In the complicated dance of personal finance, each of us carries a unique rhythm, shaped by our experiences, upbringing, and our socio-economic situations. The relationship we have with money is unique to each and every one of us, it’s not one size fits all.
Often, our early experiences with money - whether through its availability or its scarcity - will shape our own financial decisions as adults.
Financial trauma occurring as a result of distress and overwhelming experiences surrounding money can impact our decision-making process in different ways and in different situations.
If one has had negative experiences, like missed opportunities, loss of a home or familial conflicts as a result of limited resources, debt, and financial mismanagement, then it’s possible that they become increasingly afraid of spending money, to the extent of adopting a “scarcity mindset” with finances.
Financial trauma can also show up differently; if one has had limited exposure to money and little knowledge of personal finance, then they can be excessively flexible with spending, becoming unable to meet financial obligations or set reasonable spending limits.
Many of us shy away from looking at our relationship with money, which can be healed by addressing the root cause of the anxiety, learning to develop habits that allow us to both manage money responsibly alongside experiencing joy of treating ourselves.
Breaking Free from the Narrative
Remember, you are not inherently "bad" with money. The habits we inherit often stem from circumstances beyond our control. Unlearning and relearning are concurrent processes, and it's crucial to acknowledge that there is nothing inherently wrong with you. Give yourself the grace you deserve; transforming your relationship with money takes time.
Media's Role and Gendered Financial Advice
While men receive guidance on wealth-building and growth, women are often directed toward managing existing resources. This discrepancy not only perpetuates outdated stereotypes but fails to recognize the diverse goals and dreams of individuals. We need financial advice that sees us as unique beings with aspirations beyond stereotypes.
Resilience and Resourcefulness
Achieving financial stability should not demand constantly overcoming significant obstacles. Resilience and resourcefulness are valuable, but they shouldn't be prerequisites for financial stability. Every day presents an opportunity to pivot, regardless of the scale of change. Your financial situation is fluid, and there's no permanent destination on your personal finance journey.
Money as an Ally, Not an Enemy
Your money should be an ally, not an enemy. Recognize the pitfalls that turn money against you, such as reckless spending, unplanned purchases, or accumulating high-interest debt. It's time to shift from handling money in ways that work against you to ensuring every dollar serves a purpose. Your money should be diligently working for your financial well-being.
Beyond Numbers: Personal Finance with Heart
Personal finance isn't just about the mathematics of money. Emotions, values, and beliefs influence our financial choices. Recognize the personal and emotional value in spending on health, supporting loved ones, pursuing hobbies, or investing in personal development. Satisfaction often lies in aligning financial choices with personal values, enriching life beyond the balance sheet.
Small Wins, Big Impact
In the pursuit of financial dreams, don't underestimate the power of small, consistent wins. While grand plans are enticing, small, practical steps often lead to more significant achievements. Celebrate these victories, no matter how modest, and watch them accumulate into substantial results. Create a spreadsheet, visually track and reinforce your progress with money screenshots, chat with friends on the same journey as you about your goals and when you reach them!
Monthly Money Makeover
Sometimes it’s about going through the different facets of your finances and organizing them in a less overwhelming way.
- Identify All Income Sources: Understand the full scope of your income, including paychecks, freelance earnings, and side hustles.
- Track All Expenses: Document essential and non-essential expenses to gain transparency on where your money goes.
- Categorize Expenses: Classify expenses to identify spending patterns and areas for potential savings.
- Evaluate Income Versus Expenses: Compare income to expenses, adjusting spending or increasing income as needed.
- Conduct a Debt Assessment: List and plan for debt repayment, a critical step in effective financial management.
- Set Clear Savings Goals: Define specific savings goals, motivating and guiding your financial plan.
- Choose an Appropriate Budgeting Method: Embrace zero-based budgeting, ensuring every dollar serves a purpose.
- Continuously Adjust and Improve: Regularly review and adjust your budget to reflect changes in income or expenses.
Remember that your journey is personal, evolving, and worthy of celebration. Embrace the small wins, acknowledge the power of incremental progress, and stay committed to your financial well-being. Together, let's make 2024 transformative for our financial health—one month at a time.
Until next time,