Adopting a positive money mindset is crucial to achieving financial success. A money mindset is your set of beliefs about money, which influences the financial decisions you make and shapes your financial life.
Saving money and spending money reflect your mindset. It can change over the years as you grow older, wiser, and more knowledgeable based on the past financial mistakes that you’ve made.
Let’s dive deeper into the money mindset and see why it is crucial for financial independence and freedom.
Who Is in Control of Their Finances?
A large number of Americans are in a difficult position financially. This is shown in a study conducted and published by Capital One in cooperation with The Decision Lab.
Here’s what they found:
- 77% of respondents are anxious about their financial situation
- 58% feel that finances control their lives
The financial future doesn’t look bright for a lot of Americans:
- 68% do not have enough money to retire
- 56% barely keep up with the cost of living
- 43% feel fatigued and stressed out
When you feel anxious and distressed about your current financial situation, making sound decisions is almost impossible. Also, you can’t see the small wins, and as time goes by, it becomes more difficult to shift your mindset with the negative self-talk that takes over.
Luckily, there’s a way to avoid all these consequences with a simple trick. Although your personal financial situation will not improve immediately, you will be able to reverse the negative effects of stress.
Thinking About Long-Term Goals Is A Step Closer to Healthy Money Mindset
Changing your money mindset is important, but without taking action, you won’t achieve much. To reduce the effects of stress and take the first step toward the right money mindset, you need to establish long-term goals.
The study showed that simply thinking about long-term goals, even for a few seconds, will increase your sense of control, regulate your spending tracking abilities, and help you become less likely to spend money the moment you receive a paycheck.
How is Your Money Mindset Formed?
There is a reason why the statistics we presented in this article don’t look good. Negative money habits push people toward debt, increasing their fear of losing money and losing control in other aspects of life too.
To understand the numbers and how to change our perspective, we must first understand how the money mindset is formed.
The psychology of money is one of many factors that can affect your money mindset. It reflects in your behavior when you have money—how you spend it, what motivates you, and eventually, how money makes you feel—does it instill confidence, fear, gratitude, or some other emotion?
What’s more, your upbringing and previous experiences also play a significant role. The way you grew up and watched your parents talk about money at a young age and behave in a certain way will reflect your current beliefs about money and your ability to change your money habits and alter your money mindset.
Take a second to think about how your parents handled money in your household and what they did to deal with debt, become debt-free, or pay bills.
All of this will help you gain a better perspective on money, and you will have a great starting point for changing your mindset.
Why Is It Important to Change Your Money Mindset?
This quote alone is reason enough to modify your money beliefs, remove the blocks, and improve your financial well-being.
However, we aren’t here to provide you with motivational quotes but to show you how to change your mindset realistically. But before we give you a few tips…
Did you know that out of 10,000 millionaires, 97% believed they could become millionaires and had confidence in their success?
What you believe will drive your behavior in all aspects of life, not just finance.
For example, if you strongly believe that you must sit down and write a journal daily for 10 minutes because that benefits your mental health, you will sit down and write. If you see the positive effect, you will adopt the habit over time.
Do You Have a Positive or Negative Money Mindset?
You can’t tell if you need to change your money mindset until you know what a good one looks like and how it differs from a bad one. We’ll help you answer that question for yourself with some statements and questions.
Negative Money Mindset
- You associate negative feelings with money. Do you feel guilty or ashamed when you spend money on yourself? Do you get anxious when you think about your financial situation?
- One of your core beliefs is that being rich is inherently bad. Do you think that wealthy people are greedy or materialistic?
- You believe that having money is impossible for you. Do you think that you’ll never be able to save up enough money to buy a house or retire?
- You think of money as a scarce resource. Do you hoard your resources and never waste them because you’re afraid of running out?
Certain characteristics tend to go hand-in-hand with having negative and limiting beliefs.
If you feel any of the following regularly, it may be time to reassess your relationship with money and change your money mindset.
- You feel like you’re always broke, no matter how much money you have in the bank.
- You believe that rich people are greedy and selfish. This kind of thinking creates a self-fulfilling prophecy – you’ll never become wealthy yourself if you believe that wealth is bad.
