One of the factors that contribute to financial success is the money mindset. What you believe about money, yourself, and the world shapes how your life will unfold. Every single day you have the power to make decisions that will move you forward financially or set you back. It’s up to you.
Tip and tricks will be provided here to help you develop a proper money mindset. But first, let us find out what a money mindset is, how it is formed and why it is important.
What is the Money Mindset?
How is a Money Mindset Formed?
How can I Change my Mindset About Money?
How do I Change my Money Blueprint?
How do you Deal With Lack of Money?
How can I Attract Money?
What is the Money Mindset?
our money mindset is your unique set of beliefs and your attitude about money. It drives the decisions you make about saving, spending and handling money.
Read Also: Ways you can Improve Your Relationship With Money
People who have a healthy money mindset believe things like:
- I have the freedom to spend, but I can also tell myself no to a purchase.
- I enjoy helping others who are struggling by giving generously.
- I don’t have to compare myself to others.
- It’s possible to achieve my financial goals.
Your money mindset shapes the way you feel about debt, your attitude toward people who make more or less money than you, how easily you can give, your ability to invest with confidence, and more.
Henry Ford said, “Whether you believe you can do a thing or not, you are right.”
Ramsey Solutions conducted a study of over 10,000 millionaires, and one of the most fascinating statistics to me was that 97% of millionaires believed . . . wait for it . . . that they could become millionaires. They believed that it was within their control. They believed they held the key to their success. And having that mindset—not an inheritance, fancy education or wealthy parents—is exactly what caused them to succeed.
This can be true for you as well. What you believe will drive your behavior, which will lead to positive results.
You do this in other areas without even realizing it. Do you believe that making your spouse feel special is important to your marriage? Or that you need to have a job to pay rent? Or that “Pizza Fridays” are the best day of the week?
Your behaviors will support those beliefs. That means you’ll probably send texts to your spouse throughout the day, show up to work on time, and make sure you pick up pepperoni at the grocery store by Thursday.
How is a Money Mindset Formed?
Your money mindset is influenced by many different factors, including the psychology of money itself. Obviously, the experiences you’ve personally had around money will play a big role. Things like if you had a part-time job in high school if you’ve been at the receiving end of generosity, or how openly your parents talked about money growing up.
Think about that last one for a moment. Now, everything that happens in your life is not your parents’ fault. (Read that again.) But more is caught than taught, so the way you saw your parents talk about money—or not talk about it—definitely influenced your attitude about money from an early age.
Thinking about how money was handled in the household you grew up in will help you understand the foundation for your beliefs about money. If you’re married, this can also help you get to the root of money fights you and your spouse may have.
Their experience was probably totally different than yours, which means you guys are coming at this big (and sometimes emotional) topic of money from two different perspectives.
How can I Change my Mindset About Money?
Money management, like many important things in life, requires discipline. And discipline isn’t a natural mental state for everydiv. Add to that the guilt and shame that some of us carry when it comes to finances, and you have a recipe for money management misery. Or, at least, a sense of why the “ostrich approach” can seem more appealing than tackling underlying issues.
But, as appealing as it may seem, there is not a single financial guru advocating the ostrich approach as a means to achieving financial fitness! In fact, going that route will only serve up more guilt and shame in the long run.
Fortunately, there are some relatively simple steps you can take to move from negative feelings and lack of discipline to a positive money mindset and great habits.
1. Forgive Yourself for Your Financial Mistakes
There are likely few people who can claim that they have NEVER missed a credit card or bill payment, never gone on an impromptu over-spending session, and never raided their savings for no good reason. If you are one of those people, you should probably be the next financial guru. For the rest of us, it’s time to practice self-forgiveness.
Brittney Castro, Certified Financial Planner and founder of Financially Wise Women, says, “Forgiveness is a powerful tool because it prevents us from being a prisoner to our past. If we shift our focus away from shame we can make room for better practices and a healthier attitude towards money.”
It’s important to acknowledge and accept what has happened. Make your apologies to yourself (and those around you, where necessary) and focus on moving forward.
Please also remember these wise words from Brittney: “Your financial mistakes are not you – your self-worth is independent of your mistakes.”
2. Understand Your Money Mindset
While you may think you know your attitude towards money, it’s possible that you’re not fully aware of how your views are shaping your decision-making.
Brittney Castro suggests tracking the thoughts that come up each time you make a money decision. As we make so many money decisions in our lives, doing this for just one day and then reviewing the results for patterns can be enough to deepen your awareness of your attitudes. With more clarity on your mindset, you can identify beliefs and habits that affect your ability to stick to (or even create) goals and plans.
