In order to enhance your financial well-being, it is typically necessary to focus on fundamental aspects such as reducing expenses, creating a budget, saving and investing, and increasing income.
Although each of those steps is important, our money mindset is often overlooked and not given enough focus.
Usually, when you encounter money advice, the common approach is to immediately engage with your personal finances and create a plan. However, it is crucial to first begin by comprehending your mindset regarding money and identifying the reasons it has hindered your progress thus far.
If your mindset towards money is negative or you continually believe that achieving results is unattainable, what do you believe are the actual chances of you succeeding?
If you are prepared to enhance your life and make wiser financial choices, you must first focus on changing your mindset about money.
Frugal vs Cheap
There is a distinction between being frugal and being cheap, whether or not you are aware of it.
When an individual is living frugally, it implies that they are purposeful in their financial decisions. Their objective is to maximize the value derived from the money they spend as they aspire to accumulate more.
When faced with the decision between a gas station selling gas at a price of $1.79 per gallon and another one selling it at $2.27 per gallon, it is evident that the lower price is always the preferred choice.
Are Frugal People Cheap?
No, the short answer is not “no.” People who are frugal aim to save money while also appreciating others, whereas cheap individuals do not value others.
People who are cheap believe that EVERYTHING is priced too high.
The main point is that individuals who are cheap do not enjoy spending money, frequently express dissatisfaction about the expenses of things, and possess a deficiency in honesty and moral values.
Do you know any inexpensive individuals?
What Is A Money Mindset?
A money mindset refers to one’s beliefs regarding the functioning of money in the world, essentially representing one’s attitude towards their financial situation.
On a daily basis, your money mindset provides guidance to you.
- what you can/can’t do with money
- how much money you’re entitled to
- how much you’ll be able to earn
- how much you should spend
- the way you use debt
- how much you give (practiced gratitude)
- your ability to invest
Your ability to achieve your goals can be influenced by the mindset that drives how you make important financial decisions every day.
The majority of successful individuals will inform you:
By altering your mindset about money, you will likely improve your decision-making abilities when faced with challenges.
Money Mindset Example
Experiencing negativity and growing up with negative feelings can impact your money mindset, as exemplified in the following perfect example.
Suppose you were raised in a household where constant arguments over money took place and your parents consistently made statements such as:
- “ we can’t afford that “
- “ that’s too expensive “
As a consequence, the continuous arguing may lead you to subconsciously link money with feelings of anger and conflict.
It’s highly likely that in this household, these parents may have taught that individuals with money are evil, materialistic, greedy, and selfish.
Can you understand how being raised in such circumstances could impact your attitude towards money and lead to a negative association with it?
Scarcity Mindset
Millions of people are walking around with a scarcity mentality about money, which prevents them from obtaining massive amounts of it. The example provided is one of the main factors contributing to this mentality.
Individuals with this mindset hold the belief that there will always be a scarcity of resources. They feel compelled to hold onto their possessions out of fear that they will not have enough. Their thoughts and behaviors stem from a sense of insufficiency. When resources such as money, opportunity, or recognition are seen as finite, it gives way to fear and obsessive suspicion.
If you have this mindset, all decisions are made with the belief that there will not be any other options available.
Either there is no possibility of earning additional money apart from their monthly income or all available sources of income have been exhausted.
Could you please do me a favor and remove your wallet, extract some cash, and position it in front of you?
Now, direct this question to the money:
“Hey money, sitting there on the table, do you have any concern about my income? What? You have no knowledge of me? Well, I am surprised…”
Money is indifferent towards us and lacks knowledge about our individual circumstances. It gravitates towards those who have a strong desire for it and possess a mentality of abundance.
Abundant Mindset
God has the ability to generously bless you, so that you will have everything you need at all times and in all situations. As a result, you will be able to excel in every good deed.
Grant Cardone, a well-known figure in the real estate industry, consistently emphasizes the positive impact that adopting an abundant mindset can have on transforming one’s life.
His definition of abundance is having a sufficient quantity of something, which entails having an ample supply of the positive aspects of life.
The term he prefers to describe abundance is “overflowing”.
According to him, the most unfavorable action we can take with money is keeping it in an inactive location like a savings/checking account or beneath your mattress.
Grant Cardone explains that for money to move and grow, it is necessary for it to circulate rather than remaining stagnant.
According to Stephen Covey, the author of The 7 Habits of Highly Effective People, the abundance mindset is described as follows.
The Abundance Mentality is derived from having a strong sense of self-worth and feeling secure within oneself. It is the belief that there is an ample amount of resources available for everyone, with enough to spare. This attitude leads to the willingness to share prestige, recognition, profits, and decision-making. It also allows for the exploration of various possibilities, options, alternatives, and encourages creativity.
People who have an abundance mentality have the ability to look ahead and understand that the absence of something at present does not imply that it cannot be obtained in the future.
Just because you are not currently a millionaire, it does not mean that you will not become one in the future.
