7 Small Moves That Can Have a Big Impact on Your Money Mindset
Written by
Dawn Allcot
Edited by
Amen Oyiboke
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Financial security is a journey with very few shortcuts along the way. However, taking small steps that improve your money mindset can create a solid foundation to pay off debt, maintain a budget, and build up savings and investments, according to experts.
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It all starts with understanding your relationship with money, said Elana Feinsmith, certified financial planner and certified financial therapist with Oak Financial Coaching.
Here are seven subtle money moves you can take to change your money mindset.
Journal Daily
Feinsmith recommended taking five minutes every day to journal about your feelings toward money. “Journaling allows you to observe what happens in your brain as you think about different aspects of money, whether it’s your cash flow, investing, or your grocery bill,” she said.
The key is to focus on your thoughts without judgment so you can better understand your relationship with money and then set goals in alignment with your values.
Carry a Large Bill in Your Wallet
With so many digital options for money management, Feinsmith pointed out, “We tend to be disconnected from the physical aspect of our money.”
Carrying a large bill, whether it’s $50 or $100, in your pocket that you don’t spend can help you stay in touch with the physicality of cash and boost your money mindset without a large financial sacrifice.
“The idea is to have it there to remind you of your financial goals,” Feinsmith said. “It gives you the feeling you’re in charge of your money and grateful for the money. Choose an amount that makes you feel rich inside.”
Make Minimum Payments On Time
Small victories can lead to large changes in your overall financial picture over time, experts say. One thing you can do for your mental wellness is make the minimum payments on your credit card bills consistently. Take time to celebrate that small victory, too.
“If you’re making all your minimum payments, high-five yourself for helping to preserve your credit,” said Julie Guntrip of Jenius Bank.
“Jenius Bank’s research on money and mental health tells us many people feel overwhelmed when they look at their debt balances. Those negative feelings may make it even more difficult to get started with the pay-down process. But action tends to quiet anxiety,” she said.
Pay Off Your Lowest Balance Credit Card
If small actions can help quiet anxiety, imagine the mental boost you can get from paying a credit card in full, even if it’s one with a small balance. Guntrip and Feinsmith discussed the snowball and avalanche methods of paying off debt.
“Everyone’s unique,” said Feinsmith. “Each person needs to look and see what is going to motivate them. Is it knowing that the credit card company is going to get less interest per month as you pay off higher interest cards? Or is it seeing that you no longer have a particular debt?”
Guntrip touted the benefits of the snowball method, noting, “The initial win of wiping out a balance, even a small one, could deliver a powerful emotional boost.”
Automate Savings
Once you’ve paid off a credit card, you can put that monthly minimum payment you were previously making toward your next largest credit card bill. Or you can bolster your emergency savings account, which could boost your confidence even more.
“Small, intentional actions go a long way in improving your money mindset,” Guntrip said. “Setting up a cadence of automatic transfers to a savings account can help you build a [good] habit.”
Close Unused Accounts
Generally, keeping a line of revolving credit like a credit card open has benefits to your credit score by improving your credit utilization ratio and the length of your credit history. But if a card carries a high annual fee or you feel that leaving a credit line open might tempt you to get into debt again, it makes sense to close the card.
There’s also psychological value to closing an unused account that no longer serves your financial goals.
“It may remove some of the clutter from your credit report, reduce your exposure for fraud, and help you feel like you’ve ‘crossed something off your list.’ The decision is nuanced and [depends on] what’s right for the individual,” said Guntrip.
Respond To Collections Early
If you’ve gotten yourself into unmanageable debt and have collectors sending letters, don’t let those notices pile up as interest continues to accrue. Responding quickly can give you a sense of empowerment around your finances, even if you can’t make a payment right away.
“Figure out what resources you have to work with,” Feinsmith said, pointing out that not-for-profit credit counseling agencies may be able to help.
Whatever your situation, decide on the simple steps that can help you build momentum. “A string of small victories may help to reframe your relationship with money from one of avoidance to one of control and confidence,” Guntrip concluded.
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