There are many effective ways to handle money, and people have different ideas, plans, and goals when it comes to managing personal finances. My ideas may be different than yours, and that’s okay. Ultimately, you have to consider your personal goals in order to determine the best course of action for you. I strongly believe that the six factors listed below are the most important when trying to develop any solid financial plan.

Your ability to save, pay off debt, and build wealth has more to do with psychology than math. How you think, feel, and respond to your financial situation largely determines where you end up. Math does play a small role, as we all know we need to spend less than we make, but many still ignore that most basic principle.

Here the six factors to consider while developing your financial strategy:

Attitude

How you think about money plays a large role in how you behave with money. Do you have loads of debt? Do you subsidize your income by using credit cards? Are you one of those people who believes you will ALWAYS have a car payment? Your attitude determines your path. If you believe you will always be broke and in debt, you will be. Poor is a mindset, not a reality.

Behavior

What are you doing, or not doing, when it comes to managing your money? Are you prepared for the emergencies of everyday life? Do you have a budget, or are you a compulsive spender? How you behave with money has nothing to do with math. If you’re having financial difficulties, confronting the man or woman in the mirror may be more informative than reinspecting your budget sheet. Is your financial behavior helping you or hurting you?

Contentment

I believe that contentedness is a direct side effect of attitude and behavior. Changing the way you think about money can change the way you act in regard to money, and you may see your financial goals, values, and aspirations change, too. The less money you need to to be happy, the more you can focus on your life’s greater goals and desires, because what is important to you changes when you decrease money’s weight in the equation. If you’re happy with what you have it’s much easier to control that spending monster we all have inside us. You don’t need to keep up with the Joneses, just yourself.

Balance

Balance is very important if you want to stick to your financial plan. If you neglect entertainment and “pleasure” spending in order to speed things along, you may find that your desire to stick to a plan will fizzle. On the other hand, if you spend too much money on entertainment, you may feel like you are not making progress and give up all together. It’s all about finding middle ground that keeps you motivated but allows you to enjoy life along the way.

Intensity

Intensity is important!  The more intense you are towards reaching your goals, the more you’ll motivate yourself. This is especially important when trying to knock out tons of debt. With intensity comes sacrifice, and this is something most of us have trouble with. Do you want to get out of debt or go on a $3,000 vacation? Do you want to build your emergency fund or buy a big screen T.V.? Intensity will motivate you to make the right financial decisions.

Diligence

Haven’t we all failed at something in our lives?  Success is born from failure, as failure teaches you what you need to improve on to succeed. It shows you what doesn’t work. If you see failure as the end, it will be the end; but if you see it as an opportunity to learn, your chances of succeeding are greatly increased. Diligence laughs in the face of adversity and allows you to keep looking forward no matter how many times you step backward.

In A Nutshell

Changing your attitude changes your behavior, and these changes can make you think a little more about what’s important to you. Finding the proper balance allows you to remain content, while your intensity helps determine how efficiently and quickly you achieve your goals. And lastly, staying diligent in your efforts will keep you moving down the right path.

If you master these six principles, chances are your financial math will get better automatically, without you even knowing it. Good luck!

Brad Chaffee is a PerkStreet Customer Columnist who also authors Enemy of Debt, a place where he passionately but candidly tackles the psychological issues related to our own habits and behaviors regarding money. Brad and his family crawled out from under $26,000 of debt and some major bad habits to become debt-free in 20 months, and he believes that if they can do it, you can too! Aside from his blog, you can connect with him on Twitter and Facebook.

Photo: kenteegardin