When will this be over? That’s the question we keep asking ourselves, and there are no obvious, easy answers. This uncertainty can seriously affect not only our overall mental health, but also our ability to manage financially. You might feel disoriented and overwhelmed, and fear of the future could deter you from making important decisions and getting things under control.
Yes, the pandemic has brutally simplified our lifestyle, and many people are finding it harder to spend money and easier to save. But others have never felt more uncontrolled and helpless when it comes to their money. Not everything can be solved by changing attitudes – it is important to have funding and support when it is available – but it can be worthwhile to look at your money mindset and ask if it is helping or hindering you .
If you’re looking to change your money mindset in lockdown, here are 6 ideas to help you turn things around.
Main image courtesy of Morgan Housel, author of The Psychology of Money
1. Friend your finances
Choose to get to know your finances in a non-judgmental way. Imagine they are your friends and treat them accordingly. If you wanted to get to know someone, you wouldn’t criticize them and make negative comments, would you? So ask yourself: How can I improve my finances without beating myself up?
Everyone makes mistakes in money – me too. You will never get to a point where you are clearly brilliant with your finances. This whole area is too complicated to completely master. But people who have a healthy outlook on money accept their mistakes, learn from them, and don’t make finance a taboo in their life. You can also get to this point by being more preoccupied with your money and doing it in a positive, pragmatic way.
2. Prioritize your financial wellbeing
We are now beginning to understand that financial well-being is essential to a well-lived life. It has to be a priority in all of our lives, right up there, eating well and exercising. And ultimately, your lifestyle reflects your priorities and values.
If you earn time for your money, it will reap rewards very quickly that open up long-term opportunities and give you more security. Make this choice to be in charge of your expenses – otherwise, let your influences, your environment and your peer group rule your life and decide on your behalf. If you’re struggling to find time for yourself, always remember that you can’t pour out of an empty cup. Putting yourself first isn’t selfish – it’s the responsible and adult thing to do.
3. Take the time to talk to your money administrator
Why do so many people end up financially in their twenties and thirties only to find in their forties that they should have made certain decisions much earlier? Often it is because people are not actively spending time on their finances.
We often believe that our money will take care of itself, and that will become apparent when the time comes to make some active decisions. Unfortunately it doesn’t work that way! It is up to you to make these decisions, and if not now, when? The truth is, there is never a better time than now, and the lockdown provides a rare opportunity to set up a regular budgeting routine and do some homework for the big financial products you need, like annuities and investment accounts.
4. Clarify your priorities with my five S-words
Your finances are a mirror of how you REALLY spend your time and what is important to you. I would make a list of the five things in the long run that you really want in life and the five things that you appreciate in the here and now. And keep the list to five, which may sound very difficult, but it forces you to clarify what is important.
Then match your two lists to the following 5 words: accounting, storing, striving, sharing and spending. “Settling” refers to your debt – you cannot achieve your goals if you pay money on chronic debt. ‘Saving’ is obvious – this is how you can achieve short- and medium-term goals. “Strive” is about striving for a better future. That is why you need to find room for investment and a comprehensive retirement strategy. “Share” is about donating to charity or investing your resources in others to make a difference. And finally, “spend” – the culmination of all your hard financial work so that you can enjoy the joys of life without feeling guilty.
5. Increase your motivation with holistic goals
If your goal is to get better with money, you will stall. Far better to link it to another goal to increase your motivation. For example, if you walk / run and cycle more you save money AND increase your health AND reduce your carbon footprint. Selling your clothes online will make you money AND clean up your house AND avoid unnecessarily dumping clothes in a landfill.
6. Write down your bedtime financial anxieties – then break them down, one step at a time
People can get overwhelmed with their money problems, especially when the solutions don’t seem obvious. A great strategy I’ve been following for a while was originally suggested by Chloe Brotheridge in The Anxiety Solution: She suggests setting “worry time” and keeping a notebook in which you write down all of your worries specific to worry time.
They say to themselves, “I’ll worry about worry time!” You may find that a solution has emerged once the worry time comes and / or you just feel less stressed out. If you are still worried about something and you know you need to do something about it, write it down before you go to bed and say to yourself, “I’ll sleep on it and come up with a solution tomorrow.” a fresh day makes the difference.