How to Change Your Money Mindset for the Better

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Our views on money are greatly influenced by how we were raised and what money concepts we were made to believe growing up. Most of us were introduced to the same sequence of life events: going to school, moving on to college, and then finding a job. This particular format made us think that once we’ve found a job, we won’t have to worry about money anymore. And, boy, were we wrong.


Most of us who are actually lucky to have found jobs live from paycheck to paycheck. This means having enough money to pay the monthly bills, have enough food on the table, go out a few nights every month, and possibly get to travel once or twice every year; but you know for sure you’d want more out of this life if you had the chance. You want to try out new dishes at fancy restaurants without having to live on instant noodles in the next few days. For sure, you want to travel more, fly business class, and stay in hotels with more than 3 stars. You definitely want to have enough funds to save and invest.



How we go about our finances is deeply rooted in the mindset we are accustomed to. Therefore, transforming this mindset is a great step in improving the way we deal with financial matters. Here are a few tips on how to start your own transformation.


Revisit the way you talk to yourself about money. The story we tell ourselves every day becomes our very life, so be mindful of your script. Examine your inner dialogue and see if you have been too hard on yourself when it comes to money matters. Transform this inner chatter by adopting more hopeful and positive insights. If you have been beating yourself up for the student loan debts you haven’t finished paying off yet, try focusing on how much you’ve paid, rather than how much you still owe the next time you think about it. It’s simple, but it’s a start.


Always remind yourself that you are treading your own financial journey. This is important to remember especially in this day and age when we have all-day access to the life of others — or at least the way they curate it online. It’s easy to feel a pang of jealousy when you see your feed filled with travel photos, new purchases, weddings, and babies. Social media have been notorious in making people feel depressed, so never lose sight of the fact that you own your financial journey; because if you do, you might end up spending money on things you don’t need just to “keep up.”


Avoid emotional spending. Speaking of spending money on things you don’t need, we sometimes spend money to regain some sense of control. However, after using all that money and see how the impulsive buy messed up your monthly budget, you lose your sense of control again. The cycle goes on and on. When you find yourself scouring online shopping sites at the end of a very stressful workday, stand up and take a walk instead; and remind yourself that buying a second parka jacket (which will probably end up sitting unused at the back of your closet) will just stress you out more down the road.


Change your debt mindset, too. It may be hard to be positive about all the money you owe, but you can give it a try if it means lifting the weight off your shoulders somehow. Decide that you want to get out of debt soon and make a debt plan, complete with timelines, action items, and personal deadlines. Create a tracker of your progress in paying off your debt and view it exactly like that: progress. You are moving forward and out of debt, and soon enough you will have more funds to move around with.


It takes effort and courage to change your money mindset, and these tips can get you started. In a nutshell, these tips emphasize that in order to unlearn negative views on money, you must stay on top of your inner dialogue and thought patterns with regards to your finances. One effective way to recognize your thought patterns and inner dialogues is through talk therapy. A licensed therapist, like those at BetterHelp, can help you identify your cognitive biases. By doing so, you are leaving room for more productive and positive ideas on how to elevate your financial situation.


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8 Personal Financial Ratios to check Before you invest

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Like a professional footballer, the physio has to check the physical health of the players before they are declared fully fit to play in a 90 min competitive game. Similarly, to us as retail investor, we need to understand our own personal financial ratios so that we put priority in the most pressing area in our personal financial planning due to limited resources. Don’t jump straight to investment if we are not sure out financial fitness level.

There are 8 basic personal financial ratios we need to check.

(1) Basic Liquidity Ratio: This ratio checks whether we have enough cash reserve to serve our monthly expenses. The guideline for a typical person is 3 to 6 months but it may need up to 1 year for unemployed PMET who are aged 40 and above because they may need longer time to find a job. In other word, this can be treated as the number of month emergency fund available to deal with unforeseen circumstances.

(2) Liquid Asset to Net Worth Ratio: This ratio indicates the percentage of your net worth that are liquid. If you are retiree and you think you have “Asset Rich Cash Poor” symptom, check whether your ratio is meeting the guideline of at least 15%.

(3) Saving Ratio: This ratio measures whether one set aside part of the monthly income to invest regularly with discipline to meet their own financial goal. As a general rule of thumb, one should put aside at least 10% of monthly gross income. In another word, “Pay Yourself” first!

(4) Debt to Asset Ratio: This is also known as personal Gearing Ratio. This ratio checks how much your assets are funded by debt. As a general rule of thumb, you should have no more than 50% of your assets leveraged through debt.

(5) Debt Service Ratio: This ratio measures how much you use your “take-home-pay” to service total debt obligations. If you don’t want to become a housing loan slave, credit card loan slave or any debt slave, start reducing your Debt Service Ratio to less than 35% as per the general guideline.

(6) Non-Mortgage Debt Service Ratio: This ratio measures how much you use your “take-home-pay” to service you credit card debt, personal loan and other non-mortgage related debt. The effective interest rate of all these debts are much higher than mortgage loan. If you are in financial distress and facing difficulties in clearing your debt, this is the area you should be focus on immediately. As a general rule of thumb, you should have no more than 15% of your net income going into non-mortgage debt.

(7) Net Investment Assets to Net Worth Ratio: This ratio measures how much your net worth is invested assets, and whether you deploy the resources efficiently to income generating asset classes. As a general guideline, you should have at least 50% of your assets invested in some form of capital (investment) assets.

(8) Solvency Ratio: This ratio measures your technical solvency in terms of whether you have sufficient assets to meet your liabilities. As a general rule of thumb, your Net Worth should be at least 50% of your Total Assets.


In summary, understanding our own personal financial ratio is extremely important when charting our financial journey to prioritize the allocation of our limited financial resources. Personal Financial ratio also serves a measurement of our financial progress when we are moving along our life stages. Things get measured, things get done and get improved. Start measuring your Personal Financial Ratio now!


Kenny Loh is a Senior Consultant of a largest Independent Financial Advisor in Singapore. He won 4 Awards in 2017, Financial Alliance Quality Class Merit Award, Top 5 Investment Asset Under Advice (AUA) Award, Rookie Consultant of the Year Award and Best Practice Consultant Award. You may contact Kenny at if you need help in conducting a Financial Health Check to understand your Personal Financial Ratio.

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