Getting control of your personal finances is really quite simple – but it is not easy. If it were so, most all of us would not be reading this article. In fact, recapturing your personal financial health is one of the greatest stresses a family can experience.
Millions are spent each year on books and training on how to get out of debt and become financially secure. Why, then, do so many people still find themselves financially strapped or completely underwater?
The answer is mindset. If you are among those feeling trapped or squeezed by too many expenses, growing debt, and an inadequate fund for your future, it’s not a lack of information that holds you hostage. Instead, it’s the need to make the mental shift necessary to take actions leading to success.
Indeed, recognizing a limited mindset and the strategy needed to break through, are often enough to help you adopt those habits that will support good financial health.
Here are the top 5 mindset shifts to make in order to finally get control of your finances:
1. Confront your situation head-on
Get a clear picture of your financial situation. Why do people avoid looking at their finances? The limiting mindset here is, “out of sight, out of mind!” Those who steer clear of confronting their financial picture often fear what they will find if they look.
They prefer, instead, to feel the stress and worry that comes with having too little money at the end of each month. What’s the mindset shift that’s needed here? “Knowledge is power!” Get courageous and get a clear picture of where you are financially. Review your credit score. Take stock of your debt, your assets, and any other financial obligations. Know what you are working with.
2. Set an accountability pattern
Track your spending. After all, there’s a reason why you feel you’re on a sinking boat, and it’s necessary to identify all the leaks in order to put together a game plan to set you afloat. This is a tough one for couples, as you may have secret spenders or hoarders, or differing opinions about where to spend your money.
What’s the limiting mindset here? “If we don’t track it, it doesn’t exist!” And of course, this isn’t true.
What’s the mindset shift needed here? “The truth will set you free.” Gaining financial health means working in full transparency. So, whether you’re married and working with a spouse, or simply working with the two parts of yourself – the Wild Spender and the Hopeful Financial Steward – take responsibility for your part by identifying where the money is going.
3. Set healthy goals
Make a budget. This means trimming, curbing, readjusting and all those things you’ve feared will need to happen. And yes, this process does need to happen! Change doesn’t happen by itself.
What’s the limiting mindset here? “I don’t want to give up anything, so let’s not have any conversations about what’s necessary – and what’s not.” Consequences? Same sinking boat, different day.
What’s the mindset shift needed here? “Everyone involved is going to have to make some tough decisions for the moment – and these will pay off exponentially later.”
4. Replace a poor habit with a better one
Get a game plan for paying off the debt. You have freed up some money by creating and adhering to a budget. Now, get smart and get strategic. This means deciding which cards to pay down first, whether you will keep a credit card or not, how this card will be used, and a game plan for staying within your budget in order to pay off right away any new charges incurred.
What’s the limiting mindset here? “I can use the card when I need to; I won’t rack up charges like I did before.” This doesn’t work. Why? You are operating with the same mindset that helped you get into debt in the first place. What’s the mindset shift needed here? “I need to adopt a new strategy that keeps me out of debt.”
5. Plan for the future
Create a savings account for emergencies and set up a retirement fund. Look forward to what’s to come, rather than worrying about how you will care for yourself. The limiting mindset here is that “tomorrow will not come, or that ‘somehow, things will work out.’ ”
Instead, the shift that needs to occur is: “The future is coming. Let me get smart and make it secure.”
Want to get smart about doing this right – so that you have to do it only once and do it without a hitch? Get help. The limiting mindset here? “I can do this myself.” The shift that needs to occur? “Let me tap into the brain trust of someone who has best and latest information, skills, and resources, so that I am set up for success and accountable.”