Personal finance itself is not that complicated. There are certain core principles, that if followed, create an almost certain recipe for success. Pay yourself first, automate, eliminate consumer debt, invest a percentage of your income, etc. What is more complicated, and often overlooked, is creating a positive money mindset.
The reason a positive money mindset is so important is that it’s a starting point. I’ve learned in my own financial journey that a poor mindset leads to poor personal finance results. When I shifted my mindset, my actions and results also positively changed–and I believe the same can happen for you.
What is Money Mindset?
Money mindset is the way we think and feel about personal finance. Are you someone who believes money is abundant and meant to be used according to your values? Or are you someone who believes money is scarce and needs to be squirreled away? We can’t always control results, but we can control our thoughts and actions–the foundations of mindset.
Why is Money Mindset Important?
There are a lot of variables in life. And it’s no different in the world of personal finance. A lot of things can happen with our money–we might make a bad investment or two, an unexpected emergency can wipe out our emergency fund, or we might even get lucky with an investment.
The one constant though is our attitude and the way we think about money. It’s the one thing we can control, no matter what happens. We have the ability to create a positive money mindset.
I personally can relate to this. My money journey began with false premises. Those thoughts became my reality and it’s the primary reason I struggled with my own personal finances for so many years. It wasn’t until I shifted to a more positive money mindset that my results began to change. It’s why I’m writing this post and why I made the first chapter in my book specifically about mindset.
Related:
- How Much of an Emergency Fund Should You Really Have?
- Why the Pandemic Prompted Me to Increase My Emergency Fund
Behind the Money Mindset
There are many layers behind your money mindset. Like it or not, our histories play a big part in the way we think, act, and behave around money. If you came from a household in which there was an abundance mindset around money, you more than likely will have a similar mindset. If you came from a household with a scarcity mindset, you likely have retained many of those ideas.
In addition, there are many individuals that have impacted our money mindset, including:
- Parents
- Family
- Friends
- Co-Workers
- Acquaintances
- And many more
Whether we realize it or not, the people we spend the most time with influence our thoughts, actions, and mindset. That can be good or bad depending on who and what we’re listening to. That’s not to say we are robots without the capacity to think for ourselves–but we are influenced by others around us.
Sometimes the influence is wanting to do the opposite of those around us. For example, if you came from a household that lived paycheck to paycheck, that might be a motivator to get out of that cycle. You’ve experienced the negatives that come with being in that cycle, so it may act as a motivator to stay out of that cycle. Or maybe that’s what you grew up with and it seems comfortable to you.
People and experiences affect us in different ways, sometimes without us even realizing it. Often it takes education and experiences to realize just how much those past interactions with money have truly affected us.
How to Create a Positive Money Mindset
Ok, so we’re gaining some insight into our money history and how that has affected our current mindset. Now for the most important part of this post–how to improve your money mindset. There are certain and intentional steps we all can take to greatly improve our mindset around money. These steps don’t have to be time consuming either–a lot of it is simply being aware and making the necessary adjustments.
Number 1: Figure Out Your Why
A great starting point to improve your money mindset is to figure out your why. What is your why for improving your money mindset and attitude? Why do you want to improve in your personal finances?
Are you wanting to improve to change your family’s financial future? Do you want to take more vacations and have more control over your time? Or is it more about reaching your full potential, which includes financial success?
For many, it might be a combination of things. Figure out your why–there is no right or wrong answer here.
Number 2: Think About Your Money Beliefs
Think about your money beliefs. Do you lean more towards the abundance or scarcity mindset when it comes to money? What impact does your history have on your money beliefs?
It helps to think about the way you were raised and some of the viewpoints you had about money growing up. More importantly though, what are your current money beliefs? Maybe you’ve met a few people over the years who have impacted your viewpoint, or maybe you’ve read a few influential books that have helped shape your mindset.
Number 3: Eliminate the Faulty Thinking
This was a big one for me. So big in fact that I included it in the introduction of my book Cash Uncomplicated. One of the biggest reasons for my lack of success in personal finance was my faulty thinking. I used to say things like:
- Buying real estate is too expensive.
- Investing is only for the rich.
- I graduated with a sociology degree, I’m not really supposed to make money.
This way of thinking was actually holding me back. It prevented me from taking action and created built in excuses to make myself feel better. It wasn’t until I eliminated my faulty thinking that my money situation began to dramatically improve. And looking back, almost all of my thoughts and perceptions about money were completely wrong!
Number 4: Write Down What You’re Good At
This next step seems simple, and it can be. You just have set some time aside and get it done. Take about 20 minutes and write down what you are good at. It doesn’t matter how insignificant you might think it is–take some time and write it down.
Writing things down has a way of creating clarity and recognizing patterns. There’s also a magic to seeing things in writing–words have a way of popping off the page when you write them down. Some things to consider writing down:
- What are you good at that you enjoy?
