Global money week is here and what better way to celebrate it than looking deep into personal finance matters. This year’s theme is “build your future, be smart about money” and those are two things we love to talk about. What better way to start the week than discussing how we can create a better relationship with money? Money is central to life and money problems can easily creep into the rest of your life. Creating a good relationship with money is often not talked about but is one of the best things you will do for your finances. So how do we do it?
Understand that money is a tool
First things first you need to understand that money is a tool. In Shona, we have a saying that goes mari muenzi meaning “money is a guest”. We use this to tell people that money comes and goes and that is true if you treat it that way. Money is a tool and a tool is only as good as the hands of the person holding the tool. The character of money is determined by how you use it when it’s in your hands. Getting clear on this relationship is the first step towards creating a healthy relationship with money.
Explore your values
The second step is to understand your money values. This isn’t as easy as it sounds and is perhaps the most confronting step in getting your relationship with money right. Values are basic, fundamental beliefs that guide or motivate attitudes or actions. The hard part about values is sometimes we have them without knowing. You may have a value that has been imprinted on you through life experience or in early childhood that you hold subconsciously. For example, some people just can’t hold on to money and must spend it as soon as they have it. Others still may have negative feelings towards people with lots of money assuming the worst of them. We must dig deep into ourselves and identify our money values. That will help us with the next step.
Master your emotions
Another area that people speak about very little but is very important in personal finances is the relationship between money and your emotions. It is not uncommon to feel one way when we are without money and another way when we finally have it. For example, in times of financial distress people seem to be very clear about what is important and what they need to do. And when they finally climb out of that financial hole they abandon all the great thinking they were doing. Money affects your emotions and the ability to identify when money is fueling your emotions, positive or negative is a master key to personal finance.
Know your financial state
After the last two, the rest are easy in my opinion of course. Figuring out your financial state isn’t that hard for most people. If you’re reading this article you probably feel there is room for improvement in your finances. This isn’t all there is to it though. You are struggling or uncomfortable financially but compared to what? So really there are two things here; where you are and where you want to be. We all want to be billionaires or at least millionaires of course but this is about the practical steps to getting there and that starting from you are and charting courses to where you want to be in 6 months, 1 year, 3 years, 5 years, 10 years and so on.
Figure out your number
“Everybody has a number” is a popular saying in movies that talks about the price of getting people to do things they would otherwise be unwilling to do. In this case, however, your number refers to the amount of money that would get you on the path to realising your financial goals. 1 million dollars is a good number, of course, but we are referring to the number that will allow you to grow into your financial freedom. So this is a monthly income number that will allow you to save, invest, insure your health and life. It also works best if you have identified and eliminated the money wasters in your life. So what’s your number?
Keep with us for more interesting discussions as we celebrate Global Money Week 2022.