Whether it takes the form of green paper rectangles or numbers on a computer screen, money can either provide for the retirement of your dreams or fill your house with stuff you don’t need. For a lot of people, it’s the one thing there’s never enough of. Other people spend most of their time thinking about how to get as much of it as humanly possible — and who could blame them?
Money is the ultimate shape-shifter — it can morph into just about anything. In fact, last summer a couple of billionaire tycoons went to space without any qualifications other than having a lot of money.
Like it or not, your relationship with money will go a long way in determining your quality of life, and your state of mind determines whether you work for it or it works for you. Let’s explore four key ways to redefine your relationship with money.
View Money as a Life-Improvement Tool, Not Just What You Work For and Spend
People trade their labor for money, only to trade away that very same money for the things they want and need. That’s the psychology behind working for money. The trick is to view money as a tool that should be working for you.
“Redefining your relationship with money is crucial in order to have a healthy financial mindset and good habits,” said Michael Miller, CEO of VPN Online. “And the best way to do it is to start thinking of money as something that’s there to help you achieve your goals, not something that will make you happy in the short term. When you shift your focus from acquiring material possessions to pursuing experiences and goals, money becomes less important. When it happens, you’ll never be derailed in handling your finances.”
Know That Money Can Buy Something Far More Valuable Than Yachts and Mansions
Money is a medium of exchange, but shouldn’t your grand plans for spending it be dedicated to something a bit nobler than pants, pizzas and even Porsches?
“The most life-changing mindset shift anyone can have about money is to realize what your dollars are truly capable of purchasing,” said Lauren Keys of Trip of a Lifestyle. “People tend to want to get their finances in order to be able to buy all the things they want. Maybe it’s saving for a new car or a dream home. Maybe it’s planning an exotic vacation. Most people see money as just a tool to get more luxurious things.”
All of that is child’s play compared to the two most truly valuable things that money can buy — time and freedom.
“If you typically spend $60,000 per year, and you have $60,000 sitting in the bank, think about what that really means,” said Keys. “You could take an entire year off work if you wanted to. And if you reduced your spending to $30,000 per year instead, you could go two years without a need to work.”
Define Your Needs and Classify Them Separately From Your Wants
Brad Biren, tax and elder law attorney in Des Moines, Iowa and founder of IQMOP.com, suffered a traumatic brain injury that took him from a six-figure salary to a survival situation. Needless to say, the experience changed how he thought about finances.
“Things are much better now, but my perspective on what we truly need to survive and find happiness and purpose have changed dramatically,” said Biren. “Typically, a need is something you truly cannot live without, or else you will die. Your definition should probably be less bare bones and more of a reflection of your basic requirements to continue to function in society and maintain your home and raise your children. Things that are not true needs are typically those things you see in advertisements.”
Find Financial Contentment in Self-Discipline
On a human level, Biren defines the concept of contentment as “a state where we do not feel a lack of material, psychological, and social connections while not feeling compelled to actively accumulate more. In short, it is a place of comfort, rest, and appreciation.”
There’s a financial version of that concept, as well, and when you achieve it, you’ll never again view money purely as the stuff you barter for the things you need.
“Financial contentment means being able to meet all of your basic needs and having the freedom of choice to spend money if required or desired,” said Biren. “Yet, we choose not to exercise that ability frivolously. In other words, financial contentment is financial discipline.”
Financial literacy is knowing what to do to have a healthy relationship with money. Financial discipline is actually putting it into practice in your day-to-day life.
“The secret to financial success isn’t complicated,” said Dr. David Tuyo, CEO of University Credit Union. “Simply put, you need to spend less than you earn, and then leverage your savings, debt, and investments against long-term financial goals. The hard truth is that wealth and real financial success require a plan to come to fruition. It’s not enough to just earn more money. People also need to consider what they do with that money to contribute to their financial future. Most importantly, it’s about having a comprehensive understanding of your income versus living costs and building a budget that allocates a portion of your earnings towards future financial goals for you and your family.”
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