3. Stop Comparing Yourself to Others
In this age of social media, reality TV, and celebrity magazines, it’s far too easy to get sucked into making comparisons. We compare ourselves to other family members, to our friends, to celebrities, and to fictional characters on TV.
This is not a good way to spend your time for several reasons:
- 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.
So, create attainable goals for yourself and compare yourself to those. Celebrate the wins and update your goals as you reach them.
4. Create (and Maintain) Good Habits
Once you have some goals and your eye on the prize, it’s time to establish the habits that will ensure you meet them. If you’ve never delved deep into your income and expenses or created a budget, this is a good time to try that.
Understanding where you’re spending your money will help you determine where you can save more, if that’s your goal. This awareness will also help you pick goals that are achievable – even if they’re a stretch – so that you can build on your success rather than end up paralyzed by defeat.
One particularly effective habit is committing to a set time – one hour per week – to review your finances and monitor your progress. If one hour seems like a lot, it’s worth noting that millionaires spend, on average, 8.4 hours per month managing their money.
That works out to about two hours per week. You can use a platform like Mint.com, your bank account app, or a simple spreadsheet – just make sure to review everything.
If you’re in a relationship, pick a mutually beneficial time for both of you and ensure you will be fully present for the duration of the conversation. Granted, money discussions aren’t always smooth sailing for couples, and arguments can ensue. However, pushing through the discomfort can be the difference between staying together or splitting up for some couples.
Even if you decide that one of you is going to be the primary money manager, personal finance expert Farnoosh Torabi recommends, “Make sure to get on the same financial page and agree to goals so that there’s no miscommunication. Once you both have a clear picture of the finances, figure out together how you want to delegate money.”
5. Optimize Your Budget for Happiness
The very word “budget” can fill people with dread because it brings to mind restrictions.
Manisha Thakor has a more positive outlook, as she believes, “Gentle boundaries can set you free.” This is because knowing where you’re spending your money – as opposed to having no idea where it’s going – is a far more empowered place to be.
That awareness ensures that you can tweak your spending so that you’re directing your hard-earned cash towards what matters to you most. As Ashley Feinstein, founder of “Knowing Your Worth,” states, “Sometimes we spend on things that don’t actually make us happy just because we think we should. How much of what you’re spending is for you and your goals?… What are you spending on that truly brings you joy?”
A great guideline for budgeting is the 50/30/20 rule. This comprises directing 50% of your earnings to needs (housing, food, gas, medicines), 30% to wants (vacations, that painting class you’ve always wanted to take), and 20% to saving.
If you’re carrying debt, that 20% may be directed to paying that off first. If you keep the 30% and 20% separate from the 50%, you’re probably going to be OK without having to review everything on an itemized basis every month. Plus, you can go wild with that 30% and spend it on whatever you want!
6. Practice Gratitude
Last but not least, daily affirmations and gratitude for what you do have can be really powerful.
GoGirl Finance contributor Kali Hawlk suggests keeping a journal: “Start by writing down one thing every day for which you are grateful (financially and personally). Return to your gratitude journal any time you feel overwhelmed or negative about your own finances (or any situation in life).”
The simplest practices can make all the difference.
How do I Change my Money Blueprint?
Do you ever wonder how some people have become enough wealthy while others are continuously struggling throughout their lives?
Unfortunately, most of the people around the globe contain limiting beliefs and inner conflicts which has the ability to hold us back from being financially independent.
Well, to know the things more clearly in this regard there is a vital need to understand what is your blueprint and how you can change it in a proper way to be financially free. Let’s find out.
What is a money blueprint?
the relationship you have with your money and how you normally think about wealth and money is actually your money blueprint. It means your thoughts, beliefs, and values regarding money are something that has the potential to make your money blueprint. Values are basically something which are making our beliefs.
People who are having the mindsets like money is evil, you cannot afford to get it or money does not grow on trees, etc. are being taught that find a job because you can never become rich and this can lead them to poverty.
This is clearly showing that you have a bad money blueprint. If someone has this mindset then it is highly important to change it as soon as possible.
Are you thinking about how you can change your money blueprint? Well, do not wonder anymore and have a look at the following information to get a better idea about this.
How to change your money blueprint?
Well, the very first thing which you have to tackle in this regard is your value set. You should realize that you need to work on yourself. Do not give this lip service only.
Although the value set of everyone is complicated because this is being built since you were old enough to know the meaning and value of money and it was built around the environment you have raised in.
As the best way to change your room temperature is to reset the thermostat in your room, similarly, you must revisit your thoughts about money and think deeply about what you feel about the money.
It is because the only and best way to change the level of your financial success for so long is to reset the level of your financial thermostat or your money blueprint in a positive way.
Always strong roots have the ability to create fruits and it means what is underground will create what’s above the ground. Similarly, what you have in your mind will affect your financial state too.
