Why a positive money mindset is so critical
“I’ve suffered a great many catastrophes in my life. Most of them never happened” — Mark Twain
There’s only one real truth in this world: ‘Your subjective truth’. And this one is almost always going to become reality for you. Maybe you’ve heard the phrase “selffulfilling prophecy”.
For example: if you read newspapers on a regular or daily basis, where you can find most of the times negative articles, telling you that we live in a world full of chaos… then that’s probably the kind of world you’re living in: A chaotic world, where bad things after worse things happen every day.
So, the world I lived in was full of financial struggle. My parents always talked negatively about money and rich people — at least, as far as I can remember. A huge reason why it was always absent in our family.
When I asked my mom for a little cash as a young boy, even if I just wanted to use it for something meaningful, like school books, the answer was almost always the same: “Haha, do I look like I am rich?”. — Honestly, mom. I only asked for 2 Euros. But … another topic.
Or whenever something was to be repaired, both of my parents would respond, with an angry, fear-awakening voice: “And, who pays for this now?!!” — Reflecting today about our situation when I was growing up, I remember that my parents would always read the newspapers, convincing them of a world sight that was very negative about finances. And whenever there was an incident, like our car broke down, my father and my mother would always get very angry, because they had never saved up any extra cash for such reasons.
So, over the years the probability grew that I would also gain a bunch of negative associations when it comes to money. When I moved out for the first time, into my own flat, it was just obvious that I had no exact clue on how much money I should earn and keep, or how it works in society.
My job at that time just couldn’t support my costs enough. In those days I wasn’t aware of that fact. I had to learn this lesson the hard way, means when it was too late and all my savings were spent. Never before I had to take responsibility for finances and earning income in my life. All I did, were some holiday and waiter jobs at bars, when I was still in Grammar School.
Afterwards, I’d say that it was one of the greatest lessons though. It felt very painful to accept that I just hadn’t done the math before I took action. This led me to the decision to move back to my parents after 5 months. Embarrassing, at first. But as always, the most painful mistakes we make, are the ones that teach us the most. And additionally: my whole mindset about money grew much stronger, as I had grown as a person.
Was it a stupid decision, to not calculate better before moving out? — Maybe.
Was it a wrong decision? — NOPE! — Why? Because I learned so much during that process. Because every wrong decision is something you can learn a lot from in the end. Especially when you’re very young it‘s essential to make mistakes, that help you to learn valuable lessons for later life. In the beginning it was hard, but now I’m grateful that it happened.
It also taught me key lessons on the right use of money. Although they’re so simple, growing up in the middle-class, we never really learn about the importance of the right money management skills and habits:
I) Costs must be smaller than income:
If you only spend one dollar more, than you take in, this leads to your bankrupcy. Maybe not immediately, but on the long run. So better take care of it and track your costs to have an overview on how much you’re spending for which category. You can use Apps like “money control”, “1money”, etc. There are thousands of these. The one I have used over the past years, 1money, still helps me track my expenses on my smartphone. It’s for free and you always have in mind, how much money you’re spending.
When I once got aware of that, I also became conscious about the enormous amounts of cash flowing through my fingers on a monthly basis.
And this is what made me care more about my spending habits. I started asking myself: “Do I really need to buy another pullover?” — I already had a few and knew that I’d already spent 600€ that month. The world didn’t stop turning. Which brings me to the next topic.
II) Don’t let your emotions control you.
We often tend to see things in a shop, like some very fancy clothing, which could fit our style very well, and in an instance we start imagining how it would look like. We see the price and know that it would be a bad decision, if we have different priorities at the moment, like investing and saving as much as possible.
But because we’re wired emotionally, we wanna avoid negative feelings and focus on the positive. And so in many cases we buy things we wouldn’t really need at this particular moment, but we know for sure, they’re giving us a damn good feeling.
The new car, the new jacket, the new jewelry, etc…
III) Debt has to be paid back one day.
This need of feeling good and keeping up with the Jonesses can grow so strong, that I have personally seen several people buy a lot of things they couldn’t actually afford, and pay it with loaned money. Many guys also use credit cards or overdrafts. This is never a clever idea.
You should pay back your dues as fast as possible to avoid any long-term debts. I promise you, in the beginning it feels like fun “Oh, I can buy things I want, but don’t really need right now, I’ll pay it back very soon, when my next paycheck comes.” — Boom, your next paychech comes and all of a sudden you have less money on your positive cashflow side.
If you don’t pay attention to this, the limit of your overdraft will soon be reached and your bank is happy, because they earn quite a good sum with the interests.
Schools fail all over the world to teach the right use of money. Otherwise, a lot more people would cultivate a different way, a much smarter way to use their financial capabilities. Why is it that most people are having trouble when it comes to finances? — There are a bunch of reasons. But the most common probably is the lack of the right knowledge.
I tried to show you a few key learnings I had so far on my financial journey in my life. Hope you liked it. It was maybe not my best article so far on structure, but that was not my main focus this time.
My goal was to show up the things I learned, with the background stories.
