In my own personal quest for financial capability and independence, I’ve realized 7 money habits that make people live richer lives. I call them the 7 Habits of Financially Stable People.
(Read Part I of 7 Habits of Financially Stable People)
In Part I, we tackled the first four of these habits: (1) Set lifestyle goals, (2) live proactively, (3) organize everything and (4) do things electronically and online. Here we’ll outline the final three habits that can help organize finances for good.
5. Seeks financial understanding. It sounds less stressful to be told what to do, but that hands the control of your money to someone else. A person who constantly seeks financial understanding has more power than those who completely depend on others to make financial decisions.
There is a saying that “ignorance is bliss.” But, when it comes to your money, ignorance is stress. The more you know about money, the better decisions you make. It lessens the amount of future stress. It’s stressful thinking about the amount of information you need to know about banking, accounting, investments and real estate. It sounds overwhelming, but financially stable folks seek to know what’s important and what resources are available.
Read financial blogs, ask questions and seek understanding (not just answers), talk with friends and family, and know about government, non-profit and employer financial programs. The more you know about finances, the clearer it is for you to focus on the right things to live richer lives.
6. Communicates. Communication isn’t just talking but listening, too. Early on in my financial life, I found myself nodding to terms and agreements and rarely asked questions. I’d listen to people boast about how they purchased a new $500,000 home with an interest-only mortgage payment. I was awed by their financial prowess only to realize years later they, too, never asked the necessary questions they needed.
Although I had lacked financial know-how, I was an over-communicator realizing early on the importance of “asking questions, getting answers.” It’s not so much about getting answers but understanding them. Eventually, you’ll realize who within your social circle you should be communicating with to help grow your knowledge of money.
It’s important to communicate with your partner, creditors, employers and others who have a direct impact on your financial well-being.
7. Takes the emotion out of money. Let’s face it: Emotions are a part of who we are as human beings. Emotions are what make living quite fulfilling. Imagine the time you’ve bought your home, car or pretty much anything. What feeling did you get…excitement? Happiness? What happens when the bill collectors start calling? Do you feel anxiety and sadness?
Emotions are a powerful thing. They make us think that a bargain is a need versus a want. When you take the emotions out of the equation, you’ll come to realize a bargain is only a bargain if it’s actually needed. Additionally, emotions make us purchase items to get an emotional boost, known as retail therapy. It’s what made me break my budget spending more than I could afford.
Emotions also impact the reasons we help our family and friends when they need financial support. But when it comes to lending money to family and friends, it’s better to set unemotional terms and expectations. This helps avoid future money-related family drama.
(You can read more about Lending to Family and Friends on the Phroogal Blog)
How you picture your lifestyle maybe different from everyone else but how you get there can be reached faster by following guidelines. Take the time to reassess your financial habits and ingrain new ones that help you reach that dreamed about lifestyle sooner.