How do you Deal With Lack of Money?
When you’re worried about your debts and you’re trying to decide on the best way to solve your financial problems, many people start to wonder if they missed something as they went through school. As adults we’re expected to know how to manage our money properly.
However, either a lot of people skipped that class, or maybe it was never offered. The good news is that you don’t need a degree from an ivy-league university to help you solve financial problems.
1. Live on Cash for 2 Weeks
When is the last time you only used cash to pay for your purchases? Debit and credit cards help many people develop bad money habits and the fine line between what they can afford to pay for and what they can afford payments on blurs. With cash, it’s very easy to tell if you can afford to pay for something or not.
Your first assignment is to put all of your cards away for at least 2 weeks. When you need to buy something, you’re only allowed to use cash. After 2 weeks, if you’ve managed to do it, give yourself a passing grade.
2. Increase Your Spending Awareness
Consider what you learned about your spending habits by only using cash. Was it easier or harder to part with cash than plastic? Did you only buy things you needed, or was there also enough money to buy something that you wanted? How much did you have left at the end?
Some studies have found that people spend as much as 15% more per purchase when they use plastic instead of cash. Spending more on every purchase adds up over the years, and if you want debt solutions that last for life, be aware of how you spend your money.
3. Find Out Where Your Money Goes – Track Your Spending for 2 Weeks
Where does it all go? Every pay day there’s money in our bank account, but it never seems to last long enough.
Your second assignment is to track your spending for at least 2 weeks. In a little notebook, or by using an app, software or our Expense Tracker, make a note of where you’re spending your money.
You might want to track what you spend on certain types of expenses, e.g. coffee or drinks out, or maybe tracking what you spend in certain stores is easier. Either way, to pass this assignment, you need to have at least 2 weeks’ worth of spending information jotted down.
4. Create a Spending Plan or a Budget to Solve and Prevent Financial Problems
Creating a monthly plan for your spending is one of the smartest things you can do for your finances, yet it’s the most overlooked solution to most people’s financial problems. Having a spending plan or a budget (the technical name for a monthly spending plan) makes life so much easier because you’ve given yourself a guide to decide how you want to spend your money.
Ironically, it’s also one of the things that you’ll likely never learn in a class at Cambridge or Harvard. Not to pick on these universities though; most schools don’t teach students how to create a budget. So to help with this lack of training, your third assignment is to outline your budget.
If you’ve never created a household budget that works, here is a personal budget workbook to get you started or you can try out this interactive budgeting resource that guides you through the whole process. A budget based on real numbers sets you up for success, so use what you learned when you tracked your spending.
If there’s an expense you want to cut out of your budget, start by reducing it by half. This will tell you if you can stick it out for the long term. If you can make having a budget part of your life, you’ll know that you’ve passed this assignment successfully!
5. Find a Replacement for One Large Expense in Your Monthly Budget
Cutting out an expense or changing a habit is easier if you replace it with something else. For instance, if you want to quit buying expensive coffee on your way to work, plan how you can replace this habit with a new one.
You might buy yourself a new travel cup and purchase some coffee that you enjoy drinking (and can make at home!). Then change your routine so that you’re not tempted to stop for coffee anyways, e.g. travel a different route to work.
Your fourth assignment is to find one expense that’s taking a real bite out of your budget and find replacement solutions. Cutting back on coffee is just one example.
What about your entertainment costs, quitting smoking or scaling back what you spend on hobbies and recreational activities? You’ll know that you’ve passed this assignment when all of your bills are paid up to date and you’ve got a little extra left in your bank account.
6. Identify Expenses You Can Reduce
Over the next month, identify areas of your budget that need some special attention. Look for ways to decrease your spending with your utilities. Do your laundry with cold water instead of hot; turn the heat down and the lights off when you’re not home. If you have a home phone as well as a cell phone, decide if you need both. Routines can be hard habits to break.
Also identify products or services you no longer need but which you’re still paying for. Many people simply let their bundled services renew from month to month, even when their needs have changed.
This might be because they’re too busy to look at their bills carefully, but taking the time to go through your bills line by line and calling the companies to make changes to service plans, or cancel services altogether, can find a lot of hidden cash.
If you haven’t guessed it yet, your fifth assignment is to identify what expenses you can reduce and then create the plan to follow through with your changes.
7. Create a Plan to Pay Off Your Debt
Everybody has some, so is it really that big a deal? Yes, it can be. If you have debt that has slowly accumulated over a number of years, you need realistic debt solutions that work for your life style, not quick fixes that you can’t live with for the long term.
At some point interest rates will start going up and eventually, your income will likely decrease when you retire. When either of these things happens, if you have relied on credit to make ends meet, you will find yourself facing some tough choices.
