Lifestyle

Money Mindfulness: 9 Ways to Be More Financially Aware and Successful (with Less Stress)

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More and more people are incorporating mindfulness practices into their daily routines. From meditation apps to yoga studios, there are countless resources available to help individuals cultivate mindfulness in their lives. While some may view it as a passing fad, the benefits of mindfulness have been scientifically proven, making it a valuable tool for improving mental and emotional well-being. In this article, we’ll explore the benefits of money mindfulness and provide practical tips for incorporating it into your daily life.

Mindfulness has been shown to have a wide range of benefits for both mental and physical health. Scientific research has demonstrated that a regular mindfulness practice can reduce stress, anxiety, and depression, as well as improve sleep quality and boost immune function. Mindfulness has also been linked to greater emotional regulation, improved focus and concentration, and enhanced relationships.

One study published in the Journal of Health Psychology found that individuals who practiced mindfulness had lower levels of the stress hormone cortisol compared to those who did not practice mindfulness. Another study published in JAMA Internal Medicine found that mindfulness meditation can be as effective as antidepressant medication in treating depression and anxiety.

Moreover, brain imaging studies have shown that mindfulness practices can lead to changes in the brain, specifically in areas associated with attention, emotional regulation, and self-awareness. These changes can help individuals better cope with stress and emotional challenges in their lives.

With money being a major source of stress for many people, money mindfulness may be a useful approach.

Here are 9 tips for money mindfulness:

You face tens of really big financial decisions every month (Should you pay off debt? How much mortgage can you afford? Is your insurance optimized? Are you saving enough? When can you retire? ) and hundreds of small decisions (coffee, organic raspberries, drive or walk to work) every single day.

The thing is that most people aren’t always aware of the decisions they are making. They don’t think about the fact that they are making financial choices that impact monthly budgets and future security.

In fact, research suggests that the majority of people make most financial decisions using heuristics. Heuristics are mental shortcuts or rules of thumb that people use to make decisions quickly and efficiently, without engaging in a lot of conscious thought or analysis which means that emotions and short term needs are weighted more heavily than reason and long term goals.

Tips for for making more mindful financial decisions:

  • Slow down. Be aware of when you are making a financial decision.
  • Examine how you feel about financial decisions.
  • Give yourself a 24 hour waiting period before making a purchase above a certain threshold.
  • Put decisions in context of what makes you happy today and will ALSO enable you to have the life you want in the future.

2. Set Goals

Money mindfulness is not about meditating on money. Money mindfulness is more about being aware of what you want from your finances and setting a path to getting there. In other words, you need to set financial goals and establish a plan for achieving them.

You should have goals both for the short or near term (paying off debt, balancing your budget, building an emergency fund, saving adequately each month, etc.. ) and the long term (when do you want to retire and what kind of legacy do you want to leave).

You also want goals for how you are going to manage your financial life. Consider establishing goals for:

  • What kinds of tools will you use to track and manage your money? 
  • What kinds of money habits do you want to have?
  • When do you want to spend time on money management and how much time? 
  • Who do you want on your money team?

3. Have a Written Plan to Help Guide You Toward Better Outcomes

Research has found that people who are maintaining a written financial plan make better decisions and have better financial outcomes. They save more, invest and use debt appropriately, re-balance, budget, and more.

A plan is a tool for helping you make better decisions. It helps you prioritize and make tradeoffs.

A plan documents 

  • Where you are today
  • Your goals
  • A path for achieving your goals

A financial plan is like GPS for your life. The NewRetirement Planner is the most complete planning tool available online. It is the ideal tool for for managing your path to the future you want.

You probably have hundreds of habits that enhance your overall well being: eating well, exercising, meditation, and brushing your teeth for example.

But, how many of you have useful habits related to your financial life?

If money mindfulness is the practice of being aware of your financial situation, financial habits are the intentional choices, habits and behaviors that result from that mindfulness.

In addition to setting financial goals and managing a plan to achieve those goals, it my be useful to establish financial habits in the following categories:

  • Learning: Think about how you are going to increase your financial know how and establish a route around this learning. Read books, blogs, and articles about personal finance, attend financial workshops, and take online courses to learn about budgeting, investing, and debt management. Knowledge is power, and the more you know about personal finance, the better equipped you will be to make informed decisions.
  • Monitoring: Monitoring your finances regularly is an essential habit for achieving financial stability. This includes regularly checking your bank statements, credit card bills, and investment accounts to ensure that your money is being managed properly. This habit also involves keeping track of your expenses and income to identify areas where you can cut back on spending and increase your savings.
  • Tracking progress: Regularly tracking your progress against your goals and plans is an important habit for achieving financial success.

