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When it comes to managing finances, the general council says we should budget for expenses and save the rest for a rainy day. This money mentality ensures that we will always have enough money for the things we need, as well as the things that matter most to us.
But does this “safe play” approach that we’ve been talking about for so long really help us achieve our financial goals? Sometimes changing our financial mindset to make it less restrictive can help us achieve better success, argues business coach Jason Drees.
“We tend to focus on the past … setbacks, failures and missteps, and assumptions with the belief that those things will happen again,” Drees says. “When we remove these beliefs from our planning, we open the door to a greater financial opportunity.”
With April being Financial Literacy Month, Select spoke with Drees, author of the forthcoming book, “Do the Impossible: Unlock Your Full Potential with the Power of Mindset,” about four of his long-paying money mindset changes.
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1. Stop “saving” your money
Drees suggests changing that thinking to operate from a mindset of abundance, rather than telling yourself, “I have enough money to put it somewhere where it can become even more so” and save those funds in an account to collect interest. In other words, think of your savings as extra money that you need to proactively grow for your future needs.
“The process of saving money for a rainy day is working from the mindset that something bad is going to happen,” Drees explains. “Instead of the actual tactical piece of ‘what I really do with my money’, we want to operate from the point of view that: ‘I have money, I’ll make more money, it’s easy to make money’ more interesting and exciting for you “.
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2. Break your financial comfort zone
Many people live in what Drees defines as a financial comfort zone, which is largely based on what their parents earned. But what your parents earned when they raised you versus what you can earn today are two drastically different things. Drees argues that by imposing these limitations on ourselves, we may end up subconsciously sabotaging our parents’ opportunities to grow and earn more.
The first step in going through your financial comfort zone is to recognize this same pattern. Drees then suggests changing your mindset and beliefs about money, thinking instead that money is not the root of all evil, but a good thing that gives you more time, resources, and options. This may also mean believing that your family will continue to love and accept you even if you earn more.
“When you’re growing up, there’s going to be a little bit of discomfort,” Drees says. “There’s going to be a sense of growth and expansion. When you lean into that discomfort as you expand, you normalize that new level.”
We often look at richer individuals to see that money habits they have that we could possibly adopt as well. However, more than just their actions, they take into account their financial mindset or how they think about their money.
According to Drees, having a “rich person mindset” can mean starting with a basic budget but believing that your next source of income can come from anywhere.
“They often bet on themselves, eliminate the‘ fears of rainy days ’and save money on high-yield accounts knowing that their money will grow,” Drees explains. This point brings us back to the number 1 monetary mindset change, where we address putting funds into high-yield savings accounts as well as the market.
4. Determine your “financial freedom” numbers.
Once you realize that you no longer need to gamble on your finances, you may feel empowered to finally start that parallel business that you were thinking about or start a passive income business like real estate investing.
However, as the mindset changes, Drees recommends figuring out the game ranges for what he calls “financial freedom” numbers:
- The essential number, which represents what you need to live on, including high-priority debts such as your mortgage or rent, car and insurance payments, and utility bills.
- The comfortable number, which represents what you need to live comfortably, including the essentials, in addition to other fun things like traveling, entertainment and dining out.
Finding out the dollar ranges for these two categories will help you establish financial benchmarks about how far you can go when you don’t play it safe with your finances.
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Editorial note: The opinions, analyzes, reviews or recommendations expressed in this article are exclusively from the wording of Select and have not been reviewed, approved or endorsed by any third party.