Love it or hate it, money is a necessary part of life and is not in itself evil but takes on the form of its owner.
Unless you are a hermit with no connection to any other human civilization, chances are that you will need money to get by in life.
Although the uses of money is the same for everyone, our attitude or behaviour towards money varies from one person to the other and is shaped by our nature and experiences.
5 Factors That Influence Personal Financial Planning Success
Your success in planning your finances is influenced by five key factors:
- Your Financial Fluency - Knowledge of basic money principles and industry functions
- Your Financial Savviness - Your ability to leverage your fluency to establish an appropriate plan for yourself
- Your Financial Discipline - Consistency and diligence in sticking with your plan and evaluating your performance
- Your Financial Objectivity - Your ability to overcome the effects of behavioral biases that can affect the choices you make
- Your Financial Attitude - Your inherent psychology makeup and behavior when it comes to money
Your psychological makeup in general and with regards to money in particular, affects all the other four factors and therefore has a huge impact on how successful you are in achieving your financial goals.
This attitude is formed early in life and affects your relationships in terms of how you use money around others as well as your mental capacity and ability to achieve your financial goals.
4 Ways Your Attitude Affects Personal Financial Planning Success
Your attitude or psychological makeup when it comes to money can affect your personal financial planning success in four key ways.
It can cause you to:
- Under save
- Take excessive risks
- Be excessively risk averse
All these have the potential impact of reducing your wealth by causing you to have less savings (overspend or under save) or cause you to leave money on the table (excessively risk averse) or loss money (excessive risk taking).
But the good news is that, your attitude can be changed for the better and knowing what your inherent tendencies are is a great starting point to build certain safeguards in your plan that can minimize potentially negative effects of your behaviour.
A great way to start is to determine what your attitude is and what it predisposes you to when it comes to your finances.
Start off by checking out these great tools below:
Tools to Get You Started - Discover Your Money Disorders & Attitude
Money Disorder Assessment
Our relationship with money can affect our mental health and impact our relationships. This first tool by Klontz Consulting Group will help unearth any disorders that you may have or are predisposed to, when it comes to your relationship with money and how it affects your relationship with others.
Money Attitude Quiz
Your attitude towards money can determine how fast you accumulate savings and invest those savings to grow the wealth you need to achieve your financial goals. Check out this second tool by BBC to determine what your money attitude is.
Which of the four ways is your biggest challenge? overspending, undersaving, too much risk, too little risk? What methods do you use to overcome this challenge? Why don't you share by using the comment form below, it may help someone else too.