I believe the home environment plays the biggest role in shaping a person’s understanding of money, often through everyday examples rather than direct instruction. Children observe and unconsciously absorb their caretakers’ relationship with and feelings about money. While currency and the economy are taught about in school, there is not necessarily instruction about how to budget, spend, and save as an individual or household.
Even when healthy financial habits are learned early in life, emotions can still play a significant role in financial decisions. Having good financial habits may not prevent you from falling victim to emotional triggers when it comes to spending or connecting your self-worth to your finances. I believe that emotional states such as stress and boredom can lead individuals to spend money impulsively or without much thought. When money can be spent by the click of a mouse or tap of a phone, it’s easy to spend first and think later, to spend impulsively rather than intentionally. Because emotions, habits, and external influences can shape financial decisions, it is important to develop greater awareness of how we relate to money. This is where financial mindfulness can help.
Being financially mindful is about bringing conscious awareness to financial thoughts, feelings, and actions. It is looking at your relationship with money and reflecting on the way that you think and feel about your financial decisions with curiosity instead of judgement.
Mindfulness is not about limiting your spending or criticizing the financial decisions that you have previously made, but about bringing clarity to those decisions. Why are you spending or saving? By being financially mindful, you are noticing your relationship with money, instead of judging it. Developing this awareness may have a meaningful impact on both your financial wellbeing and your overall peace of mind.
So how will this benefit you? Hopefully through mindfulness, you can try to reduce your financial anxiety and impulsivity, and improve your clarity when it comes to financial values and goals. Mindfulness may also help you increase your gratitude and satisfaction with what you already have.
Mindfulness is a practice, the more you integrate it into your life the stronger your skills can become and hopefully help you make being mindful about financial decisions a habit. Like any skill, financial mindfulness becomes more effective with consistent practice. Fortunately, there are several simple ways to begin incorporating it into everyday financial decisions.
Some ways to practice financial mindfulness
Pause before purchasing
Check in with yourself to see if you are making the purchase as a way to fulfill an emotional need.
Budget mindfully
Pay attention to how and why you are spending money. Be aware and try to align your financial decisions with your personal values and long term goals.
Journal
Track your financial decisions and reflect on how you feel about them. You want to pay attention to and acknowledge any emotions that arise, without judging them as good or bad. Be curious, not critical.
Adopt an attitude of gratitude
Be grateful for what you have and proud of how you spend and save your money. You aren’t striving for perfection. You are giving yourself opportunities to learn about your relationship with money and grow.
Disclosure: This material is provided for informational and educational purposes only and should not be construed as personalized investment, financial, legal, or tax advice. The information is general in nature and may not be appropriate for every individual. Any examples or discussion of financial habits, goals, or decision-making are intended to illustrate general concepts and should not be relied upon as a recommendation to take, or refrain from taking, any specific action. Investing and financial planning involve risk, and there is no guarantee that any strategy or approach will be successful. Individuals should consult with a qualified financial, legal, or tax professional regarding their particular circumstances before making financial decisions. Howe & Rusling, Inc. is an SEC-registered investment adviser; registration does not imply any particular level of skill or training.
