Why it is important to remember that money is a tool, not a goal

Why is this approach useful?

It makes planning easier

It is not easy to calculate your costs and plan your budget when the very word “money” gives you fear and anxiety. If the numbers at the end of the month never converge, you simply stop trying to keep track of your expenses and income. But once you think of money as a tool, you can focus on solving a problem rather than emotion.

It all starts with an important goal for you. Money itself is not a goal. You need to know what you want to spend it on. To feed your family? Pay off debts or cover medical expenses? Travel? When you know your goal, you can plan and spend to achieve it. For example:

Sell something to save up for a rainy day.
Use the snowball method to get rid of all debt in two years.
Look for another job, because now you are not so scared to leave your unloved place.

It relieves shopping guilt

It is better to spend money once on quality items than to buy cheap ones often. For example, scientists at the University of Michigan tracked the purchase of toilet paper by 100,000 American families for seven years. It turned out that families with higher incomes bought paper at a discount in 39% of cases, while families with low income - only 28%. The former also bought more rolls on average. It turned out that families with lower incomes paid about 6% more per roll.

The inability to buy in large quantities prevents you from planning purchases and taking advantage of sales. Conversely, the inability to buy something exactly while the sale is in progress prevents buying in large quantities. Financial losses in this case consume up to half of the funds saved on buying cheap things.

Yesim Orhun and Mike Palazzolo study authors

Of course, when you're trying to make ends meet, you don't care about quality. But many do not want to pay more for a thing, even when they can afford it. We do not want to spend money because we are afraid that we will not have it left. We feel guilty when we spend more than we need, even if it's just more expensive toilet paper.

But the tools are designed to be used. They should not collect dust on the shelf. Don't think about how to save and spend money, think about how to use it. When we save money, we just save it for later use. And buying is just the use of a tool that is suitable for a particular job. And an expensive quality item is sometimes the most effective way to use it.

Plus, this down-to-earth approach to money helps keep you from rash spending. We begin to understand that if we use this tool incorrectly in one area, then we simply will not be able to use it in another.

How to change your attitude towards money

The main thing is to learn how to use the means in such a way as to live the life that you want. Here are some practical tips.

Decide what's important to you

Since money is not a goal, you need to know what exactly your goals are. This is why many financial planners start out with a client with a single “why?” Question. When you know the answer, all of your financial decisions are made in line with your goal.

Define your priorities

It is also very helpful to make a list of the expenses that give you the most pleasure. This will also help control costs. For example, you like to dine in a cafe and visit family or friends living in another city. By prioritizing, you can decide which spending to cut.

Move gradually

When your income is very low, changing your attitude towards money is especially difficult. Any goal in comparison to income will seem unattainable. So break your goal down into small steps. For example, if you need to repay a loan, think not about the entire amount, but about payments per month or even per week. So the amount will not seem completely unmanageable. It will be easier for you to pay it back and feel like you are in control.

conclusions

For most of us, money means more than it really is. They remind us of what we are missing. About what we can't afford. But at its core, money is just a tool. Try and treat them like a tool. Of course, this will not change your financial situation in one day, but only in this way will you begin to control your finances.