There is life after bankruptcy. Try these three suggestions to develop new financial habits:
First: Change how you talk about money
To truly know your “money self,” pay attention to what you say and hear about it on the job, at home, while out with friends. There is often a tendency to focus on the negative. Change your language if you want to change your money attitudes, which is the first step in improving money’s place in our lives.
Start by using positive language around money today. Begin saying “I choose not to” buy this item or “That is not a financial priority.” This demonstrates that you are making conscious choices.
Mindset is a powerful influence, and the language you use can support that shift. Use positive words to support that change. Telling yourself “I am saving a little bit each month” shifts your perspective as you build savings no matter how little your savings account is increasing.
Making the effort to use language that demonstrates ownership and responsibility around money is what is important. Positive language changes our attitude around money when heard often enough.
Second: Modify your behavior slowly
Like changes involving food, slow and steady wins the race in forming new money habits. Start by reviewing what’s on your bills each month. People often find recurring expenses for services they do not even use anymore or worse, something they never signed up for! Take the time to get them off your credit card.
Are there other automatic payments for services that you use that you can forgo until you pay off your debt? Each $10 you cut also reduces interest charges and gets you to the pay-off point sooner.
As you cut back on spending, be honest with friends. Meet for drinks instead of dinner or coffee instead of drinks. If what you value is time with your friends, they will understand and may even be happier with alternative, creative plans.
Third: Create a spending plan
Once you begin to change your language, it’s time to face your numbers and create some new lifelong habits.
Create a plan that allows you to cover your expenses with your income. Your net income – not your salary – is what matters. Write down every expense you incur throughout the year, not just the monthly ones. The physical act of doing this rather than just reading a summary of the past year of spending makes you more conscious of your spending as your brain processes the information better.
Financial Management is not just a numbers game. Start changing your behavior, language and create cash flow plan now. The long-term effects will be felt for years to come.