Conquering Financial Fears

One of the most powerful emotions is fear. In the realm of finances, fear can drive us to make decisions we later regret. More often, fear leads to decision paralysis when we retreat to the comfort of indecision or simply burying our heads in the sand.

To many people, their financial future is a threat to their well-being – the fear of not being able to retire, or the inability to cope with a heavy debt burden; or never being able to buy a home or being unable to cover a major emergency expense. These are all financial threats that breed the worst kind of fear. The way many people cope with them is to do everything they can to avoid them. That can be a lot easier than facing their fears, especially if they lack confidence in solving the problem.

When it comes to your personal finances, fear is just a mindset, brought about by a feeling of helplessness or not being in control. Following these three critical steps will put you back in control and give you the confidence to pursue your life ambitions.

Confront Your Goals

The first challenge in conquering your financial fears is to remove the mental roadblocks keeping you from taking control of your financial life. You can start by simply writing down your financial goals. Be specific, such as “pay off my credit cards” or “saving $20,000 for a down payment on a house.” Don’t think in terms of what you can or can’t accomplish; think only in terms of what you want to accomplish. If your list is long, prioritize your goals according to their importance and their time horizon. In the beginning, you want to tackle one at a time. But don’t worry; you are in it for the long haul.

Focus on the Destination, Not the Journey

Keep your eyes on the target. Don’t concern yourself with how long it will take to hit it. Focus instead on how you are going to feel when you do hit it. If it takes five years to pay off your credit card, don’t get discouraged. Start imagining the things you will do with the extra money you’ll have. Let the feeling of accomplishment inspire you.

Budget to Live Under Your Means

Short of winning the lottery, finding a way to free up more money each month is one way to gain control over your fears. According to some of the wealthiest people in the world, such as Warren Buffet, the key to building wealth is to live under your means. Getting control of your spending and expectations can create the cash flow needed to tackle your goals. Whether your goal is to pay off debt or save for retirement, the crucial first step is to create a sustainable budget that keeps you living under your means.