Financial independence is a powerful tool in increasing self-esteem. Taking charge of your finances will allow you to attain economic freedom and security. Simply put, money gives you choices. Freedom of choices allows you to thrive. When you thrive, you have power.
If money, or the lack of it, worries you, try taking control of that fear by using it to motivate you into taking action. For instance, if your response to financial anxiety is to procrastinate, especially when it comes to addressing the most important aspects of your financial life, invest time in figuring out the root causes of your tendency to delay making major decisions. While haste may make waste, doing nothing will only give more power to the fear and worry.
The good news is that when self-confidence is boosted, typically attitudes and feelings about money improve as well. The suggestions below may help you maintain a disciplined approach to money:
- Allocate time every month (preferably every week) to manage your money. Take this time to track your cash flow and to implement and create a budget.
- Maintain accurate records to help you file your taxes.
- Meet with a professional accountant to develop ways to pay the least or no tax.
- Maintain proper insurance coverage for the following: life, health, disability, long-term care when applicable, auto, home, personal, and an umbrella liability insurance policy.
- Think before buying. Statistics show that consumers base 95% of their spending decisions on emotions and 5% by the numbers. Impulsive buying due to emotions can create financial stress and hardship. High-pressure sales incentives are designed to short-circuit your rational decision-making process, creating a fight-or-flight response where you instinctively make decisions based on immediate short-term emotion.
- Shop with a list. In most instances, shopping without a list is more expensive than shopping with one. Unless necessary, resist making purchases that are not part of the list.
- When it comes to your car, buy rather than lease (unless your employer is leasing it for you). And when you purchase a car, buying it pre-owned with an extended warranty may be cheaper in the long run than buying brand new.
Experience has taught me that no one else can save you. Thus, it is your responsibility to save yourself. By understanding money’s role in your life, and the power it brings, you can better prepare yourself and prevent putting your financial well-being at risk.