Author: Demetrius Harrison
If you can dream it, you can achieve it. Of course money can’t buy you happiness, but it can pad you with a more comfortable lifestyle. To put things lightly, your money management skills are a direct representation of how you view economics. If you handle finances with the belief that “money isn’t everything,” you may often find yourself with droughtful assets. However, by approaching money with a growth mindset, you may have more interest in stacking your assets. Healthy financial habits can eat at the stress of massive debts and money worries, ultimately leading you to a happier lifestyle. Having a growth mindset about money is your best approach in doing so, which I will explain how to do below.
Mind over matter – the power of financial optimism:
Your mindset is constructed on whether you see your own character, intelligence, and abilities as fixed or capable of growth.
To put it simply, a fixed mindset means you’re more close-minded. This can cause you to feel threatened by the success of others, which may give you the desire to look smart or skilled in comparison to others. Additionally, you may tend to avoid challenges and failure, causing you to give up easily. A fixed mindset can also influence you to ignore the constructive criticism you receive. The aforementioned behaviors can only lead to negative results regarding your finances.
On the other hand, a growth mindset means you’re more open-minded. This gives you the desire to learn and improve, embrace challenges, and see setbacks as opportunities for growth. Contradictory to a fixed mindset, those with growth mindsets learn from constructive criticism and find inspiration in others’ success. These behaviors will lead to positive results in your finances.
The first step is to address your debt:
It’s important to understand that financial mistakes don’t decrease your value as a person. However, financial mistakes can leave you stuck in life – economically speaking. This is why addressing your debt is important in life. However, you must first know where your debt lies to do this.
Start with a list of your outstanding debts. Take down the exact amounts of your debts and to whom they are owed to. Furthermore, include each debt’s payment terms and their interest rates. If you’re unsure of where to start, check your credit report.
Additionally, consider your repayment options. To do so, contact each lender and ask about your repayment options. Furthermore, consider consolidating your debt – or even refinancing. Sometimes, these make more financial sense. Still, beware of companies making hyperbolic claims, because some could lead to paying more interest in the long run.
It’s also important you choose a strategy for tackling your debt. For example, use the Snowball Method: pay off the smallest debt first to gain confidence. This can build your momentum, making future payments easier to make. If you prefer to just rip the band-aid, use the Avalanche Method: pay off the highest interest rate first for the greatest savings. Regardless of the method you choose, be sure to at least pay the minimum for all loans.
All in all, there are many ways to reduce your debt-to-asset ratio. By building a growth mindset, you can achieve financial freedom. Check out the infographic below for more tips on the topic.