- Describe your ideal day.
- What feels light to you and what feels heavy?
- What would you like to be doing 10 years from now?
Number 5: Think Abundance
Do you believe that money is an infinite resource you can make more of, or do you believe money is limited and scarce? Speaking for myself, I used to think of money as scarce and something that had to be stored away in hopes I wouldn’t lose it. I’ve since shifted to the abundance mindset.
The person with an abundance mindset looks for win-wins, new opportunities, and problems that need to be solved. They find opportunity in everything, even if it looks like a bad thing at first. Since inflation has been running rampant over the past several months, let’s use it as an example.
Inflation presents a lot of challenges and problems for people. Their spending power is reduced seemingly overnight. Gas that used to cost four dollars a gallon is five or six dollars a gallon. Produce that used to cost 99 cents/lb. now costs $1.35/lb. The person with an abundance mindset looks for the ways to win during an inflationary period.
Maybe it’s changing an investment strategy to hedge against inflation. Or maybe a new business is started to help people overcome the challenges inflation presents. Whatever it is, the individual with an abundance mindset is looking for the ways they can win and help others during this time period.
Number 6: Get Educated
One of the best ways to begin shifting your money mindset is to get educated. Education helped me shift from excuse-ridden and financially unsuccessful to someone who takes accountability and ownership for my personal finances. The missing piece was education.
Once I got educated about the world of personal finance, my money mindset completely shifted. I realized there were a lot of things I just didn’t know, and the things I didn’t know contributed to my faulty mindset. As a result, I took incorrect actions–and even worse, developed excuses for why I wasn’t achieving any progress towards my financial challenges.
Book Recommendations:
- Rich Dad Poor Dad
- The Millionaire Next Door
- Set for Life
- The Richest Man in Babylon
- The Automatic Millionaire
Number 7: Change Your Habits
This is where it’s all about taking action. Changing your habits is one of the best ways to take action. It’s easy to sit around and think about things and ruminate about things that never will happen. But when we take action, we don’t have to sit around and worry because we are too busy doing.
Habits are formed as we begin doing and implementing. For example, if your job requires you to make contact with 10-15 customers per day to succeed, that’s an essential action. Once you begin making those 10-15 contacts per day, it will start to become habit.
The idea is after making the client contacts for a set amount of time, it will become second nature and a habit. Rather than worrying about losing customers, you will be taking actions to strengthen client relationships and building a greater client base.
Book Recommendations:
Number 8: Take Action
Piggybacking off changing habits is taking action. Taking action means getting things done. Making mistakes, picking yourself up, and moving along. Some of our actions are going to work and some aren’t.
The ones that work may become habits, the ones that don’t work get tossed out and replaced with actions that work. When we take action, we change our mindsets into the “doer mindset.” The doer gets things done and doesn’t dwell on the things that didn’t work.
Taking action also helps to build a mindset of confidence. Confidence to know that mistakes will be made and obstacles overcome. When people acquire this mindset, they are not as afraid to take action and make mistakes. Eventually past failures turn into future successes–all part of the growth process.
Number 9: Keep Persevering Through Challenges
What’s another way to improve our money mindset? Keep persevering through challenges. Anyone who has every had any success with their personal finances will tell you they had challenges they had to overcome. And they’ll probably also tell you that overcoming those challenges gave them the strength to be where they’re at today.
Personally speaking, my challenges with personal finance led me to writing a book and starting a website. If it had just been smooth sailing the whole time, those things never would have come to fruition. My challenges also helped me formulate the principles that have led to my success. None of it would have happened without perseverance.
Number 10: Embrace the Journey
Success in personal finance is not an end destination or a zero-sum game. It’s a process. To paraphrase Jim Rohn, it’s what you become in the process. Your money mindset is almost guaranteed to improve if you embrace the journey.
Embracing the journey means taking daily actions, celebrating the wins, and measuring your progress. We’re not after perfection, we are after progress. Just some of the questions you can ask yourself:
- Am I better today than yesterday?
- Have I made progress with my personal finances over the last year?
- What progress have I made over the past five years?
- What are five things I have done well this year?
Asking yourself these questions will help you move to a focus on your journey rather than the final destination. Questions like these are designed to measure progress and bring awareness to how well you are doing, rather than whether you actually achieved the destination yet.
Conclusion
It’s not hard to create a more positive money mindset. It’s also not easy. You have to make the choice that you want to improve it. If you make the choice to improve your money mindset, then you will. If you make the choice not to, you won’t.
Once you do make the choice though, it’s simply a matter of taking action and being consistent. The results will come. Some results will come faster than expected, other results will come slower. It’s all about making progress though, and getting better every day.
How can you create a more positive money mindset?
