With most things in life, if we are trying to achieve or change something, we often have ensure we are mentally ‘there.’ Our mindset can drastically shape a lot of things - whether we think we are good enough for a pay rise or that new job, do we really believe in ourselves enough to make it happen? In fact, our mindset can have a huge influence over our finances too and the ways in which we think about money.
Lesley Thomas, Financial Mindset Strategist and founder of The Money Confidence Academy, explains how talking more about money can help us all become better at money management and help tackle emotional issues surrounding our attitudes, from dealing with debt to saving woes. Here, she explains what having a ‘Money Mindset’ really means and how it can help you.
What is a ‘Money Mindset’?
'Money Mindset' refers to a person’s beliefs, attitudes, and thoughts about money. It encompasses how a person thinks about and relates to money, wealth, and financial success. A person's money mindset can have a significant impact on their financial decisions, behaviours and the results they see, or don’t see.
Our Money Mindset usually forms between the ages of 0 and 7, usually as a result of our parents, or main caregiver’s relationship with money. As small children we soak up information like a sponge and this include what our parents say and don’t say about money, and about people who have, and don’t have money. This all forms the basis of our Money Mindset, which gets further layered on a we grow older and all the experiences we have as children and then as adults.
The key element to be aware of is our Money Mindset, is directly linked to our sense of self-value, self-worth and self-confidence. Some people tie their self-esteem to their financial success, leading to a fear of failure or a drive to constantly achieve more. Others may believe that money doesn't define their worth as a person.
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Money mindset also affects how people view and handle debt. Some may see debt as a necessary tool for achieving their goals, while others may view it as a burden to be avoided at all costs.
Money mindset influences the types of financial goals individuals set for themselves. Some may prioritise saving and investing for the future, while others may focus on immediate gratification in the here and now.
People with different money mindsets may have varying levels of risk tolerance. Those with a more conservative mindset may be risk-averse and prefer safe, low-return investments, while those with a more adventurous mindset may be willing to take on higher risks for potentially higher rewards.
Money mindset can also be shaped by a person's level of financial education and exposure to financial theories and ideas. Those with a growth mindset may be more open to learning about finances and improving their financial literacy.
How can we change our ‘Money Mindset’ to help us better handle our finances?
There are a number of keys ways to help you change and alter your money mindset, from identifying negative triggers to positive affirmation, here are my top 10 ways to help create a better attitude towards money.
- Awareness. This is the key to making changes in your Money Mindset, becoming aware that your current relationship with money is not serving you. Start by examining your current beliefs and attitudes about money. Reflect on how these beliefs may have been shaped by your upbringing, culture, and past experiences. Identify any negative or limiting beliefs you may hold.
- Challenge negative or limiting beliefs. Ask yourself if these beliefs are rational and based on facts or if they are simply assumptions. For example, if you believe that you'll never be able to save money, ask yourself why you hold that belief and whether it's possible to change your saving habits.
- Replace negative beliefs with positive mantras or affirmations. For example, if you tend to believe that you're not good with money, create an affirmation like, "I am capable of managing my finances effectively." Repeat these affirmations regularly to reinforce positive beliefs.
- Invest time in learning about personal finance. This can include reading books, listening to podcasts, or seeking advice from financial experts. The more you understand how money works, the more confident and empowered you will feel in managing your finances.
- Surround yourself with people who have a positive money mindset. Start having conversations about money with friends or mentors who have a healthy attitude toward finances. Their perspectives and behaviours can positively influence your own and help you to see how useful a tool money really is.
- Define your financial goals and create a plan to achieve them. Having clear objectives can motivate you to develop better financial habits and make more informed decisions. Having goals is the best way to help keep those healthy habits that you have started around money and to stick to them.
- Create a budget and regularly track your expenses. Check your bank account daily. This can help you gain control over your financial situation and adjust as needed. Whilst this may feel uncomfortable to begin with, quickly you will start to see the benefits of being proactive with your finances and in turn this will create feelings of empowerment.
