What comes to mind when I say “Financial Prosperity”?
Maybe you think of riding in a private jet and flying off to the most lavish vacation spots. Maybe you think of not having to stress at night. You might even think of starting that business you’ve always dreamed of or being able to retire your parents. Whatever your goal looks like, these foundational steps will help set you up for financial success.
Whether you’re striving to eliminate debt, build wealth, or achieve long-term financial stability, understanding the key principles and strategies is essential for success. In this blog, we will explore three big ideas that will pave the way to your financial prosperity.
What is financial prosperity?
Financial prosperity is a state of being financially successful, secure, and abundant. What this actually looks like can be different from person to person, but a unifying factor is the lack of stress that a financially prosperous person feels from financial burdens. Being financially prosperous typically includes having a consistent income, accumulating wealth, and managing expenses effectively.
3 Keys to financial prosperity
1. Cultivating a Mindset of Financial Wellness
Research has consistently shown that the right mindset plays a vital role in achieving financial prosperity. A study conducted by Stanford University found that people with a growth mindset were more likely to develop better financial habits and accumulate greater wealth over time. By adopting a growth mindset, you open yourself up to learning, adapting, and embracing new financial opportunities.
Developing a growth mindset is instrumental in achieving financial prosperity. It involves cultivating an attitude of continuous learning, adaptability, and resilience when it comes to personal finance. Since you are here reading this blog, I am going to guess you are already well on your way to a growth mindset. By adopting this mindset, you can overcome obstacles, embrace opportunities, and set yourself up for long-term financial success.
One of the first steps you must take to transform your mindset is evaluating and reshaping your current beliefs about money. Many individuals harbor negative associations with money, such as guilt, fear, and scarcity. However, by consciously reframing your mindset, you can shift your perspective to one of abundance and opportunity. I have some free journal prompts to get you started here.
Consider someone who grew up in a household where money was always seen as a source of stress and limitation. As a result, the child internalizes the belief that financial prosperity was unattainable to her. However, as an adult, she starts reading blogs and books, hearing stories of people just like her having financial success, listening to podcasts, and engaging with personal finance communities, she begins to rewrite her future.
Part of changing your mindset is expanding what you expose yourself to. Often, if we believe we are set for one certain path, it’s because that is all we have ever seen or known. Our brains have the power to fill in the future with examples of the past, but the reality is that the future can look completely different if the person is intentional about their daily practice– and daily practices are built from habits developed from your mindset.
Adopting a growth mindset means acknowledging that there is always more to learn. This principle holds true in personal finance. By committing to lifelong learning, you can stay updated on the latest trends, investment opportunities and wealth-building techniques.
Having a growth mindset also helps ease any symptoms of “know-it-all” syndrome. Let me explain. There is no problem with knowing it all! People can absolutely be experts in their field and know it all (or almost it all). But when it comes to personal finance, feeling like you know everything there is to know can be tricky. For example, so many people have tried to predict what will happen in the stock market, however, time and time again, the proven best way to build wealth in the stock market? Playing the long game.
This is what I will teach you about in the Lazy Investing Class, by the way.
Additionally, in the pursuit of financial prosperity, setbacks and challenges are inevitable. However, it is your mindset that determines how you respond to these obstacles. A growth mindset emphasizes resilience and persistence, encouraging you to view setbacks as opportunities for growth rather than failures.
Resilience in personal finance is a must if you want to attain true financial prosperity. If the first month you make a budget and see that you go over, does that mean the whole pursuit is a bust? Of course not. There is no such thing as perfection in personal finance, and building resilience will help you achieve your goals faster and with confidence to face the unknown.
Let’s be honest, it takes vulnerability to learn a new skill. Building resilience can help you strengthen the muscle that allows you to ask questions when you don’t know the answer, discuss your finances wisely but openly, and even have better conversations with your partner about your joint financial goals.
By cultivating a growth mindset, embracing lifelong learning, and fostering resilience, you can harness the power of your mindset to shape your financial prosperity. Remember, financial prosperity is not solely determined by external factors, but also by your mindset, beliefs, and actions.
2. Building a Strong Foundation of Budgeting and Saving
Budgeting and saving form the cornerstone of personal finance. Unfortunately, a staggering number of individuals struggle with these fundamental aspects. According to a survey conducted by the Federal Reserve, 40% of Americans would struggle to cover an unexpected expense of $400.
Creating a personalized budget that aligns with your goals and values is important to see the progress you dream of. Budgets aren’t one-size-fits-all, but there are techniques that can help.
For instance, the 50/30/20 rule is a way to allocate your income every month. This strategy is extremely popular, though you can hear my real thoughts about it here. Essentially, the rule is that you allocate 50% of your income to essentials (like rent and insurance), 30% to discretionary spending, and save and/or pay off debt with the remaining 20%. This can be a great way to start setting your money mindset lens. When I first started looking at my monthly income, I realized that I had way too high of a percentage going to things that I simply did not care about.
You can research other techniques as well, like the 30/30/30/10 rule budget, but I ultimately found that a values-based budget seems to be the most dependable. When it comes to income allocation, it can get tricky– who is to say what classifies as a need vs. want? A classic one couples fight about is beauty products: need or want? And I personally didn’t like having to break down all of my spending choices into such black-and-white categories. Instead, with a values-based budget, I felt empowered to spend my money and the things I actually say I value. Like taking my dad on the vacation of his dreams or moving to my favorite place in the United States…even though it means renting. Those are my values and that’s creating my version of prosperity, which is what personal finance is about. Helping you reach your version of financial prosperity.
3. Investing for Long-Term Growth and Wealth Accumulation
Investing is THE game changer. It is the key to harnessing the power of compound interest and building lasting wealth. Unfortunately, investing can often seem intimidating and complex, deterring many individuals from taking the plunge. According to a Gallup poll, only 55% of Americans own stocks.
If this sounds like you, I have a free investing class to help you get started. I truly believe financial literacy should be available to all. Its a learned skillset and I promise, you can learn it. People aren’t born to be good at investing, though they might be born into a family that passes on the education.
I used to think that I was terrible with money until one day it hit me: “dumber people than me have figured this out”. Now, of course, that thought came to me as a sort of comedic relief for the reality of what I was going through. By the time I reached the middle of my 20’s, I was already drowning in debt with little hope of a way out. So when I say that you can learn the powers of investing, it’s coming from a place of experience.
If you are looking to attain your version of financial prosperity, there are simple steps you can take to get there. Once you define what financial prosperity means to you, you can start to reshape your mindset. Shifting from a scarcity mindset to an empowered growth mindset will help you develop confidence and resilience. Budgeting and saving play a major role in forming the foundation of the financial prosperity and knowing how and where you spend your money will help you know what it is you are showing you value– and it will also give you room to make adjustments if that doesn’t line up with what you actually value. Once you have an understanding of your budget, you can start investing. There is an old saying that says “you can’t save your way to wealth” and anyone who has achieved their version of financial prosperity knows it’s true. Investing is getting your money to work for you by the power of compound interest.
If you want more help building your financial mindset, check out this free guide.
This is a friendly reminder that you are never too old, too in debt, or too “xyz” to reach for financial prosperity. Financial peace and the confidence that you know how to manage your money all come back to financial literacy. It’s a learned skill that many are working to make accessible to all (Hi! Nice to meet you). Start by shaping your money mindset and let the rest follow.
More resources for you here.