Money
5 mindset flips that make your money work harder this year
Forget manifesting, Nicole Pedersen-McKinnon is all about the mindset shifts that actually move the money needle. These simple perspective tweaks can help you build a life that feels richer in every sense.
By Nicole Pedersen-McKinnon
You can’t have missed all the social media Influencer hoo-ha about manifesting. Well, it’s not for me… or, in reality, for better finances.
But there are small mindset changes that are indisputably conducive to more cash and growing a personal wealth stash, with a view to creating for yourself a better, more relaxed and happier life.
And they hook directly into concrete strategy tweaks.
It’s all about making some smart changes this year… and making sure they will actually stick.
Firstly, and most importantly…
1. Align your goals with your values
The first step to achieving financial success is knowing what that looks like for you. How will you ever get there unless you know where you are going?
What is your best life? What are your dream days? And thinking of an even bigger picture – do you want to leave a legacy? That legacy might be as obvious as an inheritance for your children or even a more altruistic desire to leave some kind of personal footprint on the planet.
More on this: How to leave a legacy that means something
This is the fun bit! Think of what you long for in the short, medium and farther-afield terms.
And once you have crystallised what you really want, there are two steps to getting it: cost it and calendar it.
Cost it
‘Costing’ is as straightforward as it sounds: how much money you will need for that holiday, renovation or donation. (Because core to your values might be some kind of social commitment, as touched on above.)
Calendar it
‘Calendaring’ refers to, yes, getting your goal attainment date scheduled. To do that, giving yourself licence for success, you divide the cost by the number of pays until you want to hit it.
This is how much you need to save from each pay for that so-tantalising-you-can-taste it goal. Given your money is finite, some goals might have to push out a little further than you would like.
It will probably become a prioritisation process – what best aligns with your values and life’s purpose.
Next…
2. Automate your good behaviour
Psychology tells us that habits are formed when you bundle new target behaviour with existing routines – adding small, consistent actions to what you already do helps rewire your brain for long-term automation.
When it comes to your finances, technical advances make this super simple.
Achieving the goals above relies on reserving the money for them… and that is an easy process of setting up automatic transfers of the necessary money on the day your salary lands.
This is the old mantra of ‘pay yourself first’ – with new ease.
And the double beauty is that another factor that promotes new habits is to associate them with positive emotions and clear cues; watching your balance tick up for each exquisite goal does exactly this.
Keep really close track. It might even help to make this visual with some kind of old-school vision board and progress chart, maybe on the fridge, too. You know: to keep your eye on the precious prize and feel a growing sense of control and achievement.
But couple that with another technique to boost your chances of success…
3. Create immediate rewards
I love what’s officially called the Pareto Principle. You will have heard of it: it’s the 80:20 ratio of noble to naughty.
Well, it’s not really… It's technically the theory that about 80% of outcomes come from 20% of actions.
It posits that effort and results are rarely balanced and a few vital inputs often yield the best result.
This checks out when it comes to the above goal-hitting strategies. They are small, but with a big impact.
But I like to tweak the approach to give you a benchmark for what to do with your money.
As in that 80:20 noble-to-naughty ratio from before, applied to how you split your money across competing factors. I believe that doing it this way, in general, makes money strategy both more manageable and sustainable.
There’s another trick too…
4. Engineer your environment to help
It is easier to channel money towards the good stuff – your short-, medium- and long-term goals – if there are fewer temptations.
And you, in part, control your exposure to them.
If you don’t have any surplus income this month, don’t go to the shops, don’t browse online stores, don’t tempt yourself in general. Just don’t.
Instead, find things to do that are inexpensive and maybe outdoors, including when it comes to catch ups with friends.
This might extend, too, to socially surrounding yourself with like-minded money managers.
People with similar saving proclivities will be promotive of your saving. They will not only be a commensurate level of ‘stinge-spired’, but they will commend you for your own frugal efforts.
Cost-consciousness thrives in the right company.
Once you have given yourself the strong motivation to resist instant gratification, the goals we talked about in point one, you need to give yourself the best chance of doing that.
Finally…
5. Don’t beat yourself up
Life – today’s life – gets in the way… every now and then.
Things change. Opportunities come up. Situations pivot.
As Allan Saunders's famous quote (made particularly popular by John Lennon) says: "Life is what happens when you're busy making other plans."
Sometimes life won’t go to plan… and sometimes an old plan will give way to a new one.
This won’t derail your bigger picture grand plans if you expect as much. Some things are just out of your control; the larger of these are unexpected life events like losing a job, illness or a separation.
So in your planning, do leave some room for the unplanned.
What I call a ‘Holy sh*t fund’ of preferably six months’ salary – housed in your mortgage offset account – will sure help.
So, too, will the right insurances to protect you – think life, income protection and total and permanent disability insurance, along with what I credit with saving my own life: health insurance. Read that story here.
Plan for plans to go a little awry sometimes and, if you can, try to never miss your goals twice.
You’ve heard of a growth mindset; the above is your money growth mindset.
Here’s to your happy, healthy and wealthier New Year.
This article contains general information only. It is not financial advice and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their financial circumstances, objectives and needs.
Feature image: iStock/baona
Tell us in the comments below: what’s one thing you’re going to do differently with your money this year?
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