With the start of the new year and after what is usually a period of heightened spending for many, it’s no surprise that many of us take this time to form better money habits and take a closer look at our finances. No matter where you are in your personal finance journey, here are five things I think you should remember to foster a more sustainable and long-term relationship with your money.

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1. There will be factors outside your control

Between a cost of living crisis and a government causing havoc with market stability, so many people felt progress with their personal finances was limited during 2022. There will always be factors outside your control but some can affect us more significantly than others, and impact people in different ways. 

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If you’re reflecting back on the last 12 months or you think your finances are a little stagnated, look at the areas you had control over, but also look at those external factors that play a significant role. Don’t downplay their impact on your finances. Sometimes, even the best- laid plans don’t go as we want them to.

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2. Don’t let your past dictate your future

We all have money hang-ups and habits that we might not be proud of, and when we try to improve our relationship with money we may have fears of falling back into old ways. 

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This thinking can lead us to the opposite extreme. For instance, if you accrued some credit card debt previously due to living beyond your means, you might think that you can never spend money on yourself again for fear of getting into more debt, or you might experience spending guilt when you do. It’s something I see time and time again when people speak to me about their finances. But it’s neither one nor the other; you can pay off your debt and create new habits that allow you to spend money on yourself in a more financially sustainable way. 

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This shift in mindset won’t happen overnight, but it is definitely one that is worth pursuing and working on to build a more positive mindset with your personal finances.

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3. Don’t compare yourself to others 

It’s easy to see a part of someone’s life and let the green-eyed monster take hold. This is particularly true if you have started working on your relationship with money recently or you feel as if your progress has halted. We might see their fancy car, hear their corporate job title or see that they’re going on their third holiday in 12 months and think they must be doing better than us financially. But it’s important to remember this is only ever a snapshot of someone’s life and we don’t know all the details. It’s likely that they have different financial priorities to you. 

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That’s not to say these things are not OK - of course they are, but it’s not fair to compare your reality to their highlight reel. 

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4. Remember your ‘why’

Personal finance is a long game, and because it can be a continuous work in progress, it can often feel like we’ll never get to where we want to be. There will be dips in motivation and moments when you’ll want to abandon any habits you’re working on. This could manifest itself in making rash spending decisions or deciding against setting a budget for the next few months. Both of these examples are absolutely fine and it’s normal to want to take a break from budgeting or taking care of our finances with a fine tooth comb. 

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But, when this becomes more and more consistent, there is a chance for it to derail our longer-term financial goals and the bigger picture if we’re not careful. Instead, remember why you started in the first place. 

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If clearing debt is your ‘why’, seeing the figure decreasing will be a big motivation. Incredible gives you full transparency and visibility over how much you owe, and how long it’ll take to pay off your debt. Knowing how long you have until you are debt-free can spur you on, and help you delay any desire for instant gratification in order to pay off your debt first. 

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5. You’re doing better than you think

It’s a bit of a cliche, but you are doing better than you think. 

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I receive a lot of messages from people overhauling their finances or improving their money mindset and while each person’s situation is nuanced and different, there’s a very common theme to these messages whereby the sender downplays their achievements - or doesn’t recognise them at all - and instead focuses on the areas they’d like to improve. 

While it’s great to address the areas we think we could be doing better, don’t do it at the sacrifice of recognising how far you’ve come and what you have achieved. 

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I’ve said it before, but I truly believe that our relationship with money is a constant work in progress - our circumstances change, our priorities five years ago might not be the same ones today, and there will usually be something new we have to navigate through too.

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Your relationship with money and your feelings around money will become so much more positive when you have the confidence to reframe your previous habits, recognise any external factors which may be obstacles and take the time to acknowledge how much you have achieved so far.

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