How Take Control of Your Finances by Developing a Healthy Money Mindset

Image Source: Pexels
 
Whether your goal is to be financially independent, purchase a home, or start a business, money is required to fulfill all of these. Earning money through jobs or side hustles is just one part of the process, the other part is developing a healthy money mindset allowing you to make sound financial decisions and achieve your life goals. In this article by Catherine Workman, we’ll explore some practical ways to develop a positive money mindset and tips on increasing your earning capacity.
 
Understand and Overcome Negative Biases
 
Understanding the psychology of money is key to overcoming biases that negatively affect financial outcomes. This is because having more or less money than one desires can lead to a host of problems if not managed properly. Let’s dive deeper into some common biases you should understand and overcome:
 

• Chasing Instant Gratification: Purchasing new clothes, and eating out are common impulsive decisions made by individuals when their salary hits the bank account. While treating yourself is great for mental health, pursuing instant gratification for the long term is bound to become a major problem. For instance, rather than spending $500 each month eating out, you should consider investing it toward your retirement fund or stock market portfolio. While these do not provide instant gratification, it sets you up for long-term financial success.

 

• Fear of Taking Risks: Social media is flooded with news of financial scams and frauds. Such news can scare new investors from investing their money owing to the fear of losses. However, not investing money is a much greater risk, as each year inflation eats into your savings and consistently reduces purchasing power. The right way to approach this challenge is to use certified resources to educate yourself on the risks and rewards of various types of investments and make an informed decision.

 
Learn to Save More than You Spend
 
Regardless of what your financial goal is, learning how to save will play a major role in achieving it. Here are a few ways to save more starting today:
 

• Create a Budget: A monthly financial budget is a great tool to forecast expenses and keep spending in check, according to Invested Wallet. Additionally, it will help you find areas of overspending owing to chasing instant gratification and make sustained changes in spending habits.

 

• Minimize Debt: Credit card companies often entice customers to use their cards as much as possible to ultimately charge high-interest rates on unpaid dues. By keeping your credit spending in check and making timely payments, you’ll potentially save hundreds of dollars annually.

 
Increase Your Earning Capacity
 
Following the above-mentioned strategies will help you develop a positive money mindset as you’ll be able to cut through the noise and make sound financial decisions. A great addition to this learning will be working towards increasing your earning capacity in the following ways:
 

• Pursue an In-Demand Degree: According to the U.S. Bureau of Labor Statistics, the demand for IT professionals is expected to increase by 15% between 2022 and 2031, higher than all other occupations. Making a career switch to this industry by pursuing an online degree in IT will help you earn a higher income and increase your savings. To learn about the best degrees to pursue, check this out for more info.

 

• Start a Side Hustle: Whether you love writing, painting, making music, or more, you can convert your hobby into a lucrative side hustle. On average, one can earn upwards of $500 each month through this hustle. This money can directly be invested towards retirement savings or creating a healthy emergency fund.

 
Now that you know about common negative biases and the best strategies to earn and manage money, it's time to put your knowledge to use. Creating a monthly budget will be a good first step which can be followed by planning to go back to school to make a career switching to a higher-paying industry.