13 Ways We Can Have a Better Relationship with Money.
If there is a year to have a better relationship with money it should be this year. After experiencing a pandemic and seeing millions of people lose their jobs without having a backup plan. How could we not look into our finances and develop a better relationship with money? One of the things we have to do before we start to have a better relationship with money is decide to make a commitment. Making a commitment is very important to starting any journey. Consistency will also help us to have a better relationship with money. After we’ve made a commitment to this journey, we can start making moves. Here are 13 ways we can have a better relationship with money.
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1. Don’t waste money on things that you don’t need.
We have heard this this over and over again from family, millionaires, and billionaires alike. Remember the commitment we made? We have to make sure that we control our emotions and not buy things just because the money is there for us to buy it. Also, this includes subscriptions to different services or products that we have to pay for each month. I remember when I saw that I had over 3 apps that I paid for each month that was just for listening to music. I was able to end the subscriptions and save $27 dollars just by making that change. That $27 can go towards something better like gas. If you haven’t already, please check out my blog “30 ways we can save money in 2021”.
2. Look for deals when shopping
This can be a way to save some money so that we can allocate that money for more important things down the road. How many of us do research on the deals at the different stores before we go grocery shopping? If we did, we would find the different deals that could save us money. Also, when we go shopping, we have to be disciplined to not buy items we don’t need just because it was buy one get one free. Most of the time we rarely catch deals on items we use right away. Eventually when we clean the pantry, we didn’t use that item anyway and the item ends up spoiling. So, here’s a tip, make a list, find deals, budget, and stick to purchasing the item on that list and nothing else. Budgeting is not just for grandma and grandpa. Budgeting keeps money in your pockets so you can save and be prepared for the unexpected.
3. Credit card perc’s
Someone once told me that credit cards are bad. Then I found out why the person thought so and decided to get some credit cards and use them responsibly. Credit cards are a great way to have a better relationship with money when it’s used correctly. Credit cards can be an asset. Some credits cards have perks where you can get cash back and reward points. Those points can be used to book travel, or even hotels. Now some people may believe that earning points for spending is better for people who spend a lot and not for those who don’t like using their credit cards. Well one thing that I did was put every bill that I could on my credit cards. That way I could get the perks and compound my spending. How much money is being charged to your debit account for bills and what rewards are you getting for that happening? Think about that for a second.
4. Have an emergency fund
This one was big, and I was happy to start an emergency fund using an APY savings account. Earning interest on our money needs to be a priority. The banks find ways to make their money using interest, especially on mortgages so we need to make sure that going forward we do the same thing. Having an emergency fund is helpful for when you have an unexpected expense. The main expenses that often catch us off guard are usual car maintenance and medical expenses. How many times have you gone to the dealership to get an oil change and then you get a call saying that you need, new brakes, a fuel induction service, and the total cost is $767 including labor and you only planned to spend $40-85 dollars. Having an emergency fund will help you avoid putting that cost on your credit card if you have one, because if your credit card is maxed out, you could leave yourself in quite the predicament.
5. Pay off our credit card balances each month
So, let’s take the above scenario as a starting point for this topic. If you are carrying around a balance on your credit cards you are losing money due to the interest you have to pay each month. When there’s an emergency situation and your credit cards are maxed out it can put you in an even more stressful situation. I remember when I was carrying a large balance on my credit card and I made the minimum payment on the card, the interest would take up most of my payment, so it took me forever to pay the balance off. I’m happy to have grown from that experience and now make sure to pay off my balances each month. Not paying off our balances can have us sending a lot of money to the credit card company or companies we owe because of interest.
6. Don’t spend money trying to impress others
Keeping up with the Jones’ is expensive and not worth it. Trying to keep up with the Jones’ will make us broke especially if we don’t have the money to even keep up. Depending on your culture and up-bringing name brands show that you have money, right? In my opinion, the people who have money don’t feel that they have to show it, and the people who don’t have it feel that they do. I saw a picture of a billionaire and he was wearing new balance shoes, a tee shirt and shorts. You couldn’t even tell that he was a billionaire. There’s nothing wrong with treating yourself here and there but let’s be sure that we are honest with ourselves. We need to make sure that our relationship with money is healthy. Do you want to just be rich or do you want to be wealthy? There is a difference. Over 40% of athletes end up going broke. Why? They were spending money like they would have that income stream forever. That’s why athletes care about the guaranteed money of their deals they are making because they never know when they may have an injury and can’t play the game anymore. So, save every dime when you can because you never know.
