Focus on These Four Concepts to Finally Get Hold of Your Money
Anyone who has improved their monetary skills will tell you: it’s not about the rules. Okay, rules are important, but they are not as important as your habits and behavior . After researching and writing about my relationship with money over the course of five years, I learned that it all boils down to four main factors: control, informed decisions, balance, and resourcefulness.
Feeling in control helps you feel strong
When I went broke and paid off the debt, I had a strange high that my balance fell, and this high made me continue to work. The same thing happened when I set direct savings to my 401 (k) and watched the balance rise. After a while, I checked it out and thought: “Oh, that’s enough! Did I do it ? “I felt the rush, and from this desire I wanted to save even more.
The buzz, the rush, whatever you call it, it was really just a sense of control that made me want to keep going and ultimately gain control of my money.
In fact, the whole point of personal finance is to learn how to control money. And this is difficult because most of us think the exact opposite: we feel that money controls us. This keeps us from making this awesome ride on our wishlist. This keeps us from quitting jobs that we hate.
When you read these crazy profiles of a man who paid off $ 100,000 of debt in a few years, he didn’t get it by simply being thrifty or making more money . Don’t get me wrong, they are essential. However, when you get to the heart of the story, it is about control. They learned to control their situation and do what they could, and when they could.
Money is boring and boring, and no one wants to think about it a lot. This is part of the problem. We want to know how to fix our finances, but are too scared to really understand them. Here are a few things that have helped me take control of my finances:
- Remove the taboo on money . Many popular personal finance blogs have sprung up because their owners wanted a platform to hold themselves accountable and talk openly about money. You don’t need to blog, but you can talk to family and friends about your financial goals. You can dive into your own finances and keep track of every penny. Regular daily reading of personal finance websites and blogs is a good way to get used to thinking openly about money and discussing it.
- Set important goals for yourself. Don’t create a budget just because you have to have one. Ask yourself why you want to stick to this budget. To support your family? Get out of debt and go on a trip? However, when you have a meaningful goal to strive for, money management is not a boring activity that you have to do because it is responsible. It’s about doing what’s important to you. Thus, you change the scenario – you make money work for you, and not vice versa.
- Come up with a plan. Create a plan that suits your expenses, income, and goals. A 50-30-20 budget is great, but you shouldn’t just follow someone else’s formula to get your finances back on track. Make sure this formula suits your needs. This can mean tweaking the rules to do what works for you. Overall, you want to see how your actions matter because it makes you feel powerful and in control.
Control is not easy when you feel like the deck is piling up against you. It can be difficult to control a situation when you have a huge loan and cannot find a job, but the fact remains: a sense of control is still a necessary part of the solution . Eventually, all other factors return to developing a sense of control.
Decisions make you feel in control
In general, the way to develop a sense of control is to make targeted, informed decisions.
Taking action, even if it’s a small action, can make a big difference. For example, let’s say you decide to invest another $ 10 a month in your debt. Yes, it’s a small action, but the little things add up . More importantly, when you make the decision to act, you exercise power and control, which are invaluable in the long run.
In his new book Smarter Faster Better, author Charles Duhigg goes into detail about this concept. He discusses the importance of the “inner locus of control” that we talked about in the previous section: you feel that your actions influence your destiny. And Duhigg confirms that one way to motivate yourself is to make decisions . He’s writing:
Motivation is triggered by making choices that demonstrate to us that we are in control. The specific choices we make are less important than the assertion of control. It is this sense of self-determination that drives us forward.
In other words, by focusing on a solution, you feel like you are in control and that motivates you.
Taking action is one thing, but there is a difference between blindly following the rules and deciding to act. For example, you set a budget because that’s what you should be doing, but you never check or adjust it, which makes it pointless. Rules are important, but sometimes we use them to delegate really important work . The decision to act is a little different. You don’t just do what you have to do, you do what is right for you. This is a small but important difference, and here’s how it can be applied to some of the basics of personal finance.
- Instead of making a budget to get out of debt, decide which debt payment method is best for your situation .
- Instead of saying that you are asking for a raise, decide how you are going to communicate it to your boss and decide how much more you are going to ask for.
- Rather than just cutting costs, decide what costs you really need to cut to make a difference. Decide how much you need to cut back and focus on spending with a specific goal .
We’ve told you before that, ironically, being good at money sometimes means breaking the basic rules of Money 101 . And this is where conscious decisions come to the rescue: you don’t just follow some general rules. You change the board to suit your unique financial situation. Mindfulness and awareness of your money habits goes a long way in establishing your control.
Balance keeps it all together
Of course, sometimes you will make the wrong decisions . The debt payment method you have chosen may not be working. You may have overestimated your willpower. Maybe your promotion didn’t work.
Control is important, but control alone will not solve all problems. You have to learn to recalibrate, which usually means finding balance or compromise.
For example, when I wanted to increase debt repayment, I completely overestimated my willpower. I threw every penny into debt and I had nothing left. Naturally, when I wasted money on even the tiniest of expenses, it completely threw me away, I incurred a bunch of overdraft fees, and worst of all, I felt like a loser who did nothing for that sense of control.
Even though I made a decision and tried to control the situation, my actions backfired and I ruined my finances. So I had to balance it all. I had to learn to better budget, work with my habits, and adjust my plan. Control and mindfulness are part of the process, but it also takes a fair amount of tweaking and compromise to get your money in order.
In this way, a significant part of personal finance occurs. You have to find a balance between spending today and saving for tomorrow . You have to find a balance between frugality and wasting time . Extremes rarely work well. It usually boils down to finding the sweet spot that works for you, and then working steadily and intelligently to achieve your monetary goals.
Ingenuity helps challenge the status quo
Balance is important, and there is another beneficial quality that can help you achieve your goals: resourcefulness . Being resourceful can mean that you:
- Find extra work or take advantage of overtime work
- Learn to make a meal plan to cut your grocery budget
- Optimize your home to save energy to cut your electricity bills
The list is endless, and not all of the tips apply to you. If you’re resourceful, though, you focus on the tips that apply and put them to work. Everyone’s situation is different, and while there are general personal finance tips that apply to everyone, managing your money ultimately comes down to what works for you. We’ve told you what it takes to get a little more inventive , and it basically boils down to this:
- Forget the word “should”: we use the status quo as a guide, but this can get in the way of choosing the best option. Should you pay for the car because everyone else does, or do you just need to save some money, buy a decent used car with cash and save on paying interest?
- Focus on what you can do, not what you can’t: again, when you’re creative, you don’t get stuck on what doesn’t work. It helps to recognize your obstacles, but instead of dwelling on them, you are looking for solutions.
- Learn to Seize Opportunities : Resourceful people look for opportunities in everything they encounter. They look at things in terms of how it might affect their bottom line.
It takes an effort to adapt advice to your own situation, give up what you need to have to benefit your overall financial health, and look for opportunities in unlikely places. However, learning how to optimize every opportunity to achieve your financial goal will really go a long way in establishing control. Again, control is pretty much everything.