In the 1990s and early 2000s, the important work of Steven Covey discussed in the Seven Habits of Highly Effective People had in the habit number 2, to begin with, the end in mind. If you have never read this timeless treasure, you should.
What is meant by beginning with the end in mind is to focus on what you are setting your sights on, your goals and to not be concerned with the mundane trivial minuteness of daily living that will take you off course? The end goal would be the solution to a problem, not the problem itself.
There is enough research out there to conclude that what we focus our minds on becomes our reality. It is like a self-fulfilling prophecy!
It is quite complex, but this filter bridges the gap between our conscious and subconscious minds.
Whatever you focus on will find its way into your subconscious mind and ultimately re-emerge at a future date. This is why it is self-fulfilling! So just think about this in your own life. Have you experienced this before?
In the 4th article of the Money Mindset series, we will discuss how you can stay focused on wealth creation. We’ll look at two crucial components of wealth here. It’s about making and saving money.
While obvious, quite a lot of people still do not know the tricks of making money effectively. I will show you some of the most effective strategies below.
Learn to manage stress
First of all, stress is not necessarily a bad thing. It’s just the body’s response to changes that are demanding for us. Depending on these demands, you may experience one of the two kinds of stress.
The first is eustress, which is short-term stress that motivates you and gives you energy. It excites you and improves your performance and the source of stress is something that you can cope with. It could be having a child, a marriage, a new job, etc. It’s stressful but it certainly doesn’t make you frown.
On the other hand, distress is the complete opposite. It could be long-term stress that can cause anxiety or concern, and may lead to mental and even physical problems. You won’t feel good about it because you perceive the problem at hand as something outside your control. All of this leads to decreased performance, and we want to avoid that.
As you can see, distress comes from the lack of control or the belief in that lack of control. The key then is to avoid those problems. How? By not biting off more than you could chew.
Look at it this way. Sure, you will make less money if you take on fewer jobs or deals. But if you take on too many jobs at once, there will be many problems. For one, you will fail in at least one of the jobs you take. This ruins your credibility which harms your money-making efforts. Speaking of efforts burning yourself out will also make you hate the process of making money.
In short, you want to keep stress at a tolerable level, which is something you’ll have to find out on your own. Our creative mind does not work well when overly stressed and worried. It cannot create new plans and directions when you are focused on the problem of debt.
Thankfully, you should have a clear idea of your limit once you’ve been working for a while.
Define that line and never cross it. You will make money consistently while maintaining your sanity.
Focus on what you can control
Focusing on what you can control is a big part of stoicism. I won’t bore you with Philosophy 101, but you just have to worry about the things you can control. Anything else is not worth fussing over because you can’t change it anyway.
Many people worry about the future and dwell on the past to the point that it becomes debilitating. It disrupts their focus. It doesn’t help with what you are doing right now. Of course, it’s important to meditate on past mistakes so you can plan better for the future.
The point is not to dwell on those things longer than you need to.
The only thing you can control is the present, so make the most out of it so that it won’t turn into a regrettable past and a lackluster future. What you do today matters.
To climb a mountain, one needs to overcome several cliffs. Instead of looking at the top and despair at how long you have to go, focus on the next cliff you need to climb and take it one step at a time. Keep at it and you’ll reach the top eventually.
To do this, you need to have a daily minimum standard. It means that you need to define the minimum amount of work or other productive activities you want to get done before you think it is a productive day.
There needs to be a balance between work and play, which is different from person to person. I recommend spending a few weekends figuring that out. Once you find that sweet spot, you’ll enjoy working and bringing in money without overworking yourself.
Stop comparing yourself to others
It’s silly and unproductive to your health. For one, whoever you are comparing yourself to, they have an entirely different past that got them to where they are. So you shouldn’t expect the same outcome from different processes.
It’s like looking at the latte in your hand and comparing it to the next person who has an espresso.
The process or the past is different from person to person and so comparing where you are right now to others is not healthy.
That is not to say that you should stop doing it altogether, though. You can learn a thing or two from other people when you observe how they behave or perform. But many people compare and put their own ego on the line.
Comparing yourself to other people would be sensible if you have the same past, which is impossible. There is one person who has an identical history, though. That’s you.
Instead of comparing yourself to others, compare yourself to who you were yesterday. Then, focus on building and improving yourself bit by bit each day.
You shouldn’t feel bad because someone else performs better than you. They have done a lot more in the past that you haven’t. But you should feel bad if you are a worse person than you were yesterday.
Focus on wealth creation
They say that if you put your mind to it, you can do anything. That’s certainly true, but many people don’t realize that they cannot do everything. There’s simply not enough time in our lives to specialize in many areas. If you want to be financially successful, focus on doing one thing at a time and get good at it.
Your focus is more wealth creation as you continue to automatically lower your debt obligations by simply paying them down every month
Sure, you may lose out on a money-making opportunity if you don’t take it, but think of it this way. If you already got the ball rolling for one project and have been successful thus far, there’s no reason to jump ship until you know that you will absolutely succeed. If not, stick with what you know for now and until you can automate and systemize your business so it runs more efficiently.
All businesses have an element of risk. Every plan you make needs to account for the worst possible scenario and whether you can plan around it or cope with its impact. If not, then it’s better to play it safe. Better safe than sorry.
