The Power of Mindful Wealth

Mindful Wealth Management:

Understanding the “Why” Behind Your Financial Decisions

Money plays an important part in all our lives, making financial literacy one of the most important skills you can have. Yet there is a sizable gap in our collective financial education, one that has remained steady for many years. According to the TIAA Institute-GFLEC’s Personal Finance Index, financial literacy in the US has hovered around 50% for eight consecutive years now. Additionally, the National Financial Educators Council recently announced that the average score for its National Financial Literacy Test for 2024 was 67.34%, just short of the 70% mark required to pass. There is a lack of understanding here, even in terms of basic financial principles, that has left many Americans stressed and uncertain how to save money and build their wealth.

A few weeks back, I asked three questions that are important for identifying the “why” behind your wealth and financial decisions. Answering them can give you a better understanding of your underlying motives and why your past wealth management efforts may have fallen short.

When it comes to managing wealth, adopting a mindful approach is crucial. These three questions can serve as guiding principles to help make informed decisions about personal finances and wealth management.

1.????? How do you differentiate between what you need and what you desire? How does this affect your financial decisions?

To effectively manage your finances, you must be able to differentiate between needs and desires. Needs are essential items for basic living, like housing and healthcare. Desires include luxuries, like vacations and entertainment. That doesn’t mean that desires aren’t important, rather, the importance of but understanding this distinction helps anchor your financial strategies in practicality. Thus, ensuring stability by prioritizing essential expenditures and avoiding unnecessary debt. By clearly separating needs from desires, you can focus your financial planning and save intentionally for non-essentials without compromising your fundamental needs.

This type of approach is what I call mindful wealth management. It isn’t just about maximizing returns, instead aiming to ensure that one’s wealth serves as a tool for fulfilling their life’s missions and upholding their most deeply held values. This strategic approach involves distinguishing between needs and desires. By prioritizing needs, you ensure financial stability and make room for desires without compromising essential requirements. This focus helps in making financial decisions that are not merely reactive, but thoughtfully aligned with your long-term life goals and legacy, promoting a balanced perspective on wealth that considers both material success and personal well-being.

2.????? What aspects of your financial life are under your control, and what must you learn to accept?

In your financial life, there are certain aspects that are under your control and there are those that are beyond your influence. While you can control things like your spending habits, saving strategies, investment choices, and personal cash flow, you cannot control external factors like market fluctuations and economic downturns. The key to mindful wealth management is to focus on aspects of your financial life in which that you can control, while learning to accept those aspects that are beyond your reach. This approach fosters resilience in the face of financial uncertainties, mitigates stress, and encourages individuals to be more intentional with their financial decisions. Regular reflection on financial actions and their impacts also helps maintain a proactive approach to wealth management, ensuring it aligns with personal values and life purposes.

3.????? What ultimately drives you in your financial journey?

The ultimate driver of your financial journey is your 'why'—the deeper reasons behind why your wealth accumulation and management is important to you. It's critical to pinpoint the "why" behind your wealth and financial decisions to gain a better understanding of your underlying motives. To accomplish this, you must reflect regularly on how wealth influences your relationships, your personal growth, and your wider contributions to society. By focusing on financial goals that align with one’s values and life purpose, this approach emphasizes control over reactions to financial gains and losses. It advocates for a clear understanding of one’s financial motives and thoughtfully aligning them with long-term objectives and legacy building.

Discover Your “Why”

Building financial literacy takes time and effort, but when you have a clear understanding of your values and how they relate to your financial goals, you can start making more mindful choices and manage your money more effectively. Ask yourself:

·???????? What are my most important financial needs?

·???????? What aspects of my financial life do I have control over?

·???????? What is my motivating force on this financial journey?

With the answers to these questions as a starting point, you can get your financial life on track!