Positive attitudes toward personal finance:
The economy is turbulent, recessions here and there, the cost of living is high, my boss gave me a pay cut. All these are realities in the world economy of today, but what really keeps one afloat through all of this is the right and positive mindset to finance. There is no other way. Once you have the right mindset about your finance, unnecessary worries are taken off your mind, and you will be thinking the right way to avail yourself of market opportunities, and in the long run, you will be happy.
In taking on the right financial attitudes, you need to believe in yourself and be prudent in your dealings. These ‘right attitudes’ take a lot of hard work to keep up, and it’s your resolve that will keep you from faltering in the face of challenges.
Here is a quick rundown on the type of mindsets you need to hold if you are going to lead a very good personal finance life.
What is my financial reality?
This is one of the most important questions to ask yourself if you really want good personal finance and in the long run, create wealth. You need to know your financial status, and more light will be shed on the various financial statuses in subsequent chapters. You need to know where you belong on the financial scale. It's called a reality check. Don't just assume that everything is alright, check your status from time to time. Know where your finances are headed, and this will help in planning and successfully avoiding a financial crisis. You need to know if your debts are more than your credits (either by a small margin or a large margin), as this helps you understand how many jobs you need to take on, what you need to do to supplement the dips. Once you are ready for a change in your personal finance, this is the first step to take.
Be conscious of the entire scope of your finances:
Yes, this is really key. You need to be aware of all that runs in your financial life. Don't just be lackadaisical about what comes in and goes out of your account. Get it all calculated and penned out, measuring your credit against your debt, as well as taking note of your recurring bills, leveling it all up against your income. This helps you know where you stand and how to go forward with other planning around your income. Reiterating, be aware of the entire scope of your finances.
Watch your personal spending:
Losing track of the amount of money you have spent will always happen if you don’t note how much and how frequently you spend. You need to be aware of the total amount of money you spend over time to really keep up with your plan. You should identify the luxuries and the unnecessary things you get with money, that is costing too much for your finances. You can't manage your resources well if you don't watch this fact. It drains your savings faster than you think if left unchecked. Keep track of how much you spend on groceries, on entertainment, health, sports, and balance all these on a monthly basis, against your income. And try as much as possible not to run into debt. The more your debt, the more your debt increases.
Always have a plan – A, B, C:
Events are funny, and they can turn in no time. Always make a monthly plan on how you are going to spend your money all through the month, and stick to the plan. Plan A, B, and C events and also have contingencies in cases of changes to events. Flesh out a spending schedule for your family, and see that every member of your family is aware of such a plan. Cut your spending to the minimum, pay off debts and make a proper budget for the month (short-term) and also for the year (long-term). This helps keep you and the way you spend in check. No extra spending on frivolities, only things that matter. When this is done seamlessly, if there is any deviation, it won't really affect your personal finance to any great extent.
Your attitude towards money actually matters and says a lot. If you are going to create wealth or you are going to just ‘get by’. Just remember, it’s only those with really good personal finance that are the wealthy ones. There is less pressure on your personal finance management if you have very good personal finance.
To achieve the above listed right attitudes, you need to set your goals and know what you are doing, then adjust your priorities to these set goals. You acquire clarity of thought when working on the right attitude to your personal finance, as well as bringing clarity to your financial goals and objectives.