Do you have a healthy relationship with money?
If you’re the type of person who’s even reading this blog, it’s safe to say you’re probably on the right track. You’re thinking about investing if you aren’t already—building your financial future and securing the very best not only for yourself but for future generations.
That said, our relationship with money—our money mindset—can have a profound effect on our success not just in real estate investment but with our finances in general. There are bad habits and anxieties that emerge when our attitude towards money isn’t oriented correctly.
We’re here to help you course correct. By beginning to see the ways in which your mindset can get in the way of your best financial future, you can begin to reverse bad patterns, think more critically about financial decisions, and make the most out of your investments.
The Effects of 2 Bad Money Habits on Investment Success
Problem: Your financial style is insecure.
Result: Your real estate risk is out of whack.
There are many ways to be financially insecure and only a handful of ways to be secure. Falling into extremes are always a bad idea when it comes to money, and understanding this and where you fall can help you begin to have a more secure relationship with your wealth and your buying and investing habits.
So in what ways can your financial style be insecure? There are three main categories to consider: wealth acquisition, management, and spending. There are two extremes to each that are insecure behaviors, and a middle ground that is secure.
In acquisition, it is not secure to be fearful or avoidant (we would never succeed in investing this way), nor is it secure to be ravenous. If we focus only on acquisition as quickly as we can, we may not be able to sustain growth. We have to do due diligence as we grow and scale, ensuring that our growth is sustainable in the long-term.
In spending, the extremes are between being a miser, never daring to spend your wealth on anything, and being a compulsive shopper who spends on everything. The dangers of the latter to an investor are obvious, but surely saving can’t be bad...right? Wrong!
Being unwilling to ever spend money can be detrimental when you are unwilling to pay for necessary, quality goods and services. In the real estate investment game, you have to be willing to achieve these standards: and you can’t be a miser to do it.
Lastly, there’s the area of management. The extremes are the conscientious bean-counter who dares not let a penny go unaccounted for, and the person who doesn’t care to keep up with the state of their affairs at all. They know they’re out of money when they get the overdraft notice. Again, I think it’s easy for us to see the flaw in the latter. We don’t tend to see anything wrong with wanting to make sure all of our money is accounted for.
The problem is when we become obsessive about it! This relationship with money leads to micro-management and a heap of anxiety about finances. You must be careful that you’re not letting your money control you in that way. While it's all well and good to keep a handle and an awareness of your money, allowing anxiety about every detail to creep in will make you miserable in the end.
Problem: You place your happiness in your wealth.
Result: Setbacks can’t be learning experiences.
Because we’re in the business of portfolio and wealth-building, I think we can run into the danger of accidentally selling the idea that money brings happiness. Let this be clear: it doesn’t. Money will not bring you happiness.
Money can make you more secure, allow you to buy nice things and experiences, but it won’t bring happiness. If you begin placing your happiness and worth in your wealth, you're going to expend a lot of mental and emotional energy into maintaining that wealth: and any setbacks are going to be devastating.
In the investment world, risk is inherent. It comes with the territory. It is a learning experience. We have to be able to remove these emotional attachments to money from the equation because they will prevent you from becoming a better investor. Ultimately, if you are placing your happiness in your money, you are going to make bad money decisions.
Remember, you are in charge. Not the money. Not the investment. You are.
Only you can take charge of your financial future. You can start today by scheduling a one-to-one call with one of our advisers.