Your money mindset encompasses all the beliefs and emotions you hold regarding money. Individuals tend to possess either a mindset of scarcity or abundance when it comes to money; however, realistically speaking, it is likely that most of us lie somewhere in the middle.
If you constantly believe there isn’t enough money, you possess a scarcity mindset. You consistently remind yourself that money is limited and that you’ll never attain enough to fulfill your objectives.
If you have a mindset of scarcity, it is likely that you criticize yourself regarding your financial situation.
In addition to holding negative thoughts about money, individuals with a scarcity mindset frequently hold negative perceptions about individuals who possess wealth, perceiving them as lacking moral goodness. Furthermore, they likely believe that as someone accumulates more wealth, it diminishes the overall amount available for others.
Having an abundance mindset means having the belief that there is an ample amount of money available for everyone. If you possess this mindset, you have faith that even if you utilize your current funds, more will eventually come your way, ensuring that everything will turn out fine.
When you possess an abundance mindset, you refrain from assigning excessive importance to money. You refrain from attributing any personal significance to your mistakes concerning money, just as you refrain from attributing any significance to someone else’s financial situation.
How to have an abundant money mindset
Identify your current money beliefs
Unbeknownst to you, you already possess money beliefs that shape your perspectives on money and the world. These beliefs could stem from teachings imparted by your parents when you were growing up.
Do you have money beliefs that are likely influenced by your past experiences? Have you ever committed a remarkably foolish money error and subsequently convinced yourself for years that you are incapable of managing money well?
The real effect of it is to make you believe that you are incapable of managing money. And a large number of individuals come to hold this belief without making any effort to change their mindset.
If you are having difficulty determining your current money mindset, take the time to write it out. Find a quiet space, grab a notebook, and dedicate twenty minutes to jotting down all your thoughts about money. In due time, you will surely uncover something significant.
Once you have determined your existing money beliefs, you will begin to recognize the source of those beliefs. It is crucial to realize that you have the ability to modify your beliefs.
Forgive Yourself for Your Financial Mistakes
There are probably not many people who can say that they have never missed a credit card or bill payment, never had an impromptu spending spree, and never dipped into their savings without a valid reason. If you are one of those people, you should consider becoming the next financial expert. For the rest of us, it is time to learn self-forgiveness.
According to Brittney Castro, a Certified Financial Planner and the founder of Financially Wise Women, forgiveness is a powerful tool as it frees us from the confines of our past. By redirecting our focus away from shame, we can create space for improved practices and a more positive mindset towards money. It is crucial to recognize and embrace what has transpired. Apologize to yourself and, if needed, to those affected by your actions, and concentrate on progressing forward.
Keep in mind the following quote from Brittney: “Your mistakes in handling money do not define you – your value as a person is separate from your mistakes.”
Understand that money is neutral
Recognizing that money is neutral is one of the crucial steps in transforming your current negative money mindset into a positive one.
Many individuals hold the belief that money is wicked or that a dearth of money is impeding their progress. Money is not wicked, and it is not actively seeking to harm you. It only possesses worth when we assign value to it. It only acquires significance when you confer meaning upon it.
Many individuals attribute their life problems to their financial situation, whether it involves having insufficient funds or being burdened with debt. By acknowledging that money is not an enemy, you can expedite the process of altering your perspective towards it.
Focus on being grateful for what you have
It is simple to concentrate on the negative aspects of your life, regardless of your financial status. You are probably more inclined to pay attention to the unfavorable rather than the favorable.
You often devote a significant amount of time to fretting about your debt or exceeding your budget when grocery shopping. However, you rarely consider the positive impacts that your money has had on your life.
When considering your neighbors who own luxury cars or friends who wear designer clothes, it is natural to feel discontented with your own life. However, it is important to keep in mind that a significant number of people worldwide are living in poverty. If you reside in a developed nation, you are more fortunate than the majority.
