You may already practice mindfulness to reduce intrusive thoughts and focus on the present. This strategy has proven effective at boosting mental health. According to Forbes magazine, you can apply a similar concept to money matters to improve your financial decisions.
This practice is called “financial mindfulness.” Let’s examine the benefits of financial mindfulness and ways to incorporate it into your daily life.
Tips to build financial mindfulness habits
Begin by visualizing your financial goals. Goals may include an emergency savings fund, debt payments, a vacation, a down payment for a house or a dream retirement.
Use financial mindfulness to reflect on why you want to achieve these goals. Picture how they will make you feel. Reflecting on these emotions can counteract the everyday stressors that lead to impulse purchases.
Check in with your emotions and financial decisions each day. Embrace the discomfort of complex feelings. There will be trade-offs between current wants and long-term goals. This practice can help you understand emotional triggers and become more deliberate about your buying and savings habits.
Common triggers include work stress, personal challenges, relationship issues, social media posts, and the influence of friends or family spending beyond their means. You may see other people’s highlight reels without knowing their financial situation, credit card debt, stress levels or other factors, notes the financial services firm UMB. Contemplating your emotional state can provide separation from immediate triggers, reduce temptations and enhance financial decision-making.
Track your spending each day for one or two months. According to Forbes, monitoring your purchases allows you to identify spending patterns and emotional triggers. It can also lead to solutions as you compare which purchases bring lasting joy instead of fleeting happiness followed by stress and regret.
For example, you may notice greater pleasure when you spend money on social events, travel and education. Retail therapy — using shopping to boost your mood — rarely has lasting positive results, reports the federal credit union DCU. Exploring these differences can help you avoid unnecessary purchases to save for what you most value.
Ask yourself insightful questions before each purchase. Sample questions include: Why do I want this item? Is it worth the cost? Will it put me in debt? Will it take the place of other wants or needs? How will this affect my current enjoyment and long-term financial health? In addition to tapping into your emotions, financial mindfulness can create a pause that helps you avoid impulse purchases and retail therapy.
Prepare strategies in advance. Even with your best efforts, setbacks will occur. Instead of criticizing yourself, explore workaround strategies for the next challenge.
For example, go for a walk before finalizing an online purchase. Or, write down five reasons you want to buy a high-cost item. The act of journaling can reveal emotional triggers and reduce impulsive decisions. These tips come from the Mid-Hudson Valley Federal Credit Union (MHVFCU).
Reflect on your goals and finances quarterly. You can do this individually, with family or household members, or with a financial professional. A quarterly review can keep your goals on track and enable you to spot financial issues before they become more significant problems.
Seek a balance between the present and the future. Denying yourself daily joys rarely works over the long term. Instead, create a budget that allows you to enjoy the present moment while saving for your long-term goals.
The benefits of financial mindfulness
Financial mindfulness can reduce the influence of shame, guilt and other negative emotions tied to poor financial decisions. These emotions still occur, but financial mindfulness can help you pause, become aware of your feelings, and lessen the influence of urges that don’t serve your goals, notes MHVFCU.
An intentional approach to spending and saving can help you understand how your emotions connect to your financial decisions. Contemplating your current and future monetary goals can reduce impulse purchases and improve savings, debt management and financial planning.
Financial mindfulness can also improve your mental health by reducing money-related stress and anxiety.
Knowing that setbacks will occur allows you to reduce negative feelings that often exacerbate financial challenges. DCU notes that accepting the unexpected helps you remember that unforeseen and emergency expenses arise for most people. By reducing anger, shame and self-criticism, you can prevent an unexpected cost from spiraling into giving up or creating worse financial challenges.
An ongoing practice
Financial mindfulness can adapt to changing circumstances. Incorporating these practices into your daily routine helps you adapt as your goals and priorities change during different stages of life.
For more ideas on mindfulness and other financial health solutions, talk to your benefits adviser or human resources contact. They can connect you to financial resources and education to improve your money-making decisions and overall well-being.
