A Step-by-Step Guide to Cultivating a Healthy Money Mindset

Nicolas Cesare  | 

For those with the desire, it’s not too hard to find suggestions about what to do to fix your budget, change your lifestyle, or repair your credit. As with many things in life, the hard part turns out to be mustering the force of will to make the necessary changes.

If you’re used to a lifestyle that your finances can’t support, it can be immensely challenging to change your ways in order to reach financial stability. At the end of the day, getting good with money comes down to cultivating the right mindset so that you can shrug off bad fiscal habits. Knowing what to do is important, but making yourself do it is necessary when it comes to taking responsibility for your debt. Let’s take a look at realistic steps that you can take to change your mindset in small — but measurable — ways.

Step 1: Identify Wants and Needs

The most important feature of a good money mindset is to focus on your needs. If your needs aren’t being met, then all of your other spending is frivolous. Of course, this is advice that you will hear a lot, but how can you really tell when something is a need? Experts typically identify a few types of spending as needs. These are spending on items like:

  • Shelter. This includes mortgage or rent payments for a living arrangement that is within your means.
  • Food. This will primarily include grocery payments. Often times eating out is a luxury item, not a need.
  • Clothing. Again, clothing as a need only covers what you need to be comfortable. Fashion is a luxury, not a need.
  • Health items. These include medical expenses as well as costs related to hygiene.

Debt payments. It may be strange to think of paying down debt of a need, but in the context of finance that’s exactly what it is. Failing to handle debt can destroy your financial credibility, forcing you to seek out credit repair later on down the road.

In order to change your mindset when it comes to money, find out what the needs in your life are and budget accordingly. By focusing on these needs and recognize them for what they are you’ll be able to distinguish spending that is necessary and sending that is superfluous.

Step 2: Prioritize Your Wants

Many of us will have some income leftover each month. This is your discretionary income and you should spend it wisely.

First, make sure that you are meeting your minimum payments on debt for the month. If you aren’t doing this, then you must take care of it before even thinking about spending money on your wants. In case you need incentive, remember that paying off debt will help you rebuild your credit. With good credit, you’ll be able to afford certain luxury expenses like a bigger house or a nicer car.

If your debt is being paid down on schedule, then it’s time to think about how you want to spend for fun. The world of personal finance can seem dreary at times, but it’s worth remembering that the goal of managing our money well is so that we can get to a point where we don’t have to worry about money — at the end of the day we’d all rather just have fun.

To that end, make a list of the things that you enjoy doing and that cost at least some money. This can include things like travel, sports, movies, and games. Whatever it is that gives you pleasure, put it on this list. Now prioritize those things. If travel is your favorite thing in the world, then that’s the first discretionary item that you should spend your money on. If you only have enough for one or two items on this list — and some months you might — then you’ve already made the tough decision about which ones you’ll choose.

Step 3: Work Towards Your Spending Goals Slowly

If your current spending monthly spending is around $3,000 a month and you need to bring it down to $2,000, this is not a change that’s going to happen overnight. In fact, expecting it to happen instantly is the quickest way to guarantee that it takes forever.

Rather than taking on one huge, insurmountable task, try taking on many smaller — but doable — tasks. So instead of trying to chop your spending in half instantly, try instead to identify small victories. For example, try doing cheap meal prep and eating out less for one month. Then, once you’re in the habit and you find yourself saving money on food, move on to another item in your budget.

Keep on knocking down obstacles in achieving your budget until you’re on track to pay off debts and keep up your lifestyle. Before you know it, you’ll find that you’re stretching your income more than you ever thought possible.

Nobody said that taking responsibility for your debt was going to be easy. If you take on budgeting one step at a time and identity problem areas in your spending, then paying off your debt and restoring your credit is in your future.


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Nick Cesare is a writer from Boise, ID. In his free time he enjoys rock climbing and making avocado toast.

This post was updated August 15, 2017. It was originally published August 9, 2017.