Money Management

5 Ways to Practice Financial Self-Care - Money Psychology

June 22, 2022

Financial self-care, while less commonly discussed, is just as important as regular self-care and decompression activities.

In fact, developing habits that reflect what you are trying to achieve with your money should be top on the list of your priorities.

To truly understand the concept of financial self-care, one has to understand what self-care generally actually means, before applying it to personal finance.

Self-care refers to any activity undertaken on purpose to care for one's own mental, emotional, and/or physical health.

In other words, self-care is simply taking the time to prioritise the things that add value to your life and benefit your well-being. This could be something as simple as sleeping well, eating well, exercising, meditating, or taking a break to recharge.

What is Financial Self Care?

With that in mind, one can then argue that financial self-care entails devoting time and energy to your financial situation, developing concrete plans and goals to cultivate a better financial future, and discovering ways to support a healthy money mindset.

Why Financial Self-Care Matters

Cultivating a healthy money mindset is important as it literally leads to securing a stable future. Think of it like taking an actual physical workout or eating vegetables as a kid, though not fun for most, the results and effect down the line make it worth the sacrifice.

Practicing financial self-care is one of the best ways one can set themselves up for future financial success.

It is important to remember that putting off organizing one’s finances may seem easier and more comfortable - such that you could misconstrue ignoring it as caring for yourself. But anything put off often looms over an individual like a dark cloud, and ultimately makes them feel worse about themselves.

So, how can one go about practicing financial self-care? Let’s take a deep dive into healthy habits when it comes to money.

Five Ways to Practice Financial Self-Care

Money is the leading cause of stress in the world, according to the American Institute of Stress. People are constantly concerned about their finances.

“Money has the power to influence our emotions and decisions. As a result, financial self-care is essential to our overall well-being,” reads an excerpt from a report published by Stress.org.

Stress, depression, and anxiety are unfortunately part of the modern human condition. Global statistics show that an increasing number of people are struggling with mental health issues.

With money key among the stress triggers, it is therefore important to try something different when it comes to one’s relationship with money. This can be done by:-

1. Creating money goals that inspire you

The right goals will help you track the progress you make towards your big dreams. Now, if this can be turned into something fun, then it would be a win-win scenario.

Think of it this way, if you don’t have goals, you don’t know what to track. On the other hand, if you have ever had any kind of checklist that involved ticking off things one by one as you accomplish them, then you know the indescribable fuzzy feeling one derives from it.

There is no better uplifting feeling than the excitement of achieving one goal that gets you pumped up about what you can accomplish next. It’s like fuel to your fire.

When it comes to goals, the rule is simple – they need to be S.M.A.R.T (Specific, Measurable, Actionable, Realistic, Timely).

Specific - Having a goal like ‘improve my finances’ just won’t cut it. If you come back to this particular goal a year down the line to see if you hit your target, how will you tell you ‘improved your finances’?

Measurable - If it can’t be measured, how will one gauge personal progress? You need to clearly state what you want to achieve in terms that can be measured. For example, I want to save Ksh100,000 in six months.

Achievable (Attainable)- What's the point of having a money goal if you can't change or work toward it? Make a list of what you need to do each week to reach your goal.

Realistic (Relevant) - Now this is tricky and balance is key. Don’t set yourself up for failure by setting goals you know you are not within the realm of possibilities. Should your goals be challenging? Yes. However, they should not be ridiculous or unrealistic. You can’t, for example, set a goal to save Ksh20,000 every month if you only have Ksh20,000 left over after paying your fixed expenses.

Time-Bound - This is pretty straightforward, all goals need a deadline. Set a deadline for when a goal must be completed so that you can be able to break it down into quarterly, monthly, and weekly goals. This is a great self-accountability tool.

Feel free to practice this right now by physically writing down at least 2 SMART goals and come back to this article in June 2023 to see if you hit your targets.

2. Building on your financial literacy

Being financially literate means knowing how to manage, save, and invest money for yourself and your loved ones with efficiency and confidence.

There are countless ways to do this such as using your favorite social media channels to follow financial experts, or maybe joining a personal finance Facebook group. The end goal should be knowledge transfer.

If you prefer books, there's no shortage when it comes to learning about personal finance. You just need to zero in on areas where you lack knowledge and find books that tackle that specific area. If turning pages is not your thing, there are thousands of audiobooks and seminars available for free on YouTube.

Podcasts can also be a great and fun way to soak up financial knowledge while you do house chores, run errands, or even while walking your dog.

One could also use their inner circle to improve their financial knowledge. Chances are that you have at least one friend who you can refer to as a financial expert due to their current profession.

