It’s hard to be honest all the time, and when it comes to honesty about your personal finances, you may feel like there’s room for big improvements. The good news is that being completely honest about where you’re at financially doesn’t have to be a painful, frustrating process. In fact, it can be a transformative journey that helps you fully understand where you are coming from and where you want to go.
We enjoyed this article about getting honest about your finances because our whole process and values-based investment model is based on the five points included. We’ve gone ahead and covered these five points below to help you get honest about your money.
1. Figure Out Your Money Mindset
According to a process that Goldman Sachs uses in the article we shared above, there are three types of money mindsets: happiness, commitment, and protection. Most people are a blend of the three, but most still tend to lean more towards one of these mindsets than the others.
While we don’t use this exact approach at BlueRock Wealth Management, we have a proven process for understanding how you make decisions about your life (and by default, your finances) called Communication DNA. This, partnered with completing your Financial DNA questionnaire, helps us understand your core values so that we’re providing a personalized approach to financial planning and communications. Not only does this information help us to pair you with the financial planner who most closely aligns with your values and mindset towards handling your account, but it also helps us understand your vision for your long-term goals and factor this into a more holistic approach called life planning. How each person thinks about and acts on decisions about finances is complex, but understanding how you and your partner identify your values only benefits the process.
2. Think About What You Really Want
To be totally honest about your finances, you need to have greater clarity about what you actually want. Thinking about what you want your life to look like will help you better understand how to direct your money and resources to reach these goals. Overall, dream big, but know what is essential to you. And if this past year has taught us anything, you need to prepare for the uncertainties and surprises that can take things off course.
3. Don’t Forget About your Past
Money is a tool that helps you shape your life. The way you were taught to think and act about money impacts your financial habits in the present day. Be willing to look at these habits and open yourself up to different ways of looking at things to overcome this hurdle.
4. Get Your Significant Other on the Same Page
Having an open and honest discussion, either only with your spouse or with your financial planner present, can bring out parallels in your relationship as well as your differences. Committing to an open dialogue about your money can help you understand your partner’s money mindset and craft a way forward together that realizes your joint goals and aspirations.
5. Come to Terms with the Less-than-Great Parts of Your Finances
Don’t get stuck on things in your financial past that you cannot change and instead, focus on your goals. Doing this can help you ease up on areas that don’t help you and commit to new, effective ways to achieve your financial goals.