4 Steps to a Healthier Financial Lifestyle

Instead of spending our most valuable asset – TIME! – on unrealistic and overly strict budgets that only solve short-term issues, we can change our relationship with money for the better.

4 Ways to Start Living a Healthy Financial Lifestyle

Just like healthy eating requires a lifestyle change, healthy spending requires a lifestyle change. Use these tips to jump start your journey to a healthier financial mindset.

1. Become Aware of Your Budget & Expenses

It’s extremely difficult to make healthy financial decisions if you aren’t up-to-date on your average expenses and income. Take all of the applicable factors into consideration and start keeping a closer eye on what’s coming and going from your bank account.

If you have debt, it’s also important to spend some time tracking your payments and how much progress you are making. Is it time to increase the payment? Have you lost motivation to get rid of debt? Do you have a planned payoff date?

2. Categorize Your Purchases as “Wants” and “Needs”

Go over the purchases you’ve made in the last 1-3 months. Work through the list, categorizing each purchase as something that was a “want” or a “need.” Things like gas, groceries, rent, and other necessities are obviously “needs,” while other purchases may be put in the “wants” category.

Once you get a feel for how often you are purchasing “wants” you’ll have an easier time distinguishing them from “needs” in the moment. I definitely don’t recommend cutting out all of your “wants” for sanity’s sake, but focusing on making sure that your “needs” are covered first is key.

Also be ready to add some new “needs” to your list that you may not have considered before starting a journey to a healthier financial lifestyle. You might be adding “needs” like saving for retirement or paying off debt to your monthly expenses list.

3. Make Realistic Financial Goals

Making big changes to your lifestyle is tough, and it’s not likely that you’ll stick with it if you don’t have a goal behind the change. Motivation comes from having a “why” behind goals that make it worth the sacrifice and self-discipline.

Examples of common financial goals:

  • Pay off debt (credit card, student loans)
  • Save up for a home down payment
  • Save up to purchase a more reliable vehicle
  • Finance a bucket list item (an adventure, trip, or experience)

Achieving goals gives us a feeling of accomplishment and serve as internal trophies that prove to us that we can make positive changes when we put our mind to it. Follow through begets follow through. If we can start practicing realistic goal-setting when it comes to our finances, the result is like a domino effect. We get on a roll and start making more and more progress.

Real life example: My husband and I have been working really hard to pay off student loans, but when we finally hit that goal we won’t be eliminating our budget. Our money is a tool that should be working for us. The task of paying off student loans may be gone, but we’ll give those dollars a new job the very next month. (next goal: down payment for a house!)

4. Get Rid of Some Stuff

You know what makes me want to stop buying stuff? Getting rid of some of the stuff I’ve had laying around. You’ll feel some stress lifted off your shoulders just by organizing and de-cluttering what you have laying around your home.

For you this might be clothes, shoes, home decor, kitchen utensils, or even cleaning supplies. Get your home organized and toss out some of the stressful items that are taking up space and not serving a purpose. I won’t promise, but I’d be willing to bet that getting rid of some stuff will help you to feel more motivated to get in a better financial mindset.

Maybe it’s because I am prone to messy-house-related stress, but a clutter-free and organized home space gives me motivation to take on just about anything. I’m more likely to make smart money decisions. I’m less likely to skip the gym. It definitely also improves my mood.

Don’t Put Yourself on an Unrealistic Financial Diet

A diet doesn’t solve a negative relationship with food. An extremely tight budget in the short term won’t save you from repeatedly making poor financial decisions. When the “financial diet” ends, we are likely to jump back into our bad habits that stem from the unhealthy financial lifestyle we are accustomed to living.

What Are We Compensating For?

When we allow a poor relationship with money to have authority over our decisions, we are signing ourselves (and anyone dependent on us) up for added stress and anxiety.

Symptoms and consequences of an unhealthy financial lifestyle vary, but most stem from using money to compensate for something we feel that we are lacking.

When we use tools (money, food, a career, etc) to compensate for something else, we run the risk of developing an unhealthy relationship with it. It’s common, even normal, but definitely worth acknowledging and avoiding.

Real life example: In the past, I have made purchases and used my money in an irresponsible way to compensate for feeling sad. There were times that I would tell myself that a purchase would cheer me up even if I couldn’t really afford it. That’s a symptom of an unhealthy financial mindset.

On the flip side, my husband and I currently live in a very low-cost apartment and we are saving most of our money to pay off student loans. We stockpile a little bit of our money to spend on a small adventure (anyone else feel especially sad in the winter?). This healthy financial planning allows us to take a weekend trip without it being an irresponsible compensation purchase.

Before we make purchases outside of our list of necessities, we should always consider whether we participating in unhealthy compensation. We may still choose to make the purchase, but the key is to practice recognizing the unhealthy mindset.

More Goal-Setting Motivation & Ideas

When it comes to finances, relationships, and hobbies, goal-setting skills and practice make us more effective. There are areas in life where it’s not important to work as efficiently as possible, but if you’ve been struggling to make progress on things that are important to you, setting some realistic goals is a great first step.

Read some more about goal-setting and gather the motivation you’ve been looking for. Grow your self-discipline skills and practice prioritization to get yourself moving in a direction that makes you feel excited.

Does getting your home space in order help you to feel motivated? What other ways do you de-clutter your life when you’re feeling too overwhelmed to make progress? Share below!

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