When we think of wisdom, most of us think of the knowledge that comes with time and life experience. But have you ever thought about what it means to have financial wisdom? Fortunately, you do not need to have lived an entire lifetime to acquire economic smarts. Financial wisdom can be achieved by empowering, educating, and engaging yourself around your money so that you can make good fiscal decisions.
Here are five steps to help you on your way toward financial wisdom:
1. Create your vision. Creating a clear, realistic vision for your life is the first step to building the lifestyle you desire. You have to know what you want in order to achieve it. Try this: Describe the ideal life you see for yourself in the next five to 10 years. What does it look like? What have you accomplished? Then, translate this vision into detailed financial goals that can help you work your way to this target.
2. Understand the beliefs about money that are limiting you. What are your beliefs about money that stand in the way of you achieving your vision? For instance, do you tell yourself you are not good with money? Do you allow others such as your significant other, family member, or financial advisor to manage your finances without engaging you in the process? Do you believe that you are truly worthy of the financial success that you want? It is important to identify and come to terms with any limits you have placed on yourself so that you know specifically what you have to overcome in order to make healthy financial choices.
3. Empower yourself. It is vital to empower yourself through financial education so that you can make sound decisions to overcome these limitations you have flagged. Your economic decisions should be made based on solid information, research, and professional advice, not on emotions like fear or anxiety. Education also gives you the confidence to handle your finances on your own terms. A good way to get the guidance you need is by enrolling in financial classes or workshops and by doing research on financial websites, such as The New York Times’ “Your Money” section and Investopedia. If you feel you need more help, consider hiring a financial professional to assist you with a more personal approach.
4. Have a prosperous mindset. Prosperity is much more than how much money you have in the bank — it is about thriving. Do you focus on the good in your life or are you fixated on what is lacking? A positive mindset allows you to be content regardless of what is in your bank account. In turn, this satisfaction allows you to feel more confident and in control of your finances. Thus begins a positive feedback loop when it comes your money.
5. Practice gratitude. To further a prosperous mindset, be grateful for whatever you have and where you are financially. We sometimes get so focused on where we are headed that we forget to be thankful for what we have right now. Taking a step back and assessing everything via this outlook is a powerful tool towards gaining financial wisdom. Here is a quick exercise: Make a list of the five things that you are most grateful for in your life. Now, imagine your life without these five things. Doesn’t that help put your money into perspective?
In the end, financial wisdom is not about the amount of money you have in the bank. It is about empowering, educating, and engaging yourself while managing your finances.
Pamela Plick is a member of the DailyWorth Connect program. Read more about the program here.