If I asked you what the exact source of your money problems was, you might say budgeting, credit card debt, or not making enough. But I would disagree!
I think your money problem is bigger than a specific behavior or action. In fact, I think the biggest issue most people have with money is actually CARING ENOUGH to prioritize their money habits and ensure they’re spending in alignment with what truly makes them happy. Most of us have no idea where our money goes or whether or not what we’re spending on makes us even remotely more (or less) happy.
The mechanics of money isn’t the hard part.
Everyone knows they should save more, pay off debt, blah blah blah – the concepts are not hard to grasp. But getting someone to *take action* is a whole other ball game. Until you care enough to finally make it a priority, you’ll just continue along the same path wondering why you can never get ahead.
And it’s not like you need to know everything about personal finance – you don’t. You just need to care enough to learn the basics. Fixing your problems with money is 90% mindset and 10% nerdy stuff.
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A Fear of Math Held Me Back From Becoming Money Savvy
Yep, I was afraid of personal finance because I’m so terrible at math and I assumed my money issue was a math problem, not a behavior problem. But once I started digging into personal finance books (based entirely on necessity and not interest) I realized I don’t have to know all the nerdy stuff to build wealth. It’s just simple addition and subtraction really. Subtract your spending from your income and if what you have left is more than zero, then you’ve got something to work with. If it’s less than zero, then it’s a lifestyle issue more than a math problem.
Why Your Money Mindset is a Big Part of the Problem
For years, I thought all this mindset stuff was hocus pocus. I’ve got two psychology degrees and never once in my very expensive education did I learn how or why my mindset determined the health of my bank account or anything else. It wasn’t until I hired a life coach (<- oh yes I did) that I realized how true that statement was. Once I was able to get past some of my limiting beliefs, I realized how much some of my disordered thinking was holding me back. More importantly, when I learned to stop stressing about everything, I had so much more energy to focus on achieving the things I wanted in life – including money. Money mindset issues impact how you earn, spend, save and give. It’s a HUGE roadblock and one worth examining.
Are you ready to face your reality?
When I was younger I was dirt poor with horrible credit. I had a lot of shame around my financial situation, so I did the not-so-smart thing and avoided looking at the reality of my financial situation. Surprise, surprise – it didn’t all magically go away (so much for all that law of attraction stuff I tried).
Eventually, I didn’t have a choice but to deal with my credit issues because I was planning to go back to school and I knew I’d need student loans, so a less embarrassing credit situation was necessary. Looking at the reality of my money situation was so hard, but once I had a grip on what needed to be done, I was able to start taking steps towards making it better. It took a long time, but in retrospect, I realize the fear of looking at my finances was greater than the reality of what I needed to do.
You know what feels amazing? Getting past the upfront pain of confronting your money situation and turning fear of the unknown into feelings of being in control of your life, even if you have to make hard sacrifices in the process. If fear is holding your back – take the blinders off my friend. Jump in head first, and I promise it will feel like a hot shower after a freezing cold day.
How to Solve Your Money Problems
Obviously, this isn’t something I can help you with in a single paragraph, but what I can do is point you in the right direction. The first step I’d recommend to anyone is to understand the reality of your situation in full color. Get yourself a free Personal Capital account and start connecting all your bank and credit accounts to it. This will give you the visual picture of where you are now, while also helping you track your spending going forward. Knowing where your money is going a huge part of the road to financial recovery.
Noodling Spending Down to What Makes You Happy
In my 4-step Money Mastery process (which you can get for free), I help you go through your spending and analyze what’s necessary, what’s not, what brings you joy and what doesn’t. From there, you can start making better decisions about your spending and your lifestyle. From this point, it’s about making more informed decisions and that requires a mindset shift. Rather than suggesting you start with a money book (we’ll get to that) I’d recommend reading Greg McKewon’s book called Essentialism, first. I’ve read a lot of books in my time, but this book has pushed me to think about what’s most important to me, and how to prioritize my life around it.
Dive into the Money waters
Once you understand your current finances and what your personal priorities are (so you can fund only what makes you happy) you have what you need to build good money habits. From there, start exploring the world of personal finance based on what interests you. The first money book I ever read had such an impression on me that I’m sure I wouldn’t be where I am today without it. It wasn’t a difficult or technical read, there was very little (if any) math and the storyline was interesting and relatable. If you’re looking for a soft start into the world of finance, here’s a few books I’d recommend to get you started:
- The Wealthy Barber – totally changed my financial life. It’s written for Canadians, but anyone can get value from this story.
- Total Money Makeover – I don’t love his philosophy on money or the religious slant of his writing, but it’s worth the read.
- The Richest Man in Babylon – It’s a classic, but honestly I haven’t read it yet.
- Your Money or your Life – This is a pretty drastic take on finances, but it will make you think about money very differently.
- The Simple Path to Wealth – I love J Collin’s perspective on money. It’s so simple and straight forward.
One important note about the reading list above.
Not all of them are going to resonate with you. In fact, there are money books out there that I think are ridiculous. But even if you disagree with the the ideas and philosophy behind the book you’re reading, it will help you understand your own values about money, spending and what a quality life means to you. That’s the good stuff that personal finance is made of – not dividends and tax thresholds.
Enjoy the journey! Believe it or not, it’s a really exciting path to be on!