Being good with money is not necessarily down to mathematical ability or knowing what the price/earnings ratio is. At its heart, being financially savvy is about cultivating certain positive emotions and habits, then applying them assiduously to our financial lives. Being optimistic about the future, disciplined, confident in our abilities, proactive in our decisions and outward-looking in our perspective are the solid foundations for our finances; understanding the ins and outs of money should then follow fairly easily.
Yet so many of us get stuck in unhealthy patterns of thinking that can seriously undermine our long-term prosperity. Getting swept up in peer pressure, refusing to deal with our money, succumbing to unhealthy beliefs like ‘I’ll never be rich or clever enough to manage my money properly” can be kryptonite for our finances but also speaks to a wider malaise in our lives that is well worth addressing.
You never know; getting on top of our finances -or simply saying “I’m going to start being proactive and dealing with my money properly” – can be the spur for other mini revolutions in our lives. So here is some weekend financial inspo to get you thinking more positively about your finances (and who knows what else?)
– Be proactive rather than reactive
Financial planning is often associated with older people, or those who have accrued considerable wealth. But the reality is that it is simply the decision to be proactive rather than reactive when it comes to your finances. Many people only deal with money issues when they become problems. The classic example of this is addressing debts when the bills start mounting up – by which time it is harder to ask creditors for leniency. To me there’s a connection between financial planning and life coaching; making sure you have a healthy relationship with your finances.
– Feel positive about your ability to change
The problem with this ‘reactive’ rather than ‘proactive’ approach is that not only are problems easier to resolve when addressed earlier – but that fewer emotions are involved, and the ones that are felt are positive. Being reactive can prompt a sense of dread and guilt, whereas being proactive, and planning for the future, can mean feeling positive and hopeful. Which is why financial planning doesn’t just make sense on a practical level – it makes sense emotionally.
– Be aware of how much your upbringing influences you
We often copy the habits of their parents. When I was researching my book Spare Change, I looked into the extent to which our financial behaviour is determined by our upbringing, compared to the culture we live in. And so much of it is down to our parents – not just what they told us (or didn’t tell us) about money, but the way that they handled it themselves. Our parents’ influence on our attitude towards money can go in two directions. We might understand and appreciate why our parents approached money in a certain way and use it as a template. Or, we might consider that it impacted negatively on our lives as we were growing up – and go the opposite way. And although an individual can obviously change their habits, it’s widely recognised in many quarters that a person’s attitude to money is formed by the age of eight – an astonishingly early age.
– It’s never too early (or late) to make changes
It can be very difficult to start making financial decisions as it involves looking into the future, which has too many unknown quantities. But many people also underestimate the resources they have now and are likely to have in the future, such as a family willing to support you or promising job prospects. Being flexible in your thinking also helps (do I have to live/work in this city? Do I need to be spending this amount to have an enjoyable lifestyle?) and keeping an open mind about what you’ll do in the future gives you more financial options. Making a key financial decision might be as simple as deciding whether to rent or start saving for a deposit on a property.
– Be aware of peer pressure
It’s a real problem these days: we’re up against YOLO and FOMO (‘You Only Live Once’ and “Fear Of Missing Out’), life philosophies that underline all the messages we receive on social media. This is a kind of peer pressure that the older generation didn’t have to worry about. Young people today are living their lives online and what they are doing and how they are spending their money is being watched and judged. This ‘public image’ has a firm hold over teenagers and twenty-somethings and can influence whether they choose to save or splurge. Having a healthy scepticism about this online world, and a determination to live a more “real” life outside the internet, will have all kinds of knock-on benefits that go beyond the financial, from boosting your self-esteem to being more meaningfully connected to your friends.
– Nurture a “progressive” mindset
Life is all about moving on, becoming wiser, changing your priorities – in other words, making progress. And you can only do this if you have resources at your disposal. And the irony is that if you don’t make a decision earlier in life to provide for your future, you won’t be able to give yourself the option of making progress. So it’s important for young people to think about how they see the future. To ask themselves, what will make me happy, and how can I live according to my own values rather than other people’s agendas, or the rules of social media. If you take control, the future doesn’t seem scary any more. That’s what financial planning is all about – looking to the future and not being afraid of it. It’s a way of empowering yourself.
– Do your “future self” a favour
As a young person, it’s very easy to get caught up in your life as it is now. But although the tiny details of each day seem so important at the time, looking back, you realise that most of what you worried about didn’t matter. The best piece of advice I think a young person could receive about money is to take a step back and think, in ten years’ time, what will I thank myself for having done. Happiness isn’t about being either mindful of the present or looking ahead – it’s a combination of both. Financial planning can be pleasurable and satisfying now, but it will also lay the groundwork for a happy future.
Want to know more? SPARE CHANGE – my first book all about how to have a healthy relationship with money – is out now, available to buy through Amazon or any large Waterstones bookseller near you.