Financial Education, Uncategorized

Steps You Can Take to Change Your Money Mindset

Your attitude towards money will often easily explain your financial standing at any given time. Every person has a set of beliefs towards earning, spending, saving and investing money. Such attitudes may be established by factors such as the economic state of their upbringing or other past life experiences.

Your money mindset determines whether you thrive or fall back financially. It is within your control to change it at any time, and you can do so through planning, financial literacy, and even adjusting some personal attitudes towards yourself.

This article discusses what a money mindset is, why it is essential, how it influences your finances and steps you can take to change yours. Read on for more!

What is a Money Mindset?

A money mindset is the collective of unique individual beliefs and attitudes towards money and related aspects. Your money mindset plays a huge role in your decision-making regarding saving, spending, investing and credit. For instance, people who don’t value saving are more likely to live paycheck to paycheck and spend on spontaneous purchases without setting aside money for future needs, goals or emergencies.

Your current money mindset is not fixed; if you are genuinely interested in doing better, you can always change it. It would be best if you first examined your leading beliefs about money, how they affect your financial life, and how you would like to change that. Generally, a bad money mindset has the following characteristics:

  • Hurdled with what seems like impossible roadblocks
  • Fueled by fear or intimidation
  • Aimed at avoiding problems rather than facing and fixing them
  • Defeatism: views that one can’t or may not succeed

On the other hand, a good money mindset is optimistic and determined to solve problems. Instead of impossible hurdles, one sees opportunities and learns from their previous mistakes. It is composed of small steps that build up incredible progress in the long run and, above all, a desire to succeed. For instance, a person with a good or healthy financial mindset can make sound purchasing decisions without being driven by fear. He understands that he is free to spend but can also stop himself from making some purchases.

The Four Money Personalities

1.   The Spender

The spender believes in living in the moment and enjoying it with what they have. They are comfortable with debt, even though they may not be the best at managing it. A spender doesn’t see much value in waiting and will quickly put down a hefty sum for the latest pieces of phones, designer labels, cars and anything else.

If you are a spender, you don’t worry much about saving, barely ever bargain, and can take significant investment risks.

2. The Saver

Savers are generally considered to be conservative people who enjoy the degree of financial security that saving brings. They are careful to make the best deals and will be the most likely to bargain. They can easily be considered cheap because they prefer to save up and buy later, a level of delayed gratification that spenders have difficulty mastering. This personality is often uncomfortable with debt and barely purchases things on credit.

3. The Giver

Givers find some fulfillment in giving away what they have, mainly donations and gifts. A giver will most likely be making regular donations and offering generous financial support to family and friends.

While benevolence is a desirable quality, givers can easily get carried away in their nature and plan poorly for their own financial needs. If you are one, you may want to start budgeting, setting up saving accounts and carefully planning your spending.

4. The Builder

A builder has the personality of the ‘hustler’ we have seen in the trending hustle culture. They are driven by a desire to make money work for them. They will often be investors who can take high risks, but only after careful strategic planning and consideration. A builder is also likely to forego spending on some things, anticipating investing the money instead.

Why You Should Change Your Money Mindset

The benefits of having a healthy money mindset are almost endless. Changing yours involves changing how you think about money, which might also require changing some of your strongest beliefs, especially about spending. Ultimately, however, you stand to see a great change in your personal finance and a significant improvement in your quality of life. Here are some of the benefits that come with adopting a healthy money mindset:

  • A healthy money mindset helps you define your goals so you can devise an effective plan to get there while maintaining financial security.
  • It forces you to develop a better self-image by encouraging you to reflect on and appreciate yourself.
  • A good mindset goes a long way to bringing some order to your financial life. It helps you take control of your spending, saving and investment decisions.
  • It helps you control your credit situation completely and manage it nicely without racking up too much debt or ending up in (legal) trouble.
  • It helps you develop a good balance between saving for uncertainty and spending on what you want. It takes the focus from fearing uncertainty to planning for it.
  • It goes a long way to improve your mental health. When you have goals and plans, you don’t have to struggle with the anxiety and fear of losing control over your financial life.
  • It encourages you to develop better financial literacy to make more calculated moves with your money and lose less.
  • A healthy money mindset helps you focus enough to achieve your financial goals and, eventually, financial freedom.

Steps to Change Your Money Mindset

1. Choose to succeed

Before you succeed in anything, you must first believe that you can. It is hard to find value in getting started on a journey you don’t see yourself making. This is the first step towards changing your mindset, and once you mentally set yourself up for success, the rest of the steps are easier to take.

2. Reflect on your principles

As mentioned earlier, some of your attitudes towards money may reflect your values. You need to critically examine your life in terms of your decisions, then ask yourself why you make them. Find out what you believe in, and dig up the reasons why. This is also a critical self-examination technique that can help you get more clarity on your life.

3. Time to focus on yourself

During your self-reflection, don’t be surprised if you realize that one of the critical things that may drive you is expectations from others. When you want to fulfill other people’s expectations or live a certain standard of life to impress others, you may never truly realize yourself. This is undoubtedly true in the financial sense. This is the time to ask yourself what YOU want so that you can direct your efforts towards your own success.

4. Face your fear

As mentioned earlier, fear is a major motivating factor for the spender mindset. You need to identify, accept, confront and rid yourself of fear of uncertainty. It is, of course, relatively normal for any person to fear uncertainty, but if it is fueling your unhealthy money mindset, you should consider addressing it. Understand that while no one can predict tomorrow, we can certainly prepare for it.

5. Be grateful and let go of past mistakes.

Take a moment and look at everything you have. When you stop worrying about what you don’t have, you become more grateful for what you have already achieved. Gratitude is important and helps you give yourself some credit and compassion.

6. Financial literacy

It would help if you also took the time to educate yourself about finance and money management. This will help you understand how money works and maybe shed some light on something you might have been doing wrong. You can access the internet and social media for resources that help you understand essential concepts such as budgeting and saving.

7. Planning and doing

The easiest way to start changing your money mindset is by planning. You can start by identifying your goals, listing them by priority then drawing out plans to achieve them.

In conclusion, your money mindset is important because it determines how you manage your money. To adopt a healthy attitude, you need to start being more intentional about how you view money and what you think it can do for you! Check out CrazyMoneyFacts.com for additional information on making, saving and investing money to grow your finances.

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