- You think that money is the root of all evil. This kind of thinking puts you in a victim mindset and will prevent you from ever taking charge of your finances. Instead of viewing money as evil, try viewing it as a tool that can be used for good.
- You feel guilty when you spend money on things for yourself. This is a common symptom of what’s known as the ‘broke mindset.’ It is characterized by thinking that there’s never enough money to go around and that spending any cash on oneself is frivolous and irresponsible. The truth is, you deserve to treat yourself occasionally! Just make sure that your spending is in line with your dream future.
Positive Money Mindset
A positive money mindset is one of the most important things you can do to achieve financial success.
It makes all the difference. Below are some of the key characteristics of the right mindset:
- You believe that you deserve to be wealthy (not entitled to it)
- You take responsibility for your own financial well-being.
- You understand that money is a powerful tool to be used for good and not something to be feared or worshiped.
- You know there is enough money for everyone to live prosperously.
- You have good money mantras that you recite daily, such as “I am a Money Magnet” or “I attract Wealth and Prosperity.” By having positive affirmations and a mindset about money, you will surely achieve your financial goals!
8 Ways to Develop a Better Money Mindset
Most of us have a love-hate relationship with money. We want more of it, but we also feel guilty and stressed about the money we have (or don’t have).
If this sounds familiar, it’s time to change your mindset and create an appropriate belief system. As discussed, the money mindset shapes your behavior and is the first step in creating wealth.
1. Explore Your Goals And Revisit Them Daily
We talked earlier about establishing goals and how that changes your attitude toward money and helps you reverse the negative impact of stress. Having goals on your mind will help you make better decisions that will have a positive impact on your budget and your life too.
2. Connect With People With Similar Financial Goals
Having goals alone may not be enough to get more money or change your spending habits because, over time, our motivation deteriorates and we abandon the good habits.
That’s why it is essential to surround yourself with people who don’t have limiting beliefs and are on the journey to make more than enough money to finance their lifestyles.
You can find such people in our Money School community.
3. Make Decisions While Not Stressed
Now that you have clear goals and others to support you, you will feel in control of your budget and life. No more fear or unnecessary stress.
This will allow you to make better decisions that will reflect in a positive way, and sooner rather than later, you will see your money growing.
4. Don’t Dwell On The Past – Focus on Your Financial Future
In the past, you made some mistakes. There’s nothing you can do to change that, and you have to realize it. It is critical to learn from our mistakes in life and do everything we can NOW to create a better future.
5. Stop Comparing Yourself to Others
Just because your friend has a new car or a fancy designer handbag doesn’t mean you need to spend frivolously to keep up.
Set your own standards and stick to them. Adopting an “abundance mindset” can help you fight the urge to be jealous of other people, which we all do sometimes, even when we don’t mean to. Opposed to the scarcity mindset, the abundance mindset means that there are enough resources—in this case, money—for everyone.
6. Focus on What You Can Control
One of the biggest money mistakes is that we often focus on what we can’t control. The stock market, the housing market, and the commodity price increases should not disturb our financial plan.
You need to pay for some things, but you can’t influence the prices or everything that’s going on in the world right now.
7. Spend Money Wisely
Easier said than done. However, you can spend cash wisely, and the best way to do so is to start living below your means.
This is a great thing to do initially because you spend less than you earn, forcing you to stay out of debt and save money.
8. Learn and Widen Your Horizons with Coaches and Courses
If you find that your personal finances are causing you stress or anxiety, it may be time to seek professional help. Gaining knowledge and learning more about a subject will help you overcome obstacles.
A therapist can help you understand and change the thought patterns causing you distress. Money mindset coaching is another option that can help you create financial habits and achieve your dream financial life. Here at Wealth Nation, we create courses and coaching programs to help people finance their lifestyles.
With The Right Money Mindset, It is Time To Start Financing Your Lifestyle
Now that you know the power of adopting the right attitude toward money, you can start investing in yourself and your future. Some of the things we mention here may seem silly at first, but having a strong money mindset is the first and most important step toward success.