Dealing with debt sooner than later leaves you with more options. That said, many people delay getting debt help because they’re either embarrassed or don’t know where to turn.
Use these tips to help complete assignment six – create a plan to pay your debts off, but also maintain a reasonable standard of living. You will only be able to pass this assignment if your plan is realistic and you draw on what you learned in the other five assignments.
8. Get Help with Your Debts & Your Budget – How to Find Financial Help that Will Work for You
If you need help dealing with your debts and finances, don’t be afraid to ask.
Assignment seven is optional but will earn you a bonus if you choose to complete it. Seek out professional, objective advice from a reputable non-profit credit counselling organization for a second look at your budget and your plan to deal with your debts.
You’ll know you’ve passed this assignment when you come away with additional insight about what you can do to deal with your debts more effectively and implement your budget realistically.
Any good solution takes time to follow through with – your debt didn’t happen overnight; it will likely take as much time as getting a degree from an ivy league university to pay it off.
9. Educate Yourself
Last but not least, one of the best things any high level university could instill in its students is the desire to learn more. Any degree of learning from our mistakes is worthwhile, especially when we’re educating ourselves about how to manage our money and debt better.
Your final assignment is to keep learning. Take on more challenges or homework from the school of common cents. Life skills that further develop your new money habits will keep you on track with your budget, help you avoid financial problems, and help you plan for your future success.
How can I Attract Money?
1. Believe your are worthy of happiness
Part of attracting wealth requires that you believe you are worthy of happiness. The operative word is worthy. The secret to creating happiness begins with our self-view, which in large part can be strengthened through our morning ritual.
None of the other steps mentioned here can be taken until you truly believe you are worthy of happiness. In order for this to happen, you must let go of the guilt and shame associated with the past.
2. Focus on what you have right now
Many people fall into the trap of ruminating over what they don’t have or what they have lost. This unproductive line of thinking begins the downward spiral of negativity, which is a repellant against the positive forces of happiness.
Instead, focus on all that you do have through the gift of gratitude. We have only this moment in time. Yesterday is gone. Focus on the here and now and learn from mindfulness teachers.
3. End the cycle of learned helplessness
To continue engaging in learned helplessness is to remain trapped in poverty’s gravitational pull. You cannot attract wealth or other positive things into your life when your emotional and Karmic space is occupied with the words, “I can’t”.
End the excuses of what you cannot do and begin to use the words I can. In other words, I can attract wealth because I am worthy of happiness.
Jealousy of another person’s worldly possessions means that you are occupying your mind with an illusion. Just because someone is driving an expensive car does not mean they necessarily have money or that they are wealthy. Jealousy is a liar, projecting a false narrative that is almost never grounded in the truth. Let go of your jealousies and make room for joy.
Read Also: The Ultimate List of Personal Finance Tips
Clear negative energy. Embrace the simple things and fill yourself with peace.
5. Respect the power of money
Money is the byproduct of your hard work and labor. When you disrespect money, you disrespect yourself. Respecting money means keeping it organized. It means tracking it on a regular basis. It means recognizing that money holds both restorative and destructive powers and that it is not to be handled lightly.
Money, when managed properly, has the power to grow and take care of you for many years to come. When disrespected, it turns atrophy and negatively impacts your future. Finally, respecting money means not using it as a temporary tool to boost self-esteem through unneeded spending.
6. Study wealth
Attracting wealth into your life requires that you go beyond wishful thinking. It means making a conscious choice to learn all you can about money and how wealth is accumulated. Examine the practices, beliefs and habits of enlightened people who have created and attracted wealth. These are your teachers.
Recognize that people who have true wealth do not wear flashy jewelry, drive expensive cars or wear designer clothes. In fact, the majority of millionaires are meticulous budgeters who have created their wealth over the course of time.
7. Give money away
This final point relates to the spiritual and Karmic power of money. When we give money to those who are less fortunate, we are helping to replenish the human spirit. Do not hoard money or it will leave you.
Instead, use your empathic abilities to determine who is in need and how you might help them. An example might be offering to pay for groceries in the checkout line for a struggling family in front of you. It could also mean donating your time, which is a form of money, to your favorite charity.
When you give from a place of genuine love and compassion to others, you make room greater happiness, which is the precursor to wealth.
Lastly
Regardless of your money mindset right now, you can change your money beliefs to be something different and more positive. When you change your money mindset, that’s when you can truly start your financial journey and design your dream financial life.
Finally, think like Warren Buffett and don’t be afraid to invest in yourself. Get the financial tools you need or advice from someone who has been where you are and has proven they know how to achieve the goals you hope to achieve.
