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Does Money Mindset Matter?

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Do you want to know why some people are successful with their money while others struggle? The answer lies in their money mindset.

Money mindset is about how you think, feel, and respond to money, rather than how much of it you have.

It’s your personal approach to handling your money – whether you’re saving, spending, or investing. If you have a positive attitude towards money, you will think about what money can do for you, as a tool for you to control and give you what you want in life.

On the other hand, if you’re not so positive about money, you might feel stressed about it, spend it as soon as you get it, generally live week to week, or think that being financially well-off is just a dream.

Money mindset is your beliefs about money, yourself, and how the world plays a crucial role in shaping your life. Every day, you hold the power to make choices that can either advance or hinder your financial progress. Ultimately, the decision is yours.

You might have heard me talk about the importance of budgeting, living within your means, and avoiding debt for purchases where possible. The importance of using separate bank accounts for saving, spending, and day-to-day living costs.

But none of these matter if you don’t believe in yourself and your abilities to control the money in your life.

Many people neglect their financial health, hoping that one day they will magically be prepared for retirement, or they postpone taking their finances seriously until later in life.

Some even believe that financial success is exclusive to the wealthy.

If this sounds like you, it’s important that you shift your mindset. You are the only one who can do this. The responsibility to change your thoughts or money mindset is yours alone.

The good news is that it’s entirely possible to do so!

What is a money mindset?

A money mindset is basically how you think and feel about money. It’s like your personal approach to handling your cash – whether you’re saving, spending, or investing.

If you have a positive attitude or what we call an abundant mindset towards money, you probably see it as a friend that can help you achieve your dreams and keep you stable. You would think about the future, like saving for a rainy day or investing wisely.

If you have a negative attitude or scarcity money mindset, you will probably see money as a limited resource. They often feel that there is never enough and might hoard money or feel anxious about spending.

How is your Money Mindset Formed?

Your money mindset is heavily shaped by your early experiences with money. You might have picked up financial habits from your family, or maybe you grew up in an environment where money wasn’t openly discussed. As a result, you have developed a set of beliefs about money, either intentionally or without realising it, based on these experiences.

The great thing is, no matter where you started, you can always improve or alter your money mindset. It’s all about the kind of information you expose yourself to or actions you take now. Changing your perspective and reshaping old habits are totally doable. By adopting a more optimistic view and focusing on the aspects of your financial life that you can control, you can make meaningful progress in how you think and feel about money.

Scarcity v Abundance Mindset

Thinking about money often comes down to two main mindsets: Scarcity and Abundance.

The scarcity mindset

This fear-driven mindset is all too common. It’s the belief that there will never be enough money or resources to go around. It can lead to hoarding, overspending, and constant feelings of lack. But don’t worry, there’s hope. A scarcity mindset can also serve as a catalyst for positive change, motivating us to become smarter savers and more mindful spenders.

Abundance mindset

This empowering mindset believes that there is always enough to go around. It encourages a more relaxed approach to finances, allowing us to find joy and satisfaction in what we have. An abundance mindset also fosters a spirit of generosity, as we become more willing to share our resources with others. However, it’s important to strike a balance because an abundance mindset can also tempt us into overspending and taking unnecessary financial risks.

In short, whether you lean towards thinking there’s never enough or there’s plenty of money out there, it really shapes how you handle your finances. Both mindsets have their good and not-so-good points, so it’s all about figuring out where you stand and tweaking your habits to get the best of both worlds.

Why is Money Mindset Important?

Influences Financial Decisions

Your mindset can lead you towards or away from financial prosperity. For instance, a scarcity mindset might prevent you from investing wisely, while an abundance mindset might encourage entrepreneurial ventures.

Impacts Mental and Emotional Well-being

How you think about money can affect your stress levels, happiness, and overall quality of life. A negative mindset can lead to constant worry about finances, while a positive one can foster a sense of peace and confidence.

Shapes Financial Goals and Strategies

Your mindset guides the financial goals you set and the strategies you adopt to achieve them. It can be the difference between aiming for financial freedom versus mere survival.

Changing your money mindset involves both reflective and practical exercises. Here are some effective exercises to help you develop a more positive and empowering relationship with money:

Exercises to help change your Money Mindset

Changing your money mindset involves both reflective and practical exercises. Here are some effective exercises to help you develop a more positive and empowering relationship with money:

  1. Journaling for Financial Reflection

Objective: Identify your current beliefs and feelings about money.

How to Do It:

  • Spend 10-15 minutes each day writing about your thoughts and feelings related to money.
  • Reflect on questions like: What did you learn about money growing up? What are your biggest fears regarding money? What does financial success look like to you?

  1. Gratitude and Abundance Listing

Objective: Shift focus from what you lack to what you have.

How to Do It:

  • Each morning or night, list at least three things you’re grateful for in your financial life.
  • It can be as simple as having a roof over your head or the ability to buy a coffee.

  1. Visualisation Techniques

Objective: Create a clear and positive picture of your financial goals.

How to Do It:

  • Spend a few minutes each day visualising your ideal financial scenario.
  • Imagine achieving your financial goals, how it feels, and what changes it brings to your life.

  1. Set Small, Achievable Financial Goals

Objective: Build confidence and a sense of accomplishment.

How to Do It:

  • Start with small, achievable financial goals, like saving a certain amount each month.
  • Celebrate when you reach these goals to reinforce positive feelings about money.

  1. Money Affirmations

Objective: Reprogram your subconscious mind with positive beliefs about money.

How to Do It:

  • Create positive affirmations about money and repeat them daily.
  • Examples: “I am capable of managing my finances wisely,” or “I am attracting financial abundance into my life.”

  1. Financial Literacy and Education

Objective: Build confidence through knowledge.

How to Do It:

  • Read books, listen to podcasts, or take courses on personal finance.
  • Understanding how money works demystifies it and reduces anxiety.

  1. Budgeting and Tracking Expenses

Objective: Gain control over your finances.

How to Do It:

  • Create a budget that aligns with your income and goals.
  • Track your expenses regularly to stay aware and make informed decisions.

  1. Mindful Spending

Objective Develop a healthier relationship with spending.

How to Do It:

  • Before making a purchase, ask yourself if it’s necessary and aligns with your financial goals.
  • Practice waiting 24-48 hours before making significant purchases to avoid impulsive buying.

Remember, changing your money mindset is a journey, not an overnight transformation.

So, whether you are looking to break free from the shackles of scarcity or want to harness the power of abundance, understanding these mindsets is the first step towards a more fulfilling and financially secure future. Are you ready to embrace a mindset that will transform your relationship with money?