Discover the important role mindset plays in financial success.
If you bought my award-winning book Money Girl’s Smart Moves to Grow Rich, first of all, I want to say a huge thank you! If you read it, you know the first chapter is titled “What’s Your Money Mindset?”
Do You Need to Change Your Money Mindset?
I made the topic of mindset the first chapter of my book for a reason; your attitudes and psychology around money really do affect how you handle it and how much of it you have. In this post I’ll discuss what a money mindset is, where it might come from, and how it can be the key to accomplishing your financial goals.
What is Your Money Mindset?
The term money mindset may seem a little nebulous, so I want to pin it down for you: Your money mindset is how you think about money. Your thoughts about money are incredibly powerful and that’s why it’s so important to pay close attention to them, and to change them when they don’t help you accomplish your goals. Here are a few simple examples to help you figure out your money mindset:
Example #1: You start thinking about a great party that you’ve been invited to and how you just don’t have the perfect thing to wear. After work you immediately go to the mall and end up buying an expensive pair of trendy new jeans that you can’t afford.
Example #2: You believe that you aren’t smart enough to get a better-paying job so you end up spending years making less money than you could.
Example #3: You believe that you can’t cut your spending enough to save for retirement and you never get around to building wealth for your future.
If you altered your mindset to remember how many great outfits you already have in your closet, to be aware of how much talent you have, or to decide that there are plenty of ways to make room in your budget for a monthly contribution to a retirement account, that would be the first step to making better financial decisions, right?
Results Begin with Your Money Mindset
I know you get this. The actions you take don’t just come from thin air—they originate from your thoughts. Having a poor mindset can be the reason you end up making all kinds of bad money moves like going deep into debt, not paying bills on time, dipping into retirement savings, and hanging on to losing investments, just to name a few.
Financial problems creep up when you’re stuck in bad patterns of behavior, like spending more than you make or falling prey to risky investments. Sometimes your money mindset cripples you the most when it causes you not to do something, like never getting around to saving for emergencies or creating a budget. So, be sure to choose your thoughts about money carefully and ditch the ideas or thoughts that are not aligned with your financial goals.
Where Does Your Money Mindset Come From?
It’s easy to make money mistakes, but it can be tough to figure out why you make them—why you have a poor money mindset to begin with. Where mindset comes from is an interesting topic, because many people inherit their relationships with money from their parents or close relatives. How we relate to money on a psychological level begins to take shape early in life. For instance, if your family was affluent and always wanted to project an image of wealth with fancy cars or expensive brands, you might still believe that a materialistic lifestyle is important for your self-esteem, even if you can’t afford it.
Or perhaps your family was constantly fighting about how to spend money or pay the bills when you were young and impressionable. That could’ve caused you to subconsciously pick up a feeling that money is the reason for problems in life or that it’s a destructive force in relationships. Maybe someone even told you that “money doesn’t grow on trees” or “money is the root of all evil.”
I’ve seen these issues cause people to never build wealth and to prevent talented folks from charging what they’re worth in business, for instance. These types of mental roadblocks are why it’s important to examine your mindset and consider whether your thought processes around money are the ones you really want, or whether they need to be reformed.
How To Fix Your Money Mindset
The reason I covered the topic of money mindset at the very beginning of my book is because it’s the foundation for everything that happens in your financial life. The surprising thing is that even if you learn a ton about personal finance and make plenty of money, you can still make devastating financial mistakes over and over. Having a solid money mindset is the foundation on which it’s possible to build lasting wealth.
I want to reiterate that having a poor money mindset has nothing to do with how smart you are or how much you make. I know plenty of people who are managing their money brilliantly on very moderate incomes! They simply make deliberate, conscious decisions with their money that match the outcomes they want for themselves and their families.
Your mindset and any resulting bad financial habits that are holding you back from being a better money manager can be fixed. Raising your awareness about negative thoughts you may have about money is half the battle. The rest of the battle is deciding to make positive changes, seeking the financial knowledge you need, and taking action.
Download FREE chapters of Money Girl’s Smart Moves to Grow Rich
If you like the tips you get in the Money Girl podcast and want to take more control of your money, I think you’ll like my book, Money Girl’s Smart Moves to Grow Rich. The book tells you what you need to know about money without bogging you down with what you don’t. It’s available at your favorite book store in print or as an e-book for your Kindle, Nook, iPad, PC, Mac, or smart phone. You can download two free chapters at SmartMovesToGrowRich.com!
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