The process of personal finance can be broken down into straightforward steps. Firstly, ensure that you spend less money than your earnings. Secondly, consider making investments for your future. Lastly, refrain from purchasing unnecessary items.
However, putting those rules into practice is much more challenging, as anyone who has ever had a financial goal can attest. Our ability to make changes in our financial lives is hindered by the narratives we create. We experience unnecessary stress over insignificant matters and find it difficult to control our excessive spending on food.
Debbie Sassen, a personal finance coach, assists individuals in altering their outlook on money to experience a greater sense of abundance. Through her tools and tips, she aids in identifying the underlying causes of financial challenges, enabling individuals to determine their next steps.
What is Money Mindset?
A money mindset refers to the distinct and personal core beliefs an individual holds regarding money and its functioning in the world.
Your attitude towards money determines your money mindset. Your money mindset influences your beliefs about what you can and cannot do with money, your perception of the amount of money you are entitled and capable of earning, your spending habits, your approach to managing debt, your willingness to give away money, and your ability to invest confidently and effectively.
Your money mindset influences your attitude toward people, both rich and poor. Do believe that rich people are evil, mean, materialistic and greedy – so you don’t want to be like them ? Do you believe that poor people are noble and virtuous, the salt of the earth – so it’s better to be like them ?
Your money mindset is also reflected in the way you conduct yourself in financial conversations. Do you feel insecure and scared, or do you feel assured and empowered? Are you at ease in asking questions, either because you feel secure enough to do so, or because you are hesitant and ashamed? Do you hold the subconscious belief that money is predominantly for men and women should not concern themselves with it?
The intriguing aspect of our money mindset is that it is deeply ingrained in our unconscious mind and can remain inactive. However, through vigilant observation of our thoughts, emotions, physical responses, and financial engagements, we can become conscious of our existing beliefs and have the power to transform our mindset.
Why is it important to understand your money mindset?
Knowing the origin and understanding of your money mindset is essential in order to alter it. Similar to inputting your coordinates into a navigator prior to embarking on a journey, you also need to be aware and comprehend your present money-related beliefs.
By changing your perspective, being aware of your initial position enables you to acknowledge the progress you have made. It is akin to checking the map and realizing you have already covered a distance of 200 miles. However, when it comes to money, the journey is continuous as we never truly reach our destination. We simply continually evolve. The objective lies within the journey itself.
How do you shift your money mindset?
To begin changing your money mindset, it is important to be aware of your thoughts, behaviors, and actions related to money. Your thoughts about money have an impact on your emotions, which in turn influence your behavior.
When considering each step, if someone believes that money is difficult to come by, they will experience stress and anxiety. Consequently, they may direct their frustration towards family members who display a lack of concern or make financial errors. Moreover, they will refrain from being generous and potentially begin accumulating wealth and material possessions.
If you believe there is an ample amount of money available, you will experience a sense of tranquility, positivity, and hopefulness. You will willingly share, exhibit generosity, and be willing to take risks with your money in novel ventures and investments.
The amount of money you earn or possess does not determine your money mindset. Some wealthy individuals have a scarcity mindset, thinking that there is not enough money and they will always be lacking. Conversely, some individuals with little means and possessions feel rich, abundant, and grateful from within.
The majority of us are situated somewhere in the middle of the two extremes.
As you gain a greater understanding of your mindset, you will come across your own restrictive thoughts and financial obstacles that hinder progress. These thoughts prevent you from experiencing and behaving in a more prosperous manner. Such experiences are completely normal, as we all encounter financial obstacles. These obstacles persist in various forms over time. It is your task to consistently identify, eliminate, and let go of these obstacles in order to establish a healthier and more assured connection with your wealth.
To begin, evaluate yourself by indicating whether the following statements are True, False, or partially True and partially False:
Is it true or false?
- I’m no good with money.
- I’m not smart enough to make a good living.
- Money doesn’t grow on trees.
- I always make the wrong money decisions.
- I don’t deserve to earn more money.
- I’m financially learning disabled.
- People in my field never make enough money.
- Money isn’t spiritual.
- I’m no good with numbers.
- My income is play money. My partner’s money is the real money.
- Money is a man’s world.
- Money can’t buy you love.
- I always make dumb money decisions.
- Having money costs too much.
- People won’t like me if I’m wealthy.
- Rich people are snobby and shallow.
- Poor people are hardworking and noble.
- Money makes the world go around.
- There’s a limited supply of money in the world.
- Money burns a hole in my pocket.
