Rewiring Your Mindset On Investing - Changing Your Financial Habits

The average adult makes 33,000 to 35,000 total decisions on a daily basis, according to Gerald Zaltman, a Harvard Business School professor. They range from micro (like what to wear) to mundane (what to eat) to life-changing (take the job or not). Whatever the decisions are, most of them involve the use of money.

The idea of having or making lots of money is appealing and absolutely welcoming to many of us, because whilst we may naively think that money cannot buy happiness, the reality is human beings need money to pay for things that make life possible – like providing for the basics of food and shelter. If we cannot afford that and do not feel secure, we become unhappy. Effectively, our joy comes from the sacrifices we make with money. Now let’s park that necessity and delve into how money actually drives our daily emotions and how it’s our longest standing relationship – in fact, it’s until death do us apart. When it comes to relationships, we innately try to improve and retain or fix and maybe get rid of toxic ones that don’t serve us. But when it comes to our relationship with money, it’s just an existence we have to deal with and definitely not in our top list of things to nurture and improve on.

Most of us have a dysfunctional relationship with money and despite its high value in our lives, we underestimate the importance of knowing our personal relationship with money. We apparently learn about the use of money from what we experienced between the ages of one and seven – consciously and subconsciously. So how our parents, guardians or community interacted with money between those ages is how we inherently will behave when in possession of money. Now ask yourself, were your parents educated about money, if not (like most of the population), their behaviours are learnt from their parents, and their parents from their parents – so it’s a perpetual cycle of adverse financial habits and illiteracy that must change, but can only happen once you’ve analysed, critiqued and improved your own financial habits. This inherited cycle is so deep rooted that even if you know the need to spend and save wisely, it’s difficult to keep up with that healthy habit because your brain clicks back to the unfavourable ways money was handled around you. Basically, how you acquire, spend and manage money is conditioned, but you can fix that.

Truth is, we feel better when there’s money somewhere for a rainy day. So why are we not actively trying to save and invest? It’s because when we think of saving or investing, we think about what we’re missing out on right now or what we’re denying ourselves of. We don’t quite conceptualize the idea of long-term investing until it’s too late. Despite the copious amount of information about growing and sustaining wealth, we seem to always revert back to habit circuit of the brain that likes the comfort from what we have been conditioned to do.

You may fall in one or two of these categories: Money Giver, Money Spender or Penny Pincher – all of which are bad habits if they are done without saving or investing. If you’re a money giver or spender, the idea of saving and investing may be impaired. Try the 50-30-20 budget rule of spending 50% of your income after tax on needs, 30% on wants and 20% on savings or investments. If you’re a Penny Pincher, then your financial anxiety or scarcity mindset is preventing you from looking at alternative ways of making your money grow. A normal or secure relationship with money means that your acquisition, spending and management styles will not cause financial difficulties, and that you are reasonably content with your relationship with money. Once you identify your weaknesses with money – in other words – what makes you feel guilty when spending, you can mend that habit.

Having a healthy relationship with money, means you are in control of your money, and you are in control of how your wealth or savings look in the future. It means your actions with money are being imparted correctly to your off springs and community. But to get there, you need to recognise the toxic relationship you have with money now, undo those past habits and habitually embark on an improved solution. Investing wisely in the stock market is an opportunity to learn how to make your money work for you and build a more secure future you can be proud of. When you improve your financial habits, the need to invest becomes apparent and you become consistent.

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