For many people, understanding financial advice can be daunting. The sheer amount of information about budgets, investments, and debt management can be paralyzing. However, what if something was missing, a fundamental shift that simplified everything? Enter the power of intentionality.
Intentionality doesn’t have to be as complicated as a financial product or strategy. The key is consciously directing your thoughts and actions towards a desirable financial outcome. To put it another way, it connects the “what” (financial goals) to the “how” (specific actions). This is what transforms good financial advice into an enjoyable and sustainable journey.
It Reveals Your ‘Why’
Almost all financial advice revolves around the “how.” That is, how to budget, save, and invest. Although these are important, the “why” is often lacking.- Are there any financial goals you have?
- What kind of life do you want to lead with your money?
- Do you want to save for a dream vacation, a comfortable retirement, or financial security for your family?
It Creates a Personalized Roadmap
Financial advice shouldn’t be one-size-fits-all. There is no guarantee that what works for your neighbor or friend will work for you. By being intentional, though, you can create a financial roadmap customized to fit your values, goals, and circumstances.What is more important to you, experiences or material possessions? Budgeting for travel may require a different approach from saving for a down payment on a house. Is your investment horizon long, and do you have a high tolerance for risk? If you are nearing retirement, your investment strategy might look different.
Fosters an Abundance Mindset
Despite what you may believe, wealth doesn’t just come from investments. Furthermore, it isn’t all about accumulating cash. Instead, when you are wealthy, you can do what you love and spend your days how you wish.The opposite occurs for people who hoard money due to scarcity mindsets. The problem, according to them, is a lack of money. It is feared that if they give, they will run out of money. As such, it may be difficult to enjoy life with this mindset.
Cultivates Gratitude
When we focus solely on what we lack, we can become demotivated. When you are intentional, you are more likely to be grateful for what you already have.Money Becomes a Tool, Not a Master
There is no doubt that money is a powerful tool. If we aren’t careful, however, it can easily become the master. By being intentional, you can regain control. You determine the role money plays in your life, not the other way around.Putting Intentionality Into Action
So, how do you implement an intentional approach to your finances? Here are some practical steps you can take:Identify Your Goals
As a first step, you should identify your goal(s), the amount you’ll need, and the time frame. In order to achieve your goal, you will need to calculate the amount you need to save each week or month. This is something you should take note of.Understand Your Situation
Understanding your current financial situation is the next step toward being more intentional with your money. If you’re new to finance, start by creating a budget.What’s that? Are you afraid of that filthy word budget? Well, here’s what you need to know about budgeting if it sounds a bit daunting.
Make a list of everything you spend on bills and necessities per month. Are you able to cover that number with your monthly income? If so, you know you can progress in your situation, and now you can make the necessary moves.
Before Making Any Purchase, Think It Through
Behavioral economist Dan Ariely has devoted most of his career to understanding why and how we make decisions, including our financial decisions. According to him, money is all about opportunity and opportunity costs, “Every time you buy a cup of coffee, you should be thinking, ‘What can I do better with four dollars?’”After you figure out what your situation looks like, and allocate your income to the essentials, you can start thinking about non-budget items.
Determine if You Can Realistically Achieve Your Goals and Adjust Your Spending—without Sacrificing Too Much
Can you realistically achieve your goal based on what you need to save and what you are spending? Take a moment to consider the opportunity costs of the expenditures you’re making. What do you get from these purchases? Do they bring you joy and happiness and align with your goals?Unintentionally Save Intentionally
Those who “unintentionally save intentionally” set up savings systems that are set and forgotten until they need to access the money. A good example is creating a savings folder for each kid.Spend According to Your Goals
Whenever you spend money intentionally, you know how it impacts your current and future situation. As such, start associating your spending with your goals if you want to be more intentional with your money.Consider the question: “Can I achieve my goals faster by buying this thing? It makes sense to purchase the item if the answer is yes. But, if the answer is no, then it’s not something that will help you long-term.
Check in and Repeat
Keep an eye on your intentional spending and savings frequently. In order to create a habit, Dan Ariely suggests doing this once a month.Intentionality and Financial Tools
Intentionality isn’t a substitute for solid financial strategies. Budgeting apps, investment research, and debt repayment plans are still essential tools. Intentionality, however, gives the process a sense of purpose and motivation.- Budgeting. By tracking numbers, your budget becomes your roadmap toward achieving your goals. By doing this, sticking to a budget feels empowering, not restrictive.
- Investing. When you invest intentionally, you are investing for a specific purpose, such as a child’s education or a dream vacation.
- Debt repayment. When debt is viewed as an obstacle to your goals, it feels heavier. Debt repayment becomes a proactive step towards financial freedom when it is done with intention.
The Final Word
The objective of financial advice is to help you reach your goals, but it is merely a means to that end. Being intentional guides you toward your financial goals.Ultimately, you can achieve financial freedom and fulfillment by knowing your “why” and aligning your actions accordingly.