7. Understand the interest game
When we learn how the banks charge us interest to make money it can give us ideas on how we can do the same thing. Like I stated earlier, credit cards make money off of us by charging us interest on our purchases in addition to annual fees. There are ways that we can earn interest on our money too. Some ways include using an AYP savings account. Also investing in Dividend stocks, REITS, Index and Mutual Funds are ways to earn money as well. The list goes on, but we have options to earn interest on our dollars. As one billionaire said he wants his dollars to bring more its friends when the money leaves his account. We can use interest to do that for us.
8. When you are buying a house beware of the bait and do not be deceived.
If there’s anything we can learn from the banks it’s the way, they use interest to make back their money. Take the mortgage on a house for instance, during the first 15 years of a 30-year mortgage we are mostly paying interest, especially if you have a high interest rate. If you’re not sure what I mean, take a look at your Amortization Schedule. The Amortization Schedule will show you how much money is going towards the interest vs the principal. That’s why having more than one steam of income is important. I will talk about that later in this post. Also, beware of refinancing your home. It can be beneficial when you have paid a large amount of your mortgage loan down, but it’s a whole different animal when you haven’t even paid $10,000 on the principal. Additionally, keep in mind that when you refinance too early your repayment clock is reset, so be sure to talk to an advisor and don’t make a rookie mistake.
9. Invest in your Purpose
Investing in yourself can open up doors you may not expect. I remember when I was so fearful of pursuing my dream and what it would look like. When I found the courage to do what I loved to do, I was able to see what I was capable of. I was able to write my first book and plan to have it published in March of 2021. I also started a blog because I enjoy researching and writing and have found a network of other entrepreneurs as support through my entrepreneurial journey. Investing in yourself and not running away from your purpose is very rewarding. Investing in your purpose can create business ideas and a lot of opportunities for you.
10. Invest in investments that compound
As I mentioned earlier learning the interest game is important. Real estate is another form of investment that can help improve our relationship with money if we know what we are doing. Also, investing is gold, silver, and other precious metals is something that a lot of people have done over the years to compound their money. For example, the price of gold was $500 per ounce back in the early 1900’s and last year gold was worth more than $1900 per ounce. If gold is too expensive for you right now, there is sliver that’s around $27.00 an ounce…for now at least. Compounding interest in anyway we can is an important strategy to help improve our relationship with money.
11. Think about the long game.
Sometimes our growth is not seen right away, and that can deter us from continuing to work on improving our relationship with money in the long run. I learned this from Warren Buffet who is one of the best investors in the world. It takes time for us to have our hard work pay off and it’s best for us to stay the course and not give up simply because we aren’t seeing more money in a short time period. If we aren’t seeing the results we are looking for, we can speak to a financial expert to help guide us. Also, our relationship with money shouldn’t just be about us but also about our children and family if you plan on having one. We should be building so that we can pass down equity to our future lineage and set our family up to build wealth.
12. Beware of the debt traps
I actually dedicated a whole blog post on this. This is something that is not just affecting the lower income communities but also the middle class. Choosing not to pivot and try new strategies is destroying our relationship with money. Some of the debt traps we experience are student loan debt, mortgages, and pay day loans. If you didn’t see my post on this subject, please click here to read “How Can We Break the Debt Traps Devastating Our Generation?.”
13. Have multiple streams of income
THIS IS IMPORTANT…especially for millennials. We have to stop exhausting our 9-5 income and expect that we will walk outside to a money tree in our front yard. Multiple streams of income can help us to compound our money exponentially. The key is not blowing through our money and make sure that we keep more than we spend. That’s how we will be able to build wealth over time. Multiple streams of income can help build business’s that can be passed down to our children and open up more opportunities for them and their future families.
Thank you for reading my post “13 ways we can have a better relationship with money”. Having a better relationship with money is something we should all strive for in 2021 and beyond. This year will have opportunities for us to improve our finances. Remember that commitment and consistency are needed to improve your relationship with money. What are some more ways we can improve our relationship with money? Are there any ways on this list that you’ve started? Please share below and if you find this post helpful please share this post. Also, if you are new to Millennial Oaks please subscribe 😊!