Your money mindset is your unique set of beliefs and your attitude about money. It drives the decisions you make about saving, spending and handling money.
A money mindset is a manifestation of your attitudes and beliefs about money. A positive money mindset can help guide your behaviors in an unusually powerful way, while a negative money mindset can produce equally negative effects.
Your money mindset shapes the way you feel about debt, your attitude toward people who make more or less money than you, how easily you can give, your ability to invest with confidence, and more.
How Is Your Money Mindset Formed?
Your money mindset is influenced by many different factors, including the psychology of money itself. Obviously, the experiences you’ve personally had around money will play a big role. Things like if you had a part-time job in high school, if you’ve been at the receiving end of generosity, or how openly your parents talked about money growing up.
Thinking about how money was handled in the household you grew up in will help you understand the foundation for your beliefs about money. From there, you’ve either consciously or subconsciously developed a unique set of beliefs toward money based on your life experiences.
The good news is that, regardless of your background, your money mindset can be strengthened and/or changed depending on the information you consume today. Developing new attitudes — and reforming old ones — is most definitely possible by adopting a more positive outlook and retaking control over the factors in your financial life that you have the ability to change.
How to change your money mindset:
Decide to be financially successful
Getting wealthy actually starts way before you open that investment account or make that first deposit into your savings account. It starts with a simple decision, which in itself is a very profound one. It’s deciding that you are going to be wealthy and that in turn means deciding to commit to the journey and trust the process. Deciding you are going to be wealthy (with full conviction) is an incredible boost to your mindset. This is because, with this decision, you are telling yourself you can do it. Unless you believe you can be wealthy, you probably won’t be inclined to do what it takes to actually build wealth.
Determine your life values
Once you’ve decided you are going to be wealthy, you have to determine your reason for wanting this financial success. That means determining your ‘why”. Your “why” drives a deep sense of purpose and helps you develop the motivation you need. In fact, having a “why” can directly improve factors in your life that tie into overall happiness. So why do you want to pay off your debt, save money, become financially fit and successful, financially independent, etc? Knowing your “why” will be your ultimate motivator. Especially on the days or during the seasons when things are not going exactly as you planned.
Read books that will influence your mind in a positive way.
Leadership speaker Charles Jones once said, “You’ll be the same person in a year as you are today except for the people you meet and the books you read.” If you want to give your brain the chance to change and grow, pick up a book.
Think about your life up until now and ask yourself:
What did I hear and see about money growing up?
What’s one thing my parents did with their money that I want to replicate?
What’s one thing my parents did with their money that I want to do differently?
Write down your answers in a journal. What changes do you need to make?
Give away some money.
Giving is the most fun you can have with money. And it’s a proven way to change your money mindset too. It moves you on the spectrum from selfish to selfless. I know you might feel apprehensive at first, or maybe you’re not taking me seriously. Just try it! Commit to giving back some money to help a person or organization in need just once a week. If you don’t feel like a new person a month from now, message me on Instagram (@rachelcruze) and we’ll talk. Go on . . . I’ll wait.
Dream about your retirement.
Picture your life down the road in high definition and let that be your motivation as you plan for retirement today. My friend, bestselling author Chris Hogan, says, “If you can see your dream in every detail—if you can fix your eyes on it—then I know you can muster the effort you need to hit your numbers.” By the way, if you’re still in debt or don’t have an emergency fund, having a vision for your retirement is still incredibly motivating. Take that dream and let it fuel your passion to get to a place where you can invest even faster!
Have the belief that success is possible for you.
No matter your race, religion, level of income—or, to quote some deep, philosophical lyrics from the Backstreet Boys, “I don’t care who you are, where you’re from, what you did . . . ”—you have the power to make your own success. Some people have bigger obstacles in their story than others, but simply believing is the first step. Your behavior will follow your beliefs, making it easier to stick to good habits. And over time, your entire perspective will change for the better.
Money needs direction
Most people know this as having a budget or a financial plan. From a practical standpoint, this makes complete sense. If you don’t have a plan for your money then you’ll never really shift your financial situation. However, the structure of this plan stems from the mindset that your money needs direction and a plan in order to meet your financial goals.
Cut emotional spending
Emotional spending is a huge issue for many people because we are often driven by our emotions depending on what’s happening in our lives. If life isn’t moving according to our plan then we can feel powerless amidst chaos and turn to money in order to make things right. Money represents power, so it’s no surprise that many use it to ease their pain and regain a sense of control when life throws a few curveballs.
