3 Essentials Methods to Mastering a Long-term Money Mindset
Arguably, one of the biggest problems we all have when it comes to finances is that we look purely at the short term. But when you have grand plans, whether it’s to get onto the property ladder or to go on holiday, it pays to have an understanding of the bigger picture, not just so you can achieve your financial goals, but to go much further. What does it really take for us all to develop a long-term money mindset?
Address Your Current Situation
You might be looking to apply for a mortgage but there can be a number of things that are major obstacles, such as bad credit or payday loans.
When it comes to applying for a mortgage, there are products out there that you can get but other factors may be taken into account when applying for a mortgage with bad credit or you’ve had payday loans in the past, which is why, if you want to have access to a wider range of mortgages, you’ve got to look at your current financial situation.
Debt, a bad credit score, and not living within your means are three things that need addressing. But once these things are addressed you have a far better baseline to build upon.
Stop Trying to “Keep Up With the Joneses”
Many people are on the property ladder and have lovely homes with mortgages of 0.5%, meaning that their monthly repayments are very low. The biggest problem with this is that now interest rates are shooting up, and people are panicking they’re not going to be able to afford a home without taking on a second job. This is endemic to what people call “keeping up with the Joneses.”
People want nice stuff, big houses, and holidays four times a year, but the problem with this is that most of us are not preparing for the future properly. This is why something like the 50-30-20 technique makes a massive difference. Using 50% of your earnings to pay off all the essentials, 30% on the things that you want in your life, as well as the remaining 20% going into savings or paying off debt means you have a greater balance.
When we think that we need a big house, we have to be proportionate based on our earnings, which is a big lesson in being more sensible with our money.
Always Understanding How Much You Really Have
Knowing how much is in your bank account should be a regular habit because it helps you to understand what you can realistically spend money on. While there are ways you can earn extra money, when you start to place more importance on getting more money, this is not tackling the root cause.
Instead, you should understand how much is in your bank account at any given time so you can make those subtle changes to your lifestyle that reflect your earnings. Many people don’t like the idea of having to live within their means, but the fact is that while there are credit cards and payday loans available, this is not a sustainable solution because you will end up paying the price in the long run.