What is Money Mindset?
A money mindset is an overriding attitude that you have about your finances. It influences the important financial decisions you make every day. And it can significantly affect your capacity to carry out your objectives. If you alter your perspective on money, you’ll probably choose more effective solutions to problems.
Why is a positive Money Mindset necessary?
The attitude towards money is a crucial cornerstone when it comes to making improvements to one’s personal finances. Our objectives may centre on paying off debt, saving money, making investments, or reaching seven figures in savings, but without a proper financial mindset, it will be very challenging to achieve these goals.
A positive outlook can enable one to view things through the glasses of wisdom and enlightenment, which will lead to reduced anxiety and negativity. It will lend a positive outlook towards the circumstances in life and encourage us to deal with issues in a more proactive manner.
Why don’t we save?
One of the major reasons for not saving money is that there is frequently not much left over after paying rent, bills, and loan payments. However, if we are careful with budgeting and preparation, it is possible to create a solid plan to save money.
However, there are people who genuinely find it hard to save due to the hardships they experience during the course of their life and this includes illnesses, failure to meet living expenses such as rent, education, ailing parents and other causes that are more common and prevalent. There are yet others who are unable to save money due to their careless and irresponsible attitude. They feel the pinch of difficulty only when they come upon unexpected expenditures and have no ways or means to meet it.
Some of the major reasons why people don’t save up for a rainy day are as follows:
- Lack of proper Financial awareness: One of the major reasons as to why people do not save up for a rainy day is the lack of financial knowledge or awareness. Money is a difficult proposition to manage. And people generally tend to put off the task of managing money because they are not aware of the implications of not having a proper plan for managing your finances.
Financial knowledge and education are crucial, yet this is one area that is often ignored and the result is that people are not sure on how and where to invest. Also, there are a whole host of products and investments opportunities available in the market nowadays and a lack of education about these possibilities is scaring off a lot of investors.
Investors find it challenging to pick among the many commercial items available. It is difficult for investors to sort through the numerous funds because the financial goods are separated into numerous categories based on various features and offers. Too many people are concerned about making a mistake, that they feel it is better to remain in their comfort zones and stick to traditional methods of saving money.
- Lack of a Budget: One of the primary steps of money management is to create a budget for yourself, no matter what your income. The lack of a proper budget will make it impossible to track your monthly income and expenses and this will in turn make it difficult to save money regularly. A budget not only helps in tracking income and expenses, it is also a plan that helps us to set goals towards saving money. When we fail to plan, we are planning to fail.
While having a budget will give us a road map on how to proceed with our finances, it will also give us an idea on what expenses need to be reduced and what expenses can be avoided, thereby promoting the cause of savings.
- Overspending: Overspending has become a global phenomenon now be it the case of Governments, Corporations, Multinational organizations or even the common man. There is a common belief that spending is what powers and stimulates the economy and this has led to widespread debt.
Today’s society is driven by the ideals of consumption rather than saving. People are not willing to sacrifice today’s demands in favor of securing their future. So, they prefer to spend their income without resorting to saving for the foreseeable future or preparing for its uncertainties..
The situation is exacerbated if you suddenly lose a source of income or experience a sudden decrease in available funds due to a financial crisis or economic slowdown. Should this happen, we would be forced to implement financial measures that we are not comfortable with or used to. The problem would worsen when it involves families that we need to support and sustain.
- The Burden of Debt: The current society normalizes debt as a way of life. Debt is no longer seen as an albatross around one’s neck. Nowadays students undertake loans to continue their higher education and this sets them up on the debt cycle for life. Most of the times, they are in debt to the tune of hundreds of thousands by the time they graduate.
Banking institutions now offer various instruments of credit to young professionals before they can properly understand the ramifications of financial discipline and its necessity. Credit cards which promote limitless spending are issued out to various customers and living beyond your means is promoted for commercial gains of banks and private institutions. Most customers get a wakeup call when they are unable to manage repayments in a timely manner, and usually by then, they are knee deep in debt.
- Lack of Specific Goals: If you are not sure of your destination, you will find yourself wandering aimlessly without any specific direction in mind. In such instances it is easy to ignore your future and live only in the present. However, the future will interfere at some point and at that time, it would be difficult to get a bearing on your life and its path.
Every individual needs to establish some goals towards which they can strive. This will inspire you to put aside funds to meet those goals. Sometimes we need to coerce people to save money because they lack the will power to do it on their own. In such instances, it makes sense to set up automated withdrawals towards a savings account. There is a solution for every problem if we have the will power and initiative to make things happen.
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