- Be grateful. Cultivate an attitude of gratitude for what you have, rather than constantly focusing on what you don’t have. Gratitude can shift your perspective and reduce feelings of financial scarcity.
- Seek expert help. If you have deeply ingrained money mindset issues or find it challenging to change your behaviour by yourself, consider working with a Money Coach who specialises in money-related issues. They can help you uncover underlying beliefs and develop strategies to change them
- Act. Ultimately, tweaking your money mindset requires acting. Start by making small changes in your financial habits and gradually build on them. Celebrate your successes along the way to reinforce positive behaviours.
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What can we do right now to break bad money habits?
I always advise my clients to set aside time to write about your thoughts and feelings regarding money.
- Write down 5 limiting or negative beliefs that you have around money right now, then right them in the positive. These can be the start of a collection on positive affirmations that you can say to yourself on a regular basis
- Take this a step further and carry a notebook and pen around with you for 24 hours. Every time a negative thought comes into your head, take the pen and paper and write down that thought, not in the negative, but in a positive way. This will not only allow you to become aware of how often you allow negative thoughts to take hold, but also allows you to create affirmations that are personalised to you
- Ask yourself these questions and write down the answers. What are my earliest memories related to money? How do I feel when I think about my financial situation? What are my financial goals, and what emotions are tied to them? What is my inner dialogue when making financial decisions?
Write a detailed account of your financial journey from childhood to the present. Include significant financial events, both positive and negative, and how they have influenced your beliefs and behaviours.
- Money Archetypes Assessment – Take an online assessment to help you to identify your predominant relationship with money. This can help pinpoint whether you lean more towards scarcity, abundance etc.
- Values Exploration - Identify your core values related to money. Ask yourself what truly matters when it comes to finances. Is it security, freedom, generosity, or something else? Understanding your values can shed light on your financial beliefs.
- Family Money Talk – Have a candid conversation with close family members or trusted friends about their money beliefs and experiences. Sometimes, hearing others' stories can help you recognise similarities or differences in your own beliefs.
- Visualisation – Visualisation is a powerful tool to help you develop a power Money Mindset, as it encourages the Sub-Conscious Mind to work with the Conscious Mind, to create the reality you want to have for yourself. You can either spend some time imagining the future you want for yourself in as much details as you wish. Or use one of the many visualisations that are available online
- Financial Biography of Influential Figures - Research and write about the financial biographies of successful or influential figures who inspire you. Examine how their beliefs and actions led to their financial success.
- Financial Goal Setting - Set specific financial goals and explore your emotional reactions to these objectives. Ask yourself why each goal is important and what beliefs or fears may be connected to them.
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Improving your money mindset can have so many benefits, both for your financial well-being and your overall quality of life, such as:
- Better financial decision-making. When you have a healthy attitude toward money, you are more likely to make informed choices about budgeting, saving, investing, and managing debt.
- Boost your confidence in handling your finances. You feel more capable and empowered when it comes to managing your finances, which can reduce stress and anxiety related to money. Who doesn’t want this!
- More financially secure. Those with a money mindset are more likely to save for emergencies, retirement, and future goals, reducing their vulnerability to financial crises.
- Better relationships. Money can be the number one source of conflict in relationships. A positive money mindset can lead to healthier discussions about finances and better communication with your partner or family members.
- Greater sense of fulfilment. As you become more financially secure and abundant in your thinking, you may also be more inclined to give back and be generous.
- Improved emotional well-being. Your attitude toward money can have a significant impact on your overall emotional well-being. A positive money mindset can reduce feelings of fear, envy, and comparison with others, leading to greater contentment and happiness.
- Financial success. When you believe in your ability to achieve financial goals, you are more likely to set and accomplish them. This can include goals related to home-ownership, travel, education, or any other aspiration.
- More resilient when financial challenges arise. A positive money mindset makes you better prepared to adapt to the unexpected and bounce back from financial difficulties
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