To further assist, you can also examine your childhood experiences with money. Allocate 10 or 15 minutes for jotting down responses to the subsequent inquiries:
Prompts for Shifting Money Mindset:
- What money messages did you learn from your mother?
- What money messages did you learn from your father?
- How did your parents save and spend money?
- Was money talked about calmly, or was there only tension and fighting?
- Did you work as a young adult? Why or why not?
- Were you allowed to keep the money you earned or did you hand it over to your parents?
- How were you taught to save, budget and donate money?
- How might the money messages you inherited from your caregivers be affecting you today?
In conclusion, enhance your awareness by observing your behavior today. When you decide to dine or have coffee with friends, are you consistently the one who pays or are you never the one who pays? What does this indicate about your character and your relationship with finances?
When you receive your payment, do you have a strong urge to quickly spend or give away the money? Is it your belief that it is not secure for you to hold onto the money?
When you are in a situation where you need to request money (such as discussing price or salary negotiations or presenting an invoice to a client), do you experience tension or nervousness? Does a feeling of discomfort in your stomach or tightness in your chest arise? Do you believe that you have a specific monetary value and nothing beyond that?
Have you made any money mistakes that you deeply regret and feel frustrated about? It’s a common experience! We all go through it. Making financial mistakes is a natural part of our journey towards financial understanding and maturity. Moreover, only a handful of us were provided with any guidance on effective money management by our parents or educational institutions. Therefore, we absorbed knowledge and gained experience through observation and making mistakes. It is crucial to forgive yourself for your money mishaps. Move on from the past and let go of any feelings of shame, guilt, or stress that may be unsettling you.
By becoming more conscious of your money mindset, you have the ability to begin taking steps towards altering it and improving your connection with money.
What Is a Toxic Money Mindset—and How Do You Get Rid of It?
Toxic money habits primarily revolve around poor financial behavior rather than the actual money itself. These habits can take various forms, but the most prevalent ones include dishonesty about one’s financial status, using retail therapy as a means to cope with emotions, and relying on credit cards instead of cash.
Toxic money habits refer to patterned behaviors that can cause significant harm to your financial situation. Overspending is one common example, but under-earning can also qualify as a toxic money habit. Underearners Anonymous defines under-earning as more than just a monetary issue, as it also involves an inability to recognize and utilize one’s skills and abilities. This leads to underachievement and a sense of not fully realizing one’s potential, regardless of income level. The key to addressing toxic money habits is identifying the patterns and replacing them with healthier alternatives.
Monetize something you love and would do for free.
When it comes to overcoming toxic money, the valuable saying that your salary depends on your job rather than your income proves to be invaluable. If toxic money is only one of several sources of income, its impact is diminished. To replace toxic money with money that you take pride in earning, consider activities that bring you positive energy, such as selling knitwear on Etsy or teaching classes online.
Regardless of the amount, whether it be $5 or $500, engaging in this positive endeavor will decrease the significance of the toxic money and consequently lessen your resentment towards it. By earning income from a pleasurable activity, you can establish financial independence and develop a favorable connection with your earnings.
Change your money mindset.
According to author and financial expert Rachel Cruze, our beliefs and attitudes towards money are often influenced by the people we observed during our upbringing. As a child, were you exposed to someone who struggled with unhealthy financial habits that they couldn’t overcome? Did someone you care about always make it seem like having insufficient money was normal? It is possible that you absorbed these perspectives and adopted them as your own. To change this mindset, it is important to find role models who have experienced similar challenges but have managed to overcome them, aligning their stories with the future you aspire for.
Cruze provides several methods to transform your perspective on money, along with a multitude of empowering books and practical financial strategies to modify your beliefs about money. By pushing yourself to adopt new perspectives on your identity and the significance of money in relation to your self-esteem, you can truly overcome harmful money patterns.
Identify mental and spiritual money blocks.
Limiting beliefs, as stated by Katherine Hurst, who is an author and prominent figure in TheLawOfAttraction.com, have the ability to prevent you from obtaining what you desire the most. Unconscious presumptions pertaining to your own identity, circumstances, and finances possess the potential to act as obstacles between you and happiness; however, through mental and spiritual efforts, it is possible to alter your thought processes and energy with regards to money.
By freeing yourself from a scarcity mindset, you can achieve a more balanced state of mind to confront toxic money. Various approaches can be employed to accomplish this, including practical financial planning, therapy sessions, and even unconventional methods like working with an energy healer to release bodily tension and blockages. Khan highlights the importance of seeking professional assistance if toxic money has persisted in your life for a significant duration, as they can aid in permanently eliminating it.
