It’s April 2021. The weather is turning, Covid-19 restrictions in the UK are beginning to lift, but our lifestyles are still thoroughly compromised.
So long as extended families are kept apart by social distancing rules, the gloom of this pandemic will continue to disrupt the strong relationships which naturally keep us bouncing along to the little tune that life is playing for us.
I wanted to blog this week about a concept I’ve been thinking about called money mindfulness. I’m aware this isn’t a unique term and I haven’t coined it, but I explain below what I mean by this term. I’ll conclude with how money mindfulness has been an antidote to the unique circumstances of late.
My money roots
From a young age, I’ve been single-minded about the topic of money. As a boy, I remember receiving quarterly letters from my bank which informed me about changes to my savings account interest rate. I remember using graph paper to plot the change in rates on a graph. This was before the age of 13, so that probably tells you all you need to know about how early in life an interest in personal finance developed.
As a result of this focus, I became an avid saver. I placed such a value upon savings and growing wealth that I found it easy to exercise willpower to save for tomorrow rather than spend today.
As the UK government’s Money Advice Service states on their website; we shouldn’t put money under our mattress. Money we save can be left to grow, if saved if invested in the right place. Saving something now means enjoying even more later.
The consequence of money becoming a hobby, as well as a background piece of admin, is that my financial position has generally been strong since my work life began. The money ‘sphere’ in my personal life has always been a place of security, optimism and of hope.
What is money mindfulness
Of course, because I feel all these positive feelings associated with personal finance, it’s a place my mind frequently visits.
I call this money mindfulness. It’s an antidote to anxiety because it turns the concept of worry on its head. The future of the stock market is uncertain, however I don’t feel the need to worry about an upset. In another part of my life, when a positive and negative outcome hang in a random balance, I would tend to worry about the possibility of the negative.
When I’m financial planning, I’m not in that mindset. Monthly deposits in a savings account feel steady and incremental. Bank balances grow in a step-like pattern. Investments produce income.
While valuations might falter in the short term, or emergencies might result in unplanned spending – I can turn my attention to constructive steps I can take to improve the situation.
The cornerstone of any money mindfulness activity is any medium I can use to record or present my ideas and thoughts. It could be a list on a piece of paper, or I often use a Google Sheet if I’m at a computer. This handy free piece of software is cloud-based, so I can easily find my notes again so long as I have my mobile.
How to exercise money mindfulness
I usually begin by reflecting on my current position. What have I accumulated? What is my latest net worth? If I’ve managed to save more than I’ve spent in the past month, then this already starts the session off with a happy tone as it’s likely that I’m showing a higher number than I’ve ever seen before. The higher the figure, the more independence and opportunities it provides me.
But I spend most of the session looking forward. What could I save in the following months? Where would that take me? What’s the optimistic, neutral and pessimistic scenario?
Next I think strategically. Where should I put my money? Buy shares through a UK investing app, or tuck away in a savings account? Like moving chess pieces around on a chess board, I do sums (which is why the Google Sheets app comes in handy) and try out a few different ideas before settling on a plan.
Revisiting your money mindfulness plan – not essential
What may surprise you is that I don’t often return to these plans the following month. I actually prefer to wipe the slate clean and start again. Why is that?
Because this isn’t just a wordy budget. This isn’t a self-imposed straight jacket. The joy of the plan is actually in its creation. Spending a few minutes or even an hour contemplating a bright future that could be ahead. It’s a headspace that the noting and spread sheeting helps to create. Whether I hold myself firmly against my estimates is not really relevant.