Personal Finance Tip of the Week, By Financial Fundamentals, LLC of Watertown

How’s your outlook for 2015? Whether positive or negative, it may have a significant impact on your financial well-being for the coming year and beyond.

A growing number of finance professionals are working to better understand how attitudes and behaviors influence our finances. They are finding that our outlook can impact both our feelings about our financial situation and our actual monetary gains.In other words, certain attitudes can help you feel better about your money and help you make money too. What a great deal!

Here are a three examples that I believe are particularly interesting and useful:

1. Optimism. Financial commentator Jean Chatzky calls optimism a “wealth magnet” because it is a common trait among wealthy individuals. Optimism boils down to a feeling that good times are ahead regardless of your current situation, as well as a sense that past or current setbacks are isolated and not destined to happen to you. Optimistic people don’t have their heads in the clouds or in the sand. Instead, they are able to visualize a bright future and get started today to make it happen.

2. Abundance. Financial consultants at Money Quotient say that “what you focus on grows.” If you see your financial situation as abundant, odds are that you will become more abundant over time. Conversely, if your mind is centered on what is lacking, you will likely feel even more lacking down the road. Abundance isn’t always easy to channel when money is tight, but it is possible. One way to practice abundance is to keep a gratitude journal and log at least one blessing every day. You will see how quickly they add up!

3. Slow thinking when it counts. Economist Daniel Kahneman and financial advisor Doug Lennick indicate that “smart” financial decisions often come down to recognizing the difference between big and small decisions, and being more deliberate and thoughtful with the big ones. If you have the discipline to slow down before you make a big decision, you will feel better about your decision and will generally experience a better financial outcome than if you rushed. What’s big? For younger people, it includes decisions about the percentage of income you save each year, the amount of debt you take on (or avoid), and how you invest your savings. For older people, it includes retirement decisions, especially related to the timing of retirement and Social Security benefits.

These are pretty powerful attitudes and behaviors. One nice thing about them is that they can be learned and changed. We aren’t stuck with our current outlook. We can adjust and adopt a new outlook over time.

My hope for you is that you will begin 2015 with a sense of optimism and abundance, and will tackle your biggest financial decisions deliberately and thoughtfully!

Thanks for reading! You can learn more on our web site and Facebook page.

Stephen Barkhuff, CFP(R), CFA is the founder and president of Financial Fundamentals, LLC, based in Watertown, MA. Financial Fundamentals helps couples and singles with modest incomes take control of their financial future. Please feel free to email him any questions or comments.