How to Make Better Decisions Based on Your Relationship with Money
Your relationship with money is one of the most important you'll develop in your lifetime. It's one that can impact every other area of your life, whether it seems that way or not.
When you're stressed about money, the anxiety can have lasting effects on your health. It can also weigh on your relationships. These negative impacts can snowball, which in turn can cloud your judgment, making it even harder to turn everything around.
But as you get to know more about your relationship with money, you can right the ship. Having an understanding of how you interact with money and why you interact that way enables you to change those interactions. And the results? They can be quite powerful.
Better Spending Decisions
Spending is often one of the money habits that is easiest to control. So, it makes sense to start here when trying to make better decisions.
Before you make a purchase, review your financial priorities. Part of understanding your relationship with money is finding what is important to you. The next step is being able to translate that relationship into your spending decisions. Look at your values and your goals and move forwards with those in mind.
Each purchase you make should reflect your values and help you to reach a financial goal. For example, if you value travel and your family is saving up for a vacation, it might not make sense to buy a new TV (no matter how good of a deal you can get).
This principle can be applied to most of your purchases. When you focus on what money can do to help you reach your lifestyle goals, you can look at spending in a new way.
When you abide by this thought process, your spending decisions become more about enhancing your life - not just about getting by. Not only that, but you will pay more attention to how you spend your money. Soon it will be easier than you thought to say no to purchases that don't help you reach your goals.
Decisions About Making More Money
Your relationship with money can also impact the growth of your money. It's common to feel like you're subordinate to money, especially if you feel you need more of it to create a better life.
But if you view money as a tool, you can use it to change course with your earnings. When you get your spending under control, you can start to focus on how to grow your wealth.
Some of the ways you can grow your wealth by making better money decisions include:
Investing for the future:
Set aside money to put toward your retirement or some other future goal. If you invest your money, you can make it work for you. This will help you earn more over time. When you decide that your money should do some of the heavy-lifting, you can feel encouraged to build long-term wealth.
Want to boost your earning power? One way to do so is invest in your career development. You don't have to accept your current salary for what it is. All of us have the power to work to earn more.
Once you understand your relationship with money, you can start thinking about how to make more of it through your career. Research ways to learn new skills and knowledge that will pay off in the long run. Advance your career and you'll advance your earnings.
Making your money stretch:
After my divorce, I knew that I wanted to be able to spend more time with my son and to have more financial freedom. My answer on how to do this wasn't to make more money. Instead, it was moving to an area with a lower cost of living. With that in mind, I moved from Pennsylvania to Idaho.
Another perk of moving is that my parents live nearby, so they can help me with my son when needed. This decision allows me to make the most of my money, without the need to earn more just for the sake of earning more.
Your Relationship with Money is About More than Numbers
Your relationship with money is about way more than how much you make. It includes why you want to make a certain amount of money - and what you'll do with it. If you understand your motivation for making money, you can use that knowledge to make better financial decisions. That means understanding things like where you should work, how you should work, and where you should live.
These are the quality of life issues you should address before making decisions about your future. Money isn't always about numbers.
Live a Better Life
Your relationship with money impacts most of the decisions you make in life. It's important that you get to know yourself in this way so you can make well-rounded financial decisions.
If you understand what matters to you in life, you can make proactive financial decisions. And that's a path that can lead you to fulfillment rather than subordination to money.