It’s no secret that boundaries help establish healthy relationships, so why not set some boundaries around your finances?
Money boundaries are guidelines you put in place to balance your relationship with your finances and yourself and your loved ones. Setting money boundaries can bring more richness and fulfillment to your financial life.
Think of a boundary that you’ve set in your personal life. Maybe you cut back on meat or limited the amount of dessert you have a week, and as a result, you feel healthier. Or perhaps you’ve limited take out and eating out to once and twice a week, and now you have more money to invest.
Healthy boundaries equal a happier life.
How can you set the tone for a brighter money future? Consider implementing these top four money boundaries
Set Boundaries That Help You Grow Toward Your Goals
Before you can start creating financial boundaries, you have to understand your financial goals deeply. While financial boundaries and financial goals may seem the same, they aren’t. You can’t set a limit without a clear goal in mind.
Some financial goals you may have are:
- Paying off debt
- Buying a home
- Maxing out your retirement accounts like a 401k or Roth IRA
- Accumulate a 3-month emergency fund
Whatever your specific goals are, the only way to create boundaries is to start with your goals and set parameters that inspire habits to help you achieve your goals.
For example, if your goal is to pay off your existing debt, your boundary may be to limit takeout to once per week instead of four. Depending on your taste, that could free up $200 plus to go towards your debt repayment! Or, if you have a shopping crush on Amazon, your boundary may be to delete your prime account (you’d be amazed at how much weight that free shipping has).
Don’t beat yourself up if you accidentally cross a boundary, especially in the beginning. Mistakes happen, and habits will slowly develop over time, but boundaries shouldn’t be so restrictive that you're not enjoying your life. It’s crucial to find a happy medium!
Know Your Bad Money Habits, and Make Them Harder To Do
No one is perfect, so it’s essential to know your money shortcomings to help make those habits more challenging.
One of the most common bad money habits is spending more than you make. Overspending has a domino effect on your finances, and it can get very bad very quickly. If you fall into this trap, it’s time to dust off the budget (or “spending plan,” as we like to call it). Until you write down all of your expenses and track your cash flow month to month, you can’t have control over your spending.
Don’t be afraid to put your financial needs before others. Selfish right? Actually, not at all.
Setting boundaries is about protecting your mental health and financial well-being. You shouldn’t feel guilty about building up your financial stability. Think about it like putting your oxygen mask on first in an airplane. It may seem selfish, but by putting yourself first, you're in a better position to help.
Communicate Your Boundaries Openly and Honestly
Perhaps the most challenging thing about creating boundaries is communicating them with people in your life—especially those who wouldn’t mind violating them. Talking about money has been seen as “taboo” for so long that it’s easy to dismiss the gravity of these conversations.
You may have a friend or friends with whom you love going to weekly happy hours, but those happy hours often bleed into many hours, and the bill racks up quickly. Instead of going out every week, why not offer to host a happy hour at your place? That way, your money boundary isn't so restrictive that you can’t see your friends, but it offers a more cost-effective option.
Sometimes it’s as simple as that, but other times you have to sit down, think about what boundaries will help the most - or even a little bit - and establish them. While it may not be a fun conversation to have, you may be surprised at how many people have either been in your situation or are currently setting money boundaries themself. Who knows, maybe you’ll inspire them to take a closer look at their finances!
View Boundaries As Freeing Rather Than Limiting
Instead of thinking of boundaries as restricting, think about them as ways to keep you on the path towards what truly matters to you.
We think you’ll be surprised at how setting boundaries actually changes your view about money. More money isn’t the ultimate goal because there will never be “enough” money. Economists call this the “non-satiety” axiom - the average consumer will always prefer more consumption to less consumption, though the law of diminishing returns says the additional consumption yields less and less satisfaction. When you shift your money mindset to be more goal-oriented, your boundaries won’t feel limiting; they’ll feel freeing.
At the end of the day, don’t get too stressed about it. Once you introduce and develop healthy habits that help you reach your goals, you’ll find that you aren’t as overwhelmed with your money.
Ask For Help When You Need It
Creating money boundaries from scratch can be challenging, especially if you haven’t already established your financial goals.
No matter what stage you're at in your financial journey, our team at Pro Wealth can help you create a plan to achieve your goals and lessen any money worries.Ready to take the next step? Let’s do it together.