Learn about 17 micro financial habits for more wealth and peace of mind.

5. Be Aware and Wary of Your Emotions

We are not naturally wired to make great financial decisions. Our emotions work against us. 

Worse yet, the supposedly good emotions can be as damaging as the negative ones. Here are two examples of how emotions might negatively impact financial goals:

Bias toward Optimism: Because people are optimistic, they don’t realize how bad the odds are. Most people underestimate the risks associated with financial decisions or overestimate their ability to handle those risks. This can lead to overconfidence and taking on more risk than is necessary or prudent.

Risk Adverse: Most people are risk adverse. They feel the pain of losing more than the pleasure of gaining. This means that people are more likely to take risks to avoid losses, even if the potential gains are not worth the risk. This can lead to impulsive decisions, such as selling stocks or other investments during a market downturn, which can result in significant losses

Most people are optimistic and risk adverse and these two traits can combine for terrible financial decision making.  When loss aversion and optimism bias are combined, people are more likely to take on too much risk, make impulsive decisions, and fail to adequately plan for contingencies.

6. Don’t Over-Index on Short-Term Benefits

Human beings have an inherent bias toward short-term benefits. However, your financial decisions are important for today, but also your entire future.

It is important to always consider what impact a decision will have on your life right now. Will you have less or more money this month to spend, for example. However, it is equally important to think about how your financial decisions will impact your future. A dinner out means $100 less to save and invest which alone won’t make or break your financial outlook. However, if you are doing it weekly, you could be taking a year away from the life you want in retirement.

Explore the importance of imagining your future.

7. Be Aware of Your Money Biases, Values, and How Your Upbringing Impacts Your Money Mindfulness

Our attitudes and beliefs about money are often shaped by our past experiences, cultural background, and social conditioning, which can impact our financial decision-making in both positive and negative ways.

For example, some people may have grown up in a household where money was scarce, leading to a scarcity mindset and a fear of taking risks. Others may have grown up in a household where money was seen as a measure of success or status, leading to a focus on material possessions and the accumulation of wealth. These biases and values can impact how we approach financial decisions, leading us to make choices that may not be aligned with our long-term financial goals and values.

By becoming aware of our money biases and values, we can make more informed financial decisions that are aligned with our values and goals. This involves reflecting on our past experiences and cultural background to identify our beliefs about money and how they impact our financial decision-making. It may also involve seeking out financial education and guidance to learn about effective financial management strategies and tools that can help us achieve our financial goals.

Overall, being aware of our money biases, values, and how our upbringing impacts our financial decision-making is an essential component of achieving financial success and stability. By taking a mindful and reflective approach to financial management, we can identify our financial blind spots, make informed decisions, and create a more secure financial future.

There is no one way to achieve financial wellness. You may believe something about money that is holding you back.

For example: Experts tell you to save the maximum when you are young and let it grow. Many people falsely believe that it is too late to save in their 40s or 50s and that they are doomed to work until they die.

Guess what. You can also save more (a greater percentage of your income) in your 40s or 50s and achieve roughly the same outcome as saving when you are young. (Explore using catch up saving when over 50.)

In general, questioning your money beliefs can help you become more aware of your financial blind spots and empower you to make more informed financial decisions that are aligned with your goals and values. It is important to approach this process with an open mind and seek out diverse perspectives and sources of information to gain a well-rounded understanding of your financial options.

A big part of any kind of mindfulness is just recognizing thoughts and emotions. And, as illustrated above, emotions can significantly impact our financial decisions. As such, it is important to recognize what you are feeling about your finances.

Try this exercise: For a week, check in with yourself a few times each day to think about what thoughts and emotions you have had about money over the last few hours. Write down your observations each morning or evening. And, ask yourself why you are having those thoughts and what they mean.

You may find that you have envy about a colleague’s new car. Or, feel guilty about splurging on lunch. You could also find that you are proud of a new gadget or item of clothing that cost an awful lot. You may feel stressed about not saving enough (or too much). Understanding these emotions can help you understand how money is impacting your well being in good and bad ways.

The trick is not to judge yourself on the emotions but rather to understand what is motivating your financial decisions.

When it comes to setting goals, establishing a path for achieving those goals, and providing a framework for making financial decisions, there is no better tool than the NewRetirement Planner.

  • Get an objective view on your money
  • Use a framework to support decision making
  • Explore options that support your values, priorities and goal
  • Take control over your financial future

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