How many times have you heard or even said the phrase “I can’t afford that”? In some cases, this statement is a genuine reflection of our financial reality, but sometimes, it’s more about our priorities and how we choose to allocate our money. When we take a closer look at our spending habits and re-evaluate what we value, we often find that we can make adjustments and prioritise the things that truly matter to us. In this blog, I discuss how changing your mindset can help you make better financial decisions and live a more fulfilling life.
Changing Your Mindset
The journey towards financial mindfulness begins with a shift in perspective. Instead of thinking “I can’t afford that,” try thinking “If it’s a priority, I can make it happen.” This simple change in mindset can have a profound impact on your financial decision-making, as it encourages you to take control of your spending and prioritise what you really want.
Feedback on this strategy from one person was: “I found switching from ‘I can’t afford that’ to ‘I don’t choose to prioritise that’ really helpful – the deprivation mindset meant I was more likely to snap and splurge; reminding myself it’s a choice and I choose a holiday, or having a cleaner, or working part-time instead helps me stick to my choices!”
Assessing Your Priorities
To adopt this new mindset and make it work for you, you need to be clear about your priorities. Start by making a list of your short-term and long-term goals, as well as the things you value most in life. This might include financial stability, quality time with family, travel, or your career.
Next, take a closer look at your current spending habits. Analyse your bank statements and credit card bills to identify areas where you’re overspending or underinvesting in your priorities. Are you spending too much on eating out, while neglecting your pension savings? Do you have an expensive gym membership that you barely use, but dream of going travelling?
By understanding your priorities and evaluating your spending, you can identify areas where adjustments can be made. This process will help you make more conscious financial decisions that are in line with your values and long-term goals.
Making Tweaks and Adjustments
Once you’ve identified areas for improvement, it’s time to make some tweaks and adjustments to your spending habits. Here are a few strategies to help you get started:
1. Create a spending plan: Draft a spending plan that allocates your income towards your priorities and essential expenses, such as housing, utilities, food, and savings. Ensure that your spending aligns with your values and goals, and stick to your spending plan as closely as possible.
2. Cut unnecessary expenses: Identify your non-essential expenses that can be eliminated or reduced to free up funds for your priorities. This might involve cancelling subscriptions, cooking at home more often, or shopping for deals and discounts on items you need. I always say to allow for some things you enjoy so that you don’t feel restricted.
3. Reallocate resources: Use the money saved from cutting some unnecessary expenses to invest in your priorities. For example, if you’ve been longing for a holiday, start a dedicated travel fund and allocate a portion of your monthly savings towards it.
4. Be mindful of your choices: When faced with a potential purchase or expense, ask yourself if it aligns with your priorities and values. If it doesn’t, consider whether it’s truly necessary or if there’s a more affordable alternative that still meets your needs.
5. Track your progress: Regularly review your spending habits and adjust your budget as needed to ensure that you’re making progress towards your goals. Celebrate your successes, and don’t be too hard on yourself if you experience setbacks. Remember, financial mindfulness is an ongoing practice that requires continuous reassessment and adaptation.
As a certified financial coach and Chartered Wealth Manager I have 12 years’ experience in helping people understand their money and how it can be used as a tool to build the life they want. If you’d like help navigating your relationship with money, get in touch here or book a discovery call here