No matter what your financial circumstances are, discover ways to appreciate them. This includes even the aspects that are simple to criticize. Below, you can find a couple of illustrations:
- I’m grateful for my debt because it pushed me to get serious about personal finance
- I’m grateful that I make more money in my current job than I did in my last one
- I’m grateful knowing I’ll be okay even though I went over my grocery budget
Each of these thoughts reframes something that may be considered negative (debt, a moderate income, going over budget) into a positive perspective.
Learn to love your money
People have peculiar attitudes towards money, which remains a relatively sensitive subject nowadays. Need proof? Just mention to someone that you have a strong fondness for money and observe their reaction.
The thing is, if you don’t have positive feelings about your money, you can’t anticipate having a positive money mindset.
One reason why we feel uncomfortable about expressing our love for money is because it is not a subject that people typically discuss.
Loving money is considered somewhat taboo due to the perception it creates of selfishness, materialism, and boastfulness, which inevitably leads to a sense of guilt.
If you are hesitant because of this, simply keep in mind that you can possess a love for your money while also being generous and giving. In reality, a compelling reason to cherish your money is the ability it provides to assist others.
There are numerous reasons to have love for your money. You have the ability to love your money in various ways:
- For security it provides
- For the goals it will help you to reach
- For the good it will allow you to do in the world
Set financial goals
Many people hold the negative belief that they will never accomplish all of their desired activities due to insufficient funds. Consequently, they believe they will not have the financial means to go on their dream vacation or purchase their dream house. Being convinced of its validity, they tend to forgo taking any actions to alter this belief.
By actively taking steps to establish and pursue goals, you initiate progress towards achieving them. This progress inherently improves your money mindset, as it enables you to comprehend the potential that exists. This cyclical process allows you the freedom to determine the path it follows.
Stop Comparing Yourself to Others
With the prevalence of social media, reality TV, and celebrity magazines, it has become excessively simple to fall into the trap of comparing ourselves. Whether it’s comparing ourselves to our family members, friends, celebrities, or fictional TV characters, the tendency persists.
There are several reasons why this is not a good way to spend your time.
- You’re comparing what you know about yourself (i.e., everything – “warts and all!”) to what you see of someone else (i.e., their best side that they choose to show you).
- Furthermore, you don’t know the intimate details of the other person’s finances. Someone may appear to have a fantastic life filled with fabulous clothes, vacations and other fun stuff, but it could be fueled by credit card debt…or worse! If you need a real-life example, check out the Real Housewives of New Jersey. All that glitters is not gold.
- When you make comparisons and find yourself lacking, you’re diverting attention (and, potentially, activity) away from focusing on your own finances and aspirations.
The first step is to establish achievable objectives for yourself and use them as a benchmark to evaluate your progress. Commemorate your successful achievements and adjust your goals accordingly.
Create (and Maintain) Good Habits
Once you have set goals and are focused on achieving them, it is important to develop habits that will guarantee success. If you have never examined your income and expenses or made a budget before, now is the perfect opportunity to do so. Gaining knowledge about where your money is being spent will enable you to identify areas where you can save more, if that is what you aim for. This understanding will also assist you in selecting attainable goals, even if they may be ambitious, in order to continue progressing instead of being overwhelmed by failure.
A useful habit to adopt is dedicating a specific time, such as one hour per week, to assess your finances and track your progress. It is worth noting that millionaires typically spend an average of 8.4 hours per month managing their money, which equates to about two hours per week. To facilitate this, you can utilize platforms like Mint.com, your bank account app, or a basic spreadsheet. The key is to ensure that you review all aspects of your finances.
If you are in a relationship, select a time that works well for both partners and make sure you are fully engaged during the entire conversation. Although talking about money can sometimes lead to conflicts, it is important to overcome any discomfort, as it can determine whether a couple stays together or breaks up.
Even if one person is designated as the primary money manager, Farnoosh Torabi, a personal finance expert, advises, “It is important to ensure that both partners have a shared understanding of finances and agree on goals to avoid any misunderstandings. Once you both have a clear understanding of the financial situation, work together to determine how you want to allocate the money.”
