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Short Guide 1: Motivation – Why it’s important to start getting to grips with financial matters

Published November 8th, 2020

When it comes to money matters, do you tend to wince and quickly change the subject? Fair enough. But here are a few good reasons why it might still be a good idea to change that attitude right away:

Money mindset: what is my relationship with money – and why?

“I’m no good with money”, “I’ll never be rich”, “Money stinks” – have you ever said or thought one of those statements? We all have a relationship with money – whether good, bad or neutral. And that comes from somewhere. Usually from our own environment, family background, interaction with others or from what we think we know about money. And while all these statements are not necessarily wrong, they’re not necessarily right either. Some of us might have been bad at maths years or even decades ago, which leads those people to think that they were never any good with figures. And others might have very little money at their disposal and therefore little desire to broach the subject.

Others still might be influenced by the many examples from the realms of economics and politics, where money seems to be part of the problem rather than part of the solution. And so it almost looks as if you could do more damage with money than something constructive. This is wrong for a start – our work provides evidence to the contrary every day.

When you start getting to grips with financial matters, the first thing you should do is ask yourself: what do I think about money? How good do I think I am at managing money? Or do I believe that I can never have more money than the bare minimum? And then follow this up with the next question: Why do I think that the answers I’ve just given are really true? And do things have to stay that way? Having a positive mindset will not change your bank balance or resolve structural problems, but it will change your perspective – and that is a start. Here you will find out more about your money mindset and the most important questions that you should be asking yourself about it.

Money isn’t that important to me.

You’ve made it if you have a lot of money? Not necessarily. Success is something that can take place on many levels and that takes a different form for us all. For some of us, money is part of this. But probably not for the sake of the money itself but rather the way in which it allows us to structure our lives. And what we all would presumably like is to be able to determine our own actions to a great extent. When making consumer decisions, when dividing up our time between work and private life – or even being able to leave a job our motivation for which has long been missing in action.

So while money might not be a desirable goal in itself, it creates possibilities that would not exist without it. And in order to create this kind of leeway, it is essential to get a handle on your own finances and maybe on your spending habits too. And to work with the results. After all, this is a key tool that will free you up in your decision-making and make you more independent. Needless to say, we don’t have everything under control, but some people do have a certain latitude when it comes to shaping their own lives, including the financial side. And they should urgently make use of this.

I can take care of money matters tomorrow.

“Not now! I’ll look into that soon enough …” Is that the first sentence that comes to mind when you think about pensions, provisions, insurance or even about saving money? That’s understandable. At the same time, the question of finance is an important one for all of us – regardless of how much money we have, how old we are and whether we are all that interested in finance or not.

After all, money is the currency that allows us to acquire products, experiences or time. And most of us don’t have an unlimited amount of this currency, although we may well have an unlimited amount of ideas about what we could do with it. Such as travelling the world, buying a house, working less, retiring early or simply not having to worry about money all the time. It is certainly true that money doesn’t bring happiness, but it does bring a certain amount of reassurance. And it fulfils all kinds of needs.

And even if you are the kind of person who manages very well on their own budget, it doesn’t mean that this will still be the case in the near or distant future. This is because life is difficult to plan – and because the pension provided by the state only covers the absolute minimum, if even that. More on that below.

How do I envisage my future?

Time for a little time travel: Hello Future Me! If you imagine paying yourself a visit in 30 or 40 years’ time, what would you like to see? Sounds like a mundane question, but it really isn’t. Because what we do now – or don’t do now – influences the direction we are taking and where we finally end up. Perhaps the answer is a vague one like: most of all, I want to be happy. Or maybe it is something very specific like: I want to have my own house with a garden and apple trees.

Do you have a magic wand? No. Can you assume that you will never be able to fulfil your wishes anyway? Again: no. Can you rely on it happening somehow just because you work long enough? Same answer.

This is because, at the time of writing, every third person in Germany who has worked for 40 years receives a pension of less than €1,000. And half of these receive even less than €800. The average pension for women is currently just €693. Those figures are tough to swallow, but that is how things are. Not a situation that anyone would like to find themselves in. But is that how you want to end up? Not necessarily.

So the question is: what role does money play in helping me to achieve what I want to achieve – and what steps can I take from now on to make this happen? Or how can I make (even) better decisions?

And, in order to be able to make decisions in the first place, you need knowledge. For example, you need to know how much money is currently available to you or how much is leaving your account and why. You also need to know how to increase the money that is there.

Which is where our next Short Guide comes in – read it here.