are consuming information from aligns with your values and mindset.
4. Ask questions of mentors you can trust
Even as you take control of your own finances, you may have some questions to ask others. It can be helpful to gain insights from other people, especially those with more experience managing money, but you’ll want to selectively choose who you take advice from.
When you decide who to ask, be sure to choose based on what their money mindset and habits are. It’s best if they match your own, or match the habits you’d ideally like to start building.
Also, be sure to ask someone who has experience in what you’re asking for help in. If you ask someone who has saved every penny they’ve ever earned how to invest, you may not find the best advice. The same is true when asking a gambler for saving advice. This will help you get the best advice for where you want to grow.
5. Learn a little bit at a time
Instead of feeling like you need to immediately have the knowledge of a professional bookkeeper or CPA in order to successfully manage your finances, you can take small steps toward financial literacy.
Here are a few ways you can start investing in your own financial education for free:
- Read a money management book. For saving strategies and creating a debt repayment schedule, Dave Ramsey’s books may be a great fit. Many graduates and financial experts alike recommend reading his book, The Total Money Makeover. To get closer to living with an abundant money mindset, many people love books written by Tony Robbins and Jen Sincero.
- Browse through a personal finance blog. If you are trying to dip your toes into the personal finance world, we recommend reading a blog like The Balance, Broke Millennial, or The Financial Diet. If you are focused on paying down your student loan debt, The Penny Hoarder shares tips on how the author paid off $50,000 worth of debt. It’s also a great read for anyone looking to whip their savings into shape.
- Listen to a money management podcast. The Dave Ramsey Show is a popular radio show that helps people with paying off their debt and making savings goals around their ideal lifestyle. The Rich Dad Poor Dad Show and BiggerPockets podcasts are great for people who may be interested in investing, especially in real estate. Freakonomics is also a great podcast for people who want to learn more about the economy in a digestible way.
- Flip through a financial magazine. We like skimming Money Magazine and Kiplinger’s Personal Finance Magazine, but many magazines are also available digitally. If you aren’t interested in getting a print subscription, you can often find them online.
- Take a free financial strategy workshop. You can look into local nonprofits or see what your local library offers. Be sure to look at the specific topics of the workshops to see if it is something that interests you or something you can benefit from before attending.
Simple, actionable steps to take the stress out of money
Now that you understand your money mindset and money story, we have a few strategies to help you de-stress your money. If you want to spend more intentionally and have peace-of-mind around your financial strategy, you can start with these tips.
Calculate how much you need for your necessities
One common area of money stress is not knowing exactly how much money you need to live. In our blog post about the 50/20/30 budgeting rule, we talked about allocating 50% of your after-tax income for Essentials (aka fixed costs and expenses).
Many of your necessities will fit underneath this 50% umbrella within your budget. It’s important to understand which monthly costs are true necessities, like rent and groceries, and which costs are nice-to-haves, like eating out.
Add up all of your essential costs so you understand your minimum amount needed each month. You should always have 3-6 months of essential costs in savings just in case life throws a curveball and you need cash quickly or lose your income. This will help you know how much you can realistically spend to save you from surprising credit card bills.
Record what & where you’re spending (and what doesn’t fit your values)
Some stress comes from spending on things we don’t care about every month to the point where we don’t have enough to spend on things we enjoy. The only way to reverse this habit is to start recording everything you’re spending your money on.
A great way to do this is by using a service like Mint because they automatically pull in your bank and credit card transactions. Once you have a complete record of your spending, you should highlight anything on your record that was not a necessity or a cost that added real value to your life.
By doing this for at least a month (longer is better), you’ll see how you’re doing and how to cut unnecessary expenses before they show up on your bill. If you see the highlighted totals decrease, you’re getting closer to intentional spending!
Create a list of short-term and long-term goals
Now that you are spending intentionally, you can use the same attitude and habits to save intentionally. We recommend clarifying your long-term vision first and building short-term goals to start funding those dreams.
You can do this directly within the Mimble app. You’ll first link it to your bank account so you can set up an automatic deposit schedule to fund your specific short-term goals. You can set it up once and know that every month, your goals are being hit. And you don’t have to rely on spreadsheets anymore!
After you have your short-term goals listed, you’ll want to decide on an ideal timeframe for each goal to make sure you know how much you need to start saving. You can base this on your current financial, after-tax income, and any approaching deadlines.
De-stressing your money is a constant practice
There’s no such thing as a finish line in taking the stress out of money. It’s a constant practice that you must cultivate within your financial decision making.
When you take the power away from numbers, they become something that can empower you to live the life you want rather than something scary to avoided or outsourced to someone else.