Each of us has different opinions about money and how we should use it every day. In fact, question about money is considered very personal, because our answers could define our financial life. Certainly, money has a big impact in our lives. In fact, many people struggle how to fit money properly into their lives. If you want to interact better with money, here are a few things that you should consider.
- Treat and use money as tool: Many people make the mistake of treating money as the end goal. We think that once we get enough money to ensure comfortable retirement, then it’s the end of the road. However, we should return to the real purpose of money, as the medium of exchange. It means that we use money to trade something of value. Although this may seem like a simple thing, treating money as tool is actually a big change. Money itself has no real value, it’s just paper or small pieces of low-value metal. We pretend that it has meaningful value to ease transaction processes. Without money, we will need to trade between items directly, which is not a comfortable thing to do.
- Balance needs and wants: Each person has unique needs and wants. Both are very different categories, but we often confuse them. We need food, good health, security, shelter and clothing. We want new cars, large homes, vacation homes, expensive jewelry and high-end mobile devices. If we think it more carefully, we should be able to differentiate between needs and wants. Unfortunately, our emotions tend to cloud our decisions, making us to easily confuse wants as needs. You should be careful, so our emotions won’t cause us to make bad decisions. If you think that delaying wants is really difficult, you should realize that delaying needs could be catastrophic or even fatal. You should know that wants could be easily disguised as needs. As an example, we can cook healthy meals with affordable ingredients from farmer’s market to nourish our body. But, food could turn into wants if we often indulge ourselves in fast food joints.
- Exchange it only things of real value: You have good relationship with money, if you know how to spend it. Spending a large proportion of your spare money for prestigious material things may not be a good idea. Modern people aim to have an appearance of higher standard of living. Unfortunately, it becomes easier for us to live beyond our means. Improper use of money could cause us to forfeit more important things unwittingly.
- Focus on results: It’s already very clear that money is a tool that we use in the process. If we can suppress emotional financial decisions, it is important to focus on results. As an example, a smaller, affordable and easy-to-maintain car could still bring us many places. But, many people tend to choose slightly larger and more expensive car. The same thing applies with food, medical treatment, clothing and housing.