Money is personal not relative
It’s easy to compare your financial situation to those in your family, friends or coworkers. This can create feelings of lack, envy and despair concerning the state of your finances. Consider your personal financial goals for yourself, not as they should be in relationship to what you see in others.
You may see someone driving the latest car and feel jealousy, however, you may not see they are just barely scraping together the money to make the payments every month. Yet, as you compare your situation, it shifts your mindset from being appreciative for what you have to now being insecure about what you don’t have. Money is personal and best kept that way to avoid a negative shift that will inevitably affect your financial situation.
Let go of standards and focus on what really matters to you
When it comes to building wealth and working on your money mindset you have to go with what works for you and it’s important to not get caught up in standards that are defined by the world. And you also want to avoid comparison with others; it’s the thief of joy.
Again this goes back to your “why.”
You might want to retire young, having $500,000 might be your definition of financial independence or perhaps it’s $1 million. Or your financial goal might just be to have enough money to backpack around the world.
Whatever your goals might be, focus on your own standards and what money means to you in relation to what you want in your life.
Change your money script
If you’ve ever said to yourself “I’ll never be able to afford that!” or maintain the perspective that you will never be as successful as your wealthy friends then you’ve encountered a negative money script. Money scripts shape the mental tape we have about money.
They are commonly referred to as money blocks. Negative money scripts can have disastrous effects on your financial situation because what you think affects how you feel which then shapes the actions you take and eventually, the results you get. You can see why it’s important to identify any negative money scripts so that you can shift them into positive scripts that will eventually shape your financial life in a positive way.
Get comfortable with your fears and your discomfort
Anxiety and fear are natural byproducts when you want to accomplish something big. There’s the fear of the unknown, the fear of change, the fear of failure.
And in many instances, fear can stop you dead in your tracks and can become really overwhelming. Especially when you start making up things in your head about all the “what ifs” and “whatnots” around what could happen (that more often than not, never happens).
The thing about fear though is that since it comes with the territory you really have two choices. The first choice is to let it keep you stuck. The second and better choice is to embrace fear as part of the journey, let it come along for the ride but let it know it’s not allowed to hold you back.
One great way to overcome fear is to remember your “why” and look back at all the accomplishments you’ve had to date and the fears you overcame to get there. If you could get past those fears you can most definitely get past your current fears about money.
For every fear you have, there is probably one action (even if it’s just a small one) you can take to counter the fear. For example, are you afraid you’ll never get out of debt? You can focus on making a debt payment right now or in the near future to work against that fear.
Remind yourself constantly, no matter how terrifying it can be, that you can do this and focus on taking small steps every day before you know it, you will have made big progress.
Express gratitude
Expressing gratitude is one of the best money mindset exercises because it is a good way to adjust what you focus on. When you are grateful, you focus more on the things you have that you are appreciative of as well as on all the good that has come to you. Gratitude also drives contentment in your life which is key to wealth building because when you are content with what you have, you are less compelled to spend, spend, spend, in order to gain material satisfaction which doesn’t always work because you’ll find that there’s always something new that you can buy. Check out our 30-day gratitude challenge to get started!
Use affirmations to improve your money mindset
It’s so easy to let negativity creep into our mindset. However, you can combat those bad thoughts with good ones! Using positive financial affirmations as part of your daily routine is another one of the top money mindset exercises to start.
In fact, studies show that practicing positive affirmations can actually reprogram your brain! So, using affirmations will improve your outlook and give you a healthy money mindset.
Don’t dwell on your past financial mistakes
If you beat yourself up for your past financial mistakes, it’s time to stop. Why? Because failure is the path to success! We all make mistakes and have had money problems, but you can use them to learn lessons and grow as a person. This includes bettering yourself financially. So rather than dwelling on what you did wrong, use those past experiences as a learning tool to make a financial plan to do better.
Let go of limiting money beliefs
Letting go of limiting beliefs is another key step to creating a positive money mindset. Limiting beliefs do just that…they limit you. You can achieve financial success if you try! So write down some big hairy audacious goals and set your sights high.
This is also another reason to use your daily affirmations. They will help you bust through those old beliefs and set new unlimited ones!
Podcasts to listen to:
https://www.clevergirlfinance.com/blog/the-15-best-financial-podcasts-for-women/