Surround yourself with like-minded people
Perhaps the best way to stay focused on making money is by hanging out with those who have the same goal. The company you keep speaks volumes of who you are and those people will have an influence on how you think and behave.
If you have been spending time with those who have negative influences, remove yourself immediately. Being with people who also want to make money like you will remind and encourage you to stay focused.
What makes a person rich isn’t so much about how much they earn, but rather how they spend it. The thing is, no matter how much you earn, I guarantee you that you can blow away all of your cash in a day. In this second part, I will show you some tips to stay focused on saving your money.
Know the why
Motivation comes from reason. When you know the “why”, you have the will. When there’s a will, there’s a way. There needs to be a reason for why you save up the cash. This is why you need to have a savings goal.
Think of saving goals as a smaller and more specific variant of the money objective in the previous article. Why do you want to save money in the first place? Is it to get out of debt? Is it to buy something that you need? Maybe you want to be financially free?
Have a purpose. For example, suppose that you want to get out of debt. The reason is that you barely have any money left to spend after all the taxes and debt deductions from your wage. You want to be free from this debt so you can afford to buy nice things for yourself. That’s enough to get you fired up and focused on making and saving money.
The reason can be as simple as you want, so long as it really motivates you. Maybe you have been working hard for the past 5 years and want to save for a single vacation. Then remind yourself that when you go shopping and want to buy that fidget toy you’ve heard so much about.
Take every opportunity to remind yourself why you save.
For the financially disadvantaged, the fact that they occasionally don’t have food on the table every day is an adequate reminder to save money. You may need to take more drastic measures such as putting up notes in your house or setting up reminders on your phone and computer. Do what you need to do.
Know why you spend
On the flip side, saving can get easier if you know why you spend in the first place.
- Why do you spend money on things other than the bare necessities? Do you buy new clothes so you can impress someone?
- Do you spend too much money eating out because you don’t have enough time to cook at home?
Depending on the cause, solutions can range from a simple change to addressing a deep psychological problem or a complete lifestyle overhaul.
Hold yourself accountable
When it comes to money, one can never ignore the system. I’m talking about budgets, spreadsheets, and lists. You need a lot of them and a lot of people hate them. You might have heard of this strategy already, and I recommend giving it a shot. If you already have a habit of writing things down in a note or list, it will be easy for you.
Basically, you need to allocate what you need to spend money on and how much you want to spend. It seems like a daunting task, but it won’t take much of your time to create a budget. When you have a reasonable budget for yourself, it’s just a matter of sticking to it.
Assuming it is indeed reasonable, it should be a simple task. If possible, try to minimize your expense or outright eliminate it. The same goes for the list. Your grocery list should point out exactly what you need to buy. Then, you just need to not stray from it.
As for the objects of purchase themselves, I will discuss needs and wants later.
If making lists isn’t your cup of tea, consider using an automated approach. Things such as automatic deposits to your savings account or auto-pay for bills and credit cards go a long way. You can’t just set it and forget it, though. You need to monitor your accounts periodically to make sure that you have enough money in your accounts for various transactions.
Say no to lifestyle inflation
It seems natural to upgrade your lifestyle by spending a little more after getting a promotion. Maybe you want a bigger apartment or some high-end tech. The problem is a more expensive lifestyle can ruin your saving efforts altogether.
Think of a pay raise as a boost to get you closer to your saving goal. Perhaps you initially planned to take that vacation in 2 years’ time, but the raise shortened it to 1 year. Maybe you can be completely debt-free within 2 years instead of 5.
If you can live with the previous budget, then there’s no need to upgrade your lifestyle. Keep living modestly and deposit any extra income into your savings account. It’s for either your saving goal or a rainy day.
Different people have different saving rules. Some say that 10% to 15% is adequate. Some suggest that you save as much as 50 percent. It depends on how fast you want to achieve your savings goal.
Getting out of debt should be the first priority and needs to be achieved as soon as possible.
This should be simple if you are already happy with what you have and enjoy living life simply. You’ll see the rewards of your discipline soon enough.
Satisfy your needs, not wants
Know the difference. Needs are the things that you cannot live without such as food, housing, utilities, clothes, work equipment, etc. Wants are everything else. The problem is when you want something so badly, you convince yourself that you need it.
The most effective way to stop yourself from making hasty purchases is to address the urge itself. If you don’t know whether it is a need or want, don’t buy it just yet. Wait for at least a week to let the urge die down and then you can decide.
Make saving fun
Saving money can be fun and simple so you can stick to it more consistently. I recommend doing the 52-week money challenge. Basically, you save $1 for the first week, $2 for the second, $3 for the third, and so on until you save $52 on the 52nd week. In the end, you’ll save $1,378 in a year and that’s not counting the interest if you put that money into your savings account.
It’s not much but anyone can do it. Over 5 or 10 years, you can see how the number swells over the years.
I want to reiterate again the fact that finance management is not only about maximizing income, but also minimizing expenses. Both of them are more about understanding your own psyche than it is about creating a complex system. Once you get it under control, you can start to steer your wealth in the right direction. Practice this concept of focus on everything in your life! Start focusing on how you desire to create your life and you will see that is exactly what you will get. Focusing on wealth creation and your burdensome bad debts will soon be a thing of the past.