Are you exhausted from living off of each paycheck and having no tangible results? Despite having a well-paying job, it remains a struggle to financially make it through the month and cover all expenses. You aspire to overcome this constant state of financial instability but are unsure of where to begin. It is highly probable that your money mindset is what is hindering your progress. In order to modify your money mindset, it is essential to first understand its nature.
What is Money Mindset?
To begin, let’s clarify what money mindset is not. When some individuals think of the term “money mindset,” they may envision someone resembling Charles Dickens’ character “Ebenezer Scrooge” who counts his coins obsessively. However, this does not define the concept of money mindset.
Your money mindset refers to your personal connection with money, encompassing your emotions towards it, your convictions regarding money, and its significance in society.
Your perspective on money is similar to the law of attraction – how you think and feel about money determines if you have little, just enough, or a lot. While my logical left-brain side would prefer to believe that the key to financial success is just hard work and frugality, the reality is that your mindset about money greatly influences the outcome.
Ready to Change?
Let’s focus on the task at hand and guide you towards success and a mindset of abundance by gaining knowledge from others.
I came across a post written by a young woman who had recently gotten married and was feeling overwhelmed by the financial burdens she was facing at this stage of life. She penned the following:
After experiencing a notably costly sequence of events, like getting married, how can one effectively arrange their finances? I find my recent expenditure information to be untrustworthy and I have developed a tendency to simply pay for things without much thought.
We can all likely understand this statement on some level, when we lose control and the bills continuously arrive. It feels like we are barely managing to survive, and as soon as we believe we have made progress, another bill appears.
What course of action should this young lady take?
Firstly, she must take action to initiate change. Taking control of the overwhelming wave of expenses and making a commitment to achieve financial stability should be her priority.
How to Change Your Money Mindset
Where did your Money Mindset Come From?
Before you begin altering your money mindset, it is prudent to investigate the origins of your money mindset. A significant portion of your beliefs about money became ingrained in your mindset before reaching the age of 7.
When you were growing up, do you recall feeling stressed about paying bills? Did your family experience poverty or have to move to a poor neighborhood due to job loss? Perhaps your family had financial stability, but your parents were always occupied with work and had little time for you or your siblings. Maybe there was something you desired greatly, but your mother expressed frustration by saying “we can’t afford that.” Alternatively, did your family attempt to find happiness through excessive spending, going all out during Christmas and always owning the latest and greatest car in the driveway?
Your money mindset was shaped by these negative experiences and others encountered on the journey leading up to today.
Steps to Initiate Change
The steps presented below will provide a solution to the problem faced by the young lady. Your steps may be similar or different, but they should be helpful in developing your own plan for change.
- The first thing this young lady needs to do is adjust her mindset, look at her situation as a challenge, and take an “I’ve got this attitude”.
- Next, she needs to take control. What is the underlying problem with her finances? Why has her spending become frivolous? Does she lack goals? Setting some goals is a great way to motivate oneself to take control. She needs to hold herself accountable and track where her money is going .
- Once she knows where her money is going she needs to create a budget . A budget will rein in her spending while enabling her to save for her financial goals.
- The budget may reveal that she needs to change lifestyle habits, perhaps she’s spending too much on a daily coffee at Starbucks, or going out after work. She’ll next work on replacing those habits with less costly habits.
- She should review the outcome of her budgeting efforts monthly. And compare where she ended up versus where she had budgeted to be. It is VERY motivating to see the debt start to disappear and savings start adding up.
- Successful people tend to read books. Here are a few suggestions on some books that will help you find the path to financial success:
- Rich Dad Poor Dad , Robert Kiyosaki: The #1 personal finance book of all time, is about the difference in mindset between the poor, middle class and rich.
- The Millionaire Next Door by Stanley and Danko: Identifies common traits amongst millionairs in the USA
- Atomic Habits by James Clear: A comprehensive and practical guide on how to create good habits, break bad ones and become 1% better everyday.
- Your Money or Your Life by Vicki Robin: The purpose of this book is to transform your relationship with money.
4 Ways To Shift Your Money Mindset From Scarcity To Abundance
If you find that you are living from one paycheck to another, it is likely that you have developed a scarcity mindset when it comes to money. There may have been a past event in your life that influences your current mindset regarding your finances. As a result, you now function based on that mindset, leading to less than satisfactory outcomes.
When it comes to spending money, you might experience fear or find yourself immediately using up the majority of your funds as soon as it enters your checking account. Although there are indeed emotional factors involved, the mindset you adopt regarding your earning and expenditure is of utmost significance.
When having a scarcity mindset, your focus will always be on lacking enough.
How can we transition from scarcity to abundance?
Let’s examine a couple of methods to initiate the transition of your mindset from scarcity to abundance.
Money requires guidance Money must have a purpose or goal Money demands clear direction Money necessitates proper guidance
Having a budget or a financial plan is commonly known among most individuals. From a practical perspective, this concept is entirely logical. If you lack a plan for managing your money, your financial situation will never truly evolve. Nevertheless, the foundation of this plan is based on the belief that your money requires guidance and a blueprint to achieve your financial objectives.
Adopt a logical approach to reduce unnecessary expenditures based on emotions.
Many people struggle with emotional spending due to the influence of their emotions, which are often dependent on the circumstances in their lives. When our plans are not going as expected, we may feel powerless and overwhelmed, leading us to rely on money as a means to restore equilibrium. It is not surprising that individuals seek solace and regain a sense of authority by utilizing money, as it symbolizes power, especially when facing unexpected challenges in life.
Money is subjective and differs from person to person.
Comparing your financial situation to that of your family, friends, or coworkers is simple. However, this may result in feelings of scarcity, jealousy, and hopelessness regarding your financial state. Instead, focus on your individual financial objectives without considering how they should align with what you observe in others.
Although you might feel envious when you see someone driving the newest car, you may not realize that they are struggling to gather enough funds to cover the monthly payments. This comparison of circumstances transitions your mindset from gratitude for your own possessions to a state of insecurity regarding the things you lack.
In order to prevent any negative impact on your financial situation, it is advisable to maintain the personal nature of money, thinking carefully at each step.
Update your money mindset step by step.
If you have ever told yourself, “I’ll never have enough money for that!” or believed that you can never achieve the same level of success as your wealthy friends, then you have come across a negative money script. Money scripts influence the thoughts and beliefs we hold about money.
They are often called money blocks. Negative money scripts can have detrimental consequences on your financial situation because your thoughts influence your emotions, which in turn shape your actions and ultimately determine the outcomes you achieve. It is crucial to recognize any negative money scripts to transform them into positive ones that will ultimately improve your financial life.