How to Change Your Mindset About Money
Altering your mindset towards money can be quite challenging and requires a gradual adaptation process, especially considering the years of diverse influences that have shaped your beliefs based on your age.
Shifting from a mindset of being broke to a positive one cannot be achieved immediately, but you can gradually shape your mind in a more beneficial way.
If you have determined that your money mindset is negative and you need to alter it, there are several sequential steps you can follow to shift your perspective in the correct direction.
1. Make the commitment to financial stability
Before you engage in investing or saving money, it is important to commit yourself to achieving financial stability. Therefore, ensure that you are prepared to adhere to your plan and have faith in the effectiveness of your efforts.
This does not necessarily apply exclusively to achieving financial stability. Perhaps your ultimate goal is to attain wealth, achieve complete financial independence at an early age, or a mix of both.
When you make the decision to dedicate yourself to your process and feel enthusiasm for it, you are already enhancing your mindset! Additionally, by choosing to be committed, you are unconsciously elevating yourself and motivating yourself to continue advancing.
2. Read personal finance books
Luckily, not all individuals in your life possess expertise in finances or can impart the correct mindset. However, there exists a plethora of excellent personal finance books that can steer you towards the correct path.
A great deal of what you read aims to enhance your financial skills, yet you will also notice a positive transformation in your perspectives towards money.
The knowledge I gained from reading personal finance books:
- Anyone can learn to be better with money, it’s not as complicated as it seems
- I don’t have to let money and finances control me
- Managing everything on my own is possible without anyones’ help
- Life will be less stressful and peaceful when you learn how to manage money
3. Practice Money Affirmations
Have you ever imagined or pictured in your mind how your finances can be improved? Do you contemplate the goals and aspirations you wish to achieve with your financial resources? How frequently do you reaffirm and motivate yourself about all the positive financial actions you intend to take?
The purpose of money affirmations is to assist you in visualizing outcomes and maintaining your focus on your goals. By consistently affirming the things you will achieve and embracing positive thoughts, you gradually diminish the presence of negativity.
Merely assuming that things will work out with your finances is not enough to solve all problems; you must be prepared to invest effort and persist consistently. Nonetheless, when you commence reshaping your mindset about money, formulating different affirmations can gradually have an impact on your thought process.
4. Stop Focusing On What Others Have
The fear of missing out (FOMO) can have negative effects on both your finances and your mental state.
Have you ever experienced financial jealousy towards what others possess? Have you felt inferior to people your age when observing their possessions?
I believe that a majority of us have experienced this situation or felt this way previously.
If you constantly worry about what others possess, it may lead to a pessimistic outlook and compel you to spend beyond your means in an attempt to match their lifestyles.
However, the ironic aspect is that the individuals you are comparing yourself to may also share similar feelings towards others or may not have their financial situation well-managed. Ultimately, it is all about maintaining a façade.
As you begin to comprehend that the majority of individuals are putting on an act, your concerns gradually diminish. When I personally grasped this fact and encountered it in certain personal finance literature, my awareness expanded slightly.
5. Be Grateful and Practice Gratitude
In addition to worrying about what others possess and amplifying your financial strain, it is advisable to cultivate a habit of appreciating what you already have and acknowledging your personal achievements.
By cultivating a sense of gratitude, you develop a greater appreciation for your accomplishments, convictions, and possessions. It involves shifting your focus towards the favorable aspects rather than fixating on the negative aspects of your financial situation.
While you definitely do not want to evade your financial problems, it is common for your mindset regarding money to be excessively fixated on unfavorable situations.
When you develop the habit of gratitude, you become more satisfied with what you possess and concentrate less on consumerism and the immediate satisfaction gained from purchasing items, in an attempt to compete with others or seek instant gratification.
Make a list of all the positive aspects of your financial situation at present, record any small victories you have achieved along the way, and take pride in the things you currently possess in your life.
6. Create Big Money Goals
As you formulate your financial objectives, you will establish a combination of immediate, future, and potentially ambitious goals that might appear unattainable. Nevertheless, aim for ambitious aspirations!
While it is important to have a range of attainable goals that require minimal effort, it is crucial to consider your long-term aspirations and where you ultimately aspire to be in the future.
Are you someone who envisions early retirement? Do you possess specific targets for wealth accumulation? Is your aspiration to achieve millionaire status?
Shifting your attention towards larger monetary goals can assist in molding your mindset about money in an improved direction. These significant objectives aid in maintaining concentration on important aspects and developing a strategic plan to pursue.
7. Believe In Yourself
Changing the way you think about money can be a challenging aspect when it comes to having confidence in yourself and believing that you can improve your finances.
Frequently, individuals allow their past experiences to determine every aspect of their lives.
Are any of these familiar to you?
- “I was raised poor, so I’ll always be poor and broke.”
- “I will never be able to retire because I don’t know how to invest.”
- “I’m drowning in debt and I will never be debt-free.”
