At Effortlessly Sarah, we are big believers in building wealth and developing sound financial literacy. The pandemic has given more and more people reason to think about their current financial circumstance and whether they’re truly happy with their money. We believe that money should not be a source of anxiety or worry.
Money should be a tool in our hands to achieve the life of our dreams.
In today’s blog post, I’ll be sharing a detailed explanation of the financial habits that we’re implementing to secure the bag and we think you should do the same!
1. Improve your money mindset
When it comes to building wealth, people often want to hit the ground running and get to the “meat and bones” of moneymaking, but the truth is that so much of this work begins internally. It begins with understanding your beliefs surrounding money and wealth, it begins with understanding why you spend the way that you do or why you save the way that you do.
One thing that a lot of people don’t realise is that whether you’re spending or saving, if you’re doing so from a scarcity mindset these behaviours will never produce true wealth.
Truth wealth isn’t just about money, it’s about freedom.
Why? Because operating from scarcity but wanting abundance, is equivalent to operating from fear and wanting love at the same time. It doesn’t work.
A great podcast that has helped me to understand money mindset, is the "Money Moves with Toni Tone" podcast. In this episode she engages in a searingly honest conversation about beliefs surrounding money and how we can incorporate a healthier money mindset into our everyday lives. Spoiler alert: It all begins with your internal dialogue surrounding having and making money.
2. Build an emergency fund
If there’s anything that the last 12 months has taught us, it’s that an emergency fund is needed like never before! With unemployment on the rise and numerous families being made reliant on stimulus checks and furloughs, it’s become apparent that having an emergency fund can make all of the difference.
If you’re employed, it is important that you have at least £1000 in your fund as the bare minimum. Ultimately, it is recommended that you have upwards of 3 months’ worth of expenses in an easy-access savings account. It’s okay to build this over time but start somewhere! This should cover any unexpected events such as redundancy, a damaged roof, emergency travel and things of that nature.
Do keep in mind that an emergency fund is strictly for emergencies. That new Chanel handbag is not an emergency. Instead, focus on how much better you would feel, knowing that (God forbid) were anything to happen you have 3 months’ expenses in the bank, at your service! Plus even if nothing happens, the funds act as a financial safety blanket.
3. Invest in the stock market
Apps like E*trade, Freetrade, Etoro and Trading 212 make investing in the stock market easy and accessible for the everyday investor, no longer is investing solely for the investor on Wall Street. Equipped with the right knowledge and skills, investing is for people like you too!
One of the most common questions about investing is, “Which stocks should I invest in?” and the answer to that question is, it depends. Your investing style will be heavily dependant on what it is that you’re trying to achieve. For example, some investors focus solely on purchasing dividend paying stocks, as they prefer have regular income versus the exponential growth that growth stocks generally offer.
Ultimately, the best way to determine your unique investing style is to do research. You avoid a lot of the trial-and-error when you read books about investing by the greats such as Warren Buffet. Alternatively, YouTube is packed with videos on topics such as “Investing in the stock market for beginners” from investors from all around the world. Whether you’re starting with £50 or $10,000 – what you have is more than enough to get started.
4. Practice evaluative spending
One of the things that I love to do before shopping, is plan the purchase. I find that this often gives me more gratification than actually making the purchase itself. I call this “evaluative spending” and I practice this whenever I am making non-essential but big purchases.
For example, there’s a new handbag that you really want, you’ve noticed it on several influencers but it’s pricier than what you’re used to paying for a handbag and you’re not sure if it’s really your style. You add it to your wishlist and then you grab a pen and paper and write out the pros and cons of making the purchase. After doing this, you leave the item in your wishlist for 7 days and return to it with a fresh set of eyes. Do you still want the handbag?
This a great way to prevent impulsive spending whilst allowing you to determine; how much of a positive impact the purchase will have on your quality of life and whether or not the item will be used, based on how you currently live. You may discover after doing this exercise, that actually the handbag doesn’t match any of the outfits in your closet or instead you may come to find that it’s much needed. Either way, you’ll be making the decision with sound judgement rather than impulse and you’ll be glad that you did!
5. Have real conversations about money
One of the things that always amazes me is when I meet people that want to make more money, but don’t like talking about it! Money is not a dirty word and we have to get comfortable talking about money if we want more of it in our lives. It all goes back to the money mindset ladies.
If there are people in your life that make multiple 6 or 7 figures, now is the time to sit down with them (virtually, of course) and have frank conversations about their career journey and how they’ve achieved their financial goals. Most successful people usually have people asking them for handouts, very rarely do they have people that want advice so use this to your advantage and ask the right questions!
I would also encourage you to have very frank conversations with your parents about money as well, regardless of how much they make. So much of what we’ve learned about money comes from our upbringing and having those frank conversations, can help you to identify limiting beliefs and unlearn them.
6. Learn from the pro’s
There are so many financial gurus on YouTube and Instagram, there is no longer any excuse, you can learn even while you’re scrolling through social media! The likes of Dave Ramsey and Anthony O’Neal provide fun and interactive means for learning more about getting out of debt and building wealth. There are countless other public figures in the online financial literacy space, now is the time to get online and learn!
7. Plan your financial future
Whilst there may be some uncertainty about what the economy will look like in the next year from now, one thing remains - Money will still be in use! An important part of having a strong financial future, is ensuring that you prepare for it.
Where do I want to be financially 5 years from now?
What do I want my investment portfolio to look like?
How much do I want to be earning per year?
How can I increase my earning capacity?
Do I want to be a homeowner?
These are some of the many questions that you should be asking yourself if you want to build wealth in the long-term.
Take action!
Whilst reading this, some limiting beliefs surrounding money may have come to the surface, we want you to instead focus on the positive. Start now by sharing with us a positive money mantra in the comments below.
For example:
“It’s difficult for me to make money”
becomes
“Money flows to me easily and effortlessly!”
Written by Faith O.
Contributing writer for Effortlessly Sarah
*Do keep in mind that we are not financial advisors. Please seek licensed professionals for financial advice.
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