Understand Your Money Mindset

By Joy Thompson

First things first, it’s essential to understand your money mindset. Are you a saver, a spender, or somewhere in between? Knowing your money personality will help you make informed decisions and set realistic goals. Take a moment to reflect on your spending habits and how you feel about money. Here are some questions to guide you:

• Do you enjoy saving money or prefer spending it?
• Are you comfortable talking about money with friends and family?
• Do you tend to make impulse purchases or carefully plan your spending?

Remember, there’s no judgment here – we’re all on a learning journey! Understanding your money mindset will help you identify areas where you can improve and make positive changes.

Set Clear Financial Goals

Once you’ve got a handle on your money mindset, it’s time to set some clear financial goals. Are you saving for a dream holiday, a deposit on a home, or planning for retirement? Whatever your goals, make sure they’re SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.

Here’s an example of a SMART goal: “I want to save £5,000 for an emergency fund within the next 12 months by putting aside £417 each month.”

Having clear goals will give you a roadmap to follow and help you stay motivated along the way. Don’t be afraid to dream big, but also make sure your goals are realistic and achievable.

Create a Budget That Works for You

Now that you’ve got your goals in mind, it’s time to create a budget that supports them. Start by tracking your income and expenses, then allocate your money towards your needs, savings, and wants. There are plenty of budgeting methods out there, like the 50/30/20 rule or zero-based budgeting. Find one that resonates with you and give it a go!

Here’s a breakdown of the 50/30/20 rule:

• 50% Needs: This includes essential expenses like housing, utilities, groceries, and transportation.
• 30% Wants: This category covers non-essential expenses such as dining out, entertainment, and hobbies.
• 20% Savings and Debt: Allocate this portion of your income towards savings, investments, and paying off debt.

Start an Emergency Fund

Life happens, and sometimes it throws us curveballs. That’s why having an emergency fund is so important. Aim to save at least 3-6 months’ worth of living expenses, so you’re prepared for any unexpected events. Even if you can only save a little each month, every bit helps!

To build your emergency fund, consider setting up an automatic transfer from your main bank account to a separate savings account. This way, you’ll be saving money without even thinking about it. Also, look for ways to cut back on expenses and redirect that money towards your emergency fund.

Tackle Debt Head-On

If you’re carrying debt, it’s crucial to have a plan to pay it off. Start by listing all your debts, including the balance, interest rate, and minimum payment for each. Then, choose a debt repayment strategy that works for you, such as the snowball method or the avalanche method.

• Snowball Method: Pay off your smallest debts first, regardless of interest rate, while making minimum payments on the rest. Once a debt is paid off, roll that payment into the next smallest debt, creating a “snowball” effect.
• Avalanche Method: Focus on paying off the debt with the highest interest rate first, while making minimum payments on the rest. This method can save you money on interest charges in the long run.

Educate Yourself

Knowledge is power, and the more you learn about money, the better equipped you’ll be to make smart financial decisions. There are tons of resources out there, from books and podcasts to online courses and workshops. Check out our resources page for some recommendations to get you started.

Here are a few topics you might want to explore:

• Investing: Learn about stocks, bonds, mutual funds, and other investment vehicles to grow your wealth over time.
• Credit: Understand how credit scores work and how to improve yours to access better financial products and services.
• Taxes: Educate yourself on tax laws and strategies to minimize your tax liability and keep more of your hard-earned money.

Celebrate Your Wins

Lastly, don’t forget to celebrate your wins, no matter how big or small. Yes, I sound like a broken record but most people that have achieved more success celebrated a few races before they held a trophy. 

Paid off a debt? Treated yourself to a nice meal? Saved your first £1,000? Do a little dance and pat yourself on the back! Recognizing your achievements will keep you motivated and help you stay on track.

Build a Support Network

I believe I said this in my previous post but it’s worked for successful founders and startups and families. Surround yourself with like-minded individuals who share your financial goals and values. Join online communities, attend local meetups, or connect with friends and family who are also on a journey to financial wellness. Having a support network can provide encouragement, accountability, and a wealth of knowledge and experiences to learn from.

Join the Conversation 🗣

We’d love to hear about your financial journey and any tips or tricks you’ve picked up along the way. Share your story in the comments below, or join the conversation on our social media channels. Let’s grow wealth together, one step at a time!

Upcoming Poll: Topics You Wished You Knew About 5 Years Ago

We’re excited to announce that we’ll be sending out a poll soon to gather your thoughts on the financial topics you wished you knew about 5 years ago. Your insights will help us create more relevant and valuable content to support you on your journey to financial wellness. Keep an eye out for the poll and share your thoughts – we can’t wait to hear from you!

Until next time, stay empowered and keep cultivating those financial roots! 🌱❤️

Roots to Roots is dedicated to empowering and educating individuals on financial wellness. We believe that everyone deserves the opportunity to grow wealth and live a financially secure life. For more tips, resources, and support, visit our website and follow us on social media.