At last count, there were roughly 4.7 gazillion blogs(*give or take a few) covering money, saving, and wealth – this one included. And with great minds giving all-out efforts to helping people save up for retirement, stick to a budget, buy their first home, or find ways to save, there’s a message and a solution for everyone out there.
So, what gives? Why is it that over three-quarters of Americans are still living hand to mouth? With little or no savings to bolster their budget, they’re living in fear of what will happen when they lose work or have a sudden need for a large chunk of cash.
Why Your Money Mindset Must Change
Personal finance blogs proliferate because they can work. It doesn’t matter how far behind you are in the area of personal finance: it can be fixed and you can reach your goals with the right approach and a little guidance.
The problem is: too many people focus on the wrong things when they try and solve their money issues. The solution isn’t going to be found in cutting coupons or setting budgets aimed at whittling down debt a tiny bit at a time.
What has to happen, if you really want to improve your financial standing in the world, is you have to adopt a new mindset when it comes to money. That’s a behavioral change, and it ain’t easy. If it were, everyone would be debt-free, flush with cash, and right on track for retirement.
What a Difference the Right Money Mindset Can Make
The trick to winning at personal finance isn’t actually a trick. Rather, it’s a mind-change that starts with realizing what money is really for. I’ve known people who make almost six figures, and can’t figure out where all the money goes, and can’t pay their bills. Some of them don’t even have any kids!
On the other side of the spectrum, I have an artist friend who makes an annual salary in the low-$30s and he manages to max out his IRA contributions every year ($5,500 for 2016 but he’s 53 so he gets to put in $6,500) as well as live a debt-free, totally happy life.
What’s the difference? If you look at how my high-earning friends are spending their money, it’s pretty clear: their spending is out of control. They buy brand-new cars, for starters. Plus, they buy expensive cars- and most of them live right in NYC, where you don’t even need to own a car!
What is Money Really For?
Those are just examples- the things we buy, for the most part, are what bring us down, financially. Unfortunately, though, consumerism is built into our culture. We crave the new thing and we show status by displaying our nice things, whether it’s designer heels, a fancy car, or a home in the best neighborhood. We are what we own.
How to Adopt a New ‘Money Mindset’
Not everyone has to live that way, and in fact not everyone does. The people who figure this out early on in life are the ones who usually end up more financially secure, no matter what their salaries are.
Buying things is also a fast road to buying more things. People buy stuff and they enjoy the initial rush of pleasure they get from having something new. Then after a while they get used to the stuff and they want to experience that (temporary) happiness again. So they go out and buy more stuff.
Scientists have a name for that: “Adaptation level theory”. Recognizing this phenomenon in yourself is the first step towards developing the right money mindset. Once you master that, everything else is cake. You’ll have more money to put toward the important things in life like travel, retirement, emergency funds, living well, and even maybe someday leaving a legacy to your heirs.
Instead of buying “things” why not invest in yourself like learning more about financials, taking a course in trading, going to night college to gain a new skill to further your career.