It could be a banker, a real estate expert, or a close friend that is running his/her own business successfully.

The beauty of such an arrangement is that a financial professional can answer your financial questions, whether it is about the basic day-to-day money situations or more complex long-term scenarios.

They can also assess your current situation, help you make a plan for all of your financial needs, and help you stay on track going forward.

3. Reflect on your money mindset

Your money mindset can be described as a set of core beliefs about money and how it functions in a world that is unique to you. It is time you took time to reflect on yours.

What you believe you can and cannot do with money, how much money you believe you're allowed, entitled, and able to earn, how much you can and should spend, how you use debt, how much money you give away, and your ability to invest with confidence and success are all influenced by your money mindset.

Your money mindset heavily influences your attitude toward people, both rich and poor. This is where some myths exist. For example, one could believe that rich people are evil, mean, materialistic, and greedy, and therefore not want to be like them.

How do you handle yourself in financial conversations: do you feel vulnerable and intimidated or confident and in control?

Are you comfortable asking money questions – yes, because you feel safe doing so; or no because you're embarrassed?

Do you have an irrational belief that money is a man's world and that women should be unconcerned about it?

Such questions will help paint a picture of who you are when it comes to money. It is important to know that this core set of beliefs resides in our unconscious mind.

However, you can gain awareness of your current set point and the ability to change your mindset by becoming a keen observer of your thoughts, feelings, bodily reactions, and interactions with money.

Notably, most of our core financial beliefs are formed in early childhood as a result of observing and internalising money messages from our parents, friends, community, and other caregivers. This places extra responsibility on parents as they are tasked with shaping young minds, and how they will interact with money down the line.

Shifting your money mindset begins with awareness. Pay close attention to your thoughts, behaviors, and actions around money. Your thoughts about money will influence your feelings, and your feelings will then affect your behavior.

Forgive your money mistakes. Allow yourself to let go of the past and any feelings of shame, guilt, or stress you may be experiencing.

With a better understanding of your money mindset, you can begin to take steps to change it and transform your relationship with money.

4. Create a solid money management system

You don’t necessarily need a higher-paying job or handouts from a rich relative to improve your personal finances.

Better money management can be all it takes to cut costs, and increase one’s ability to invest, save, and achieve previously unattainable financial goals.

In many cases, financial problems arise when you don’t have an effective money system in place.

There are a number of things you can do to create a better financial situation for yourself

These are:-

Tracking your spending
Creating a realistic monthly budget
Building up your savings - You can look up some of the best Saccos in Kenya among other interest-earning vehicles and try what works for you.
Paying your bills on time every month - Temptations should be quashed the moment they appear.
Automating your finances - This is like having insurance that guarantees critical tasks will be completed on time.

For example, you can schedule a variety of transfers to occur on a specific date. E.g. you can transfer funds from your current account to one or more savings accounts labeled with whatever you want, such as emergency funds, holiday vacations, etc.

This is the simplest way to prioritise paying yourself first.

5. Raise your hand if you need help

Most, if not all, humans are wired to believe that helping ourselves is the hallmark of responsible behaviour. Many people don’t like to portray themselves as weak and needy and wanting anyone’s help, especially when it comes to money.

Pause and consider these two questions: How often have you asked for help? When was the last time you asked someone to help you out with anything related to money?

Why is it so hard to ask for help? There are many explanations psychologists offer. Some say that asking for help makes one vulnerable, having perhaps opened up to the wrong person for help, who then exploited that information.

Some say it’s because most view this act as one that means surrendering control, and that’s scary.

However, it is important to realise that asking for help is a skill that needs to be developed.

If getting advice from financial advisors scares you, try consulting with close friends, specifically those who are successful with their money that can give you a wide range of insights and options.

The scary part may be deciding which advice to take, but take it all into account and weigh what is best for you.

WRAPPING UP

It’s important to take care of our bodies and minds in order to remain healthy and happy. But, no matter how physically healthy you are, it will be impossible to be fully happy if your financial self-care is lacking.

Trying some of the practical solutions above could go a long way in steering you toward where you want to be financially.

The mechanics of personal finance are easy. Spend less than you make. Invest for the future. Don’t buy the stuff you don’t need.

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Eddy Mwanza is Creative Consultant living and working in Nairobi, Kenya. His areas of focus are Content Creation, Creative Writing, Research and Photography. When he is not writing in his favorite coffee shop, Eddy spends most of his time reading, cooking, and traveling. He is also a sports fanatic. Connect with Eddy on LinkedIn.

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