How to Transform Your Relationship With Money

Transforming your relationship with money is mostly an inside job. Exploring your history, emotions and assumptions around money AND being willing to challenge and change outdated beliefs is easier said than done - yet it must be done.

1. What’s My Money History?

Imagine you’ve been given a project to write an autobiography about your money history. Begin with your very first memory of money and go from there. Note the best and worst financial decisions you have made in your life to date. Growing up, was money discussed around the kitchen table? Was it ever a source of conflict in your family? As an adult, are you more like your mother or father in terms of your relationship with money? The more you can understand your money history, the sooner you can discover if any ‘money baggage’ you’ve been carrying around is limiting your ability to achieve financial success.

2. What are my Money Assumptions?

Your assumptions around money - conscious or unconscious, play a formidable role in the level of financial success you achieve in life. For example, if you assume you’ll always struggle with money, I guarantee you your assumption will prove correct. Challenging all the assumptions you have around money, especially the ones that you have been schlepping around since you were a child, is necessary if you desire to transform your relationship with money and achieve financial independence. For Your Money or Your Life fans, you know this step is very often when major breakthroughs occur.

3. What’s My Level of Financial Intelligence?

Financial intelligence is being able to step back from your assumptions and your emotions about money and observe them objectively. In order to gain financial intelligence you first need to know how much money you have already earned, what you have to show for it, how much is coming into your life and how much is going out. One tangible outcome of financial intelligence is getting out of debt and having 3-6 months of basic living expenses in the bank. Take the time to assess how deep your knowledge or lack of knowledge is in relation to money management and investing as well. A good place to start would be with one of my favorite guides on the basics of money and investing: Personal Finance for Dummies and the seminal book on how to transform your relationship with money, Your Money or Your Life.

4. What’s my Level of Financial Integrity?

Financial Integrity is about trust. It’s about trusting in yourself when it comes to your financial promises and commitments. Having financial integrity means you have an unyielding self-confidence when it comes to your personal money management promises you make both to yourself or others. Financial integrity is achieved by having all aspects of your financial life in alignment with your core values - it’s that simple.

5. What’s My Plan for Achieving Financial Success?

If you have a financial plan that provides clear guidance on how you will reach your financial goals - congratulations and well done. If on the other hand, you do not have a plan and the thought of developing a comprehensive financial plan is too daunting a task to consider right now, start instead with baby steps and work your way up from there. Begin with a one year plan and set financial goals such as paying off your credit card balances in one year, saving x amount of money, establishing an emergency fund, putting x amount into your 401k or IRA this year, funding your children’s 529 plan by x amount, etc. You get the idea. Make the goals challenging enough yet attainable. Success breeds success. These yearly personal victories will increase your self-confidence as well. The goal here is to get in the habit of planning, especially financial planning - a task that does not come naturally for most people.

Speaking as someone who has successfully transformed their relationship with money, I can tell you from personal experience that it will be one of the greatest and most rewarding journeys of your life.

Photo by Katedubya