MONEY MINDSET: HOW YOUR THOUGHTS IMPACT YOUR FINANCES

MINDSET

Mindset is our attitude or beliefs that influence how we think, feel, and act. Our mindset can be positive or negative, and it can change over time. While we usually are naturally inclined toward a certain mindset, we can make changes to our mindset to approach things differently. If we tell ourselves we can’t do something before even trying, we are approaching the situation with a negative mindset. If you approach a challenging situation with a positive mindset, you may or may not be able to navigate the situation successfully. However, we will at least have given it our best shot and will know if we were able to deal with whatever we were facing. This helps us be open to approaching challenges in the future. Mindset impacts many aspects of our lives. Today we are going to talk about the ways it impacts our finances.

SPENDING HABITS

Your mindset has a definite influence on your spending habits. If you have a scarcity mindset, you may be more likely to spend money impulsively and without much thought. A scarcity mindset is a belief that there is never enough of something, including money or things. It is one where we focus on what we lack, which can create a need to purchase things that aren’t needed. A scarcity mindset can shifted more towards an abundance mindset by practicing gratitude. Instead of focusing on what you don’t have, focus on what you do have. This can shift your perspective which can reduce the need to spend on things that are not necessary.

RISK TOLERANCE

Your mindset can also affect your risk tolerance. If you have a fixed mindset, you may be more risk-averse and less likely to take chances with your money. A fixed mindset is a belief that one’s abilities and traits are innate and cannot be changed.  So, we choose not to do things we are not sure about.  People with a fixed mindset tend to avoid challenges, which could include figuring out how to set up a retirement account and how to invest the money. A fixed mindset can be shifted more towards a growth mindset over time by stepping out of your comfort zone a little bit at a time. This will help build your confidence and see that you can not only learn but can become very good at things you are not currently familiar with. While we all still have different levels of risk tolerance, you don’t want to be so risk averse that you lose out on financial opportunities that can impact your future.

FINANCIAL GOALS

Your mindset can impact your financial goals. If you have a negative mindset, you may be less likely to set ambitious financial goals for yourself. Or you may go as far as never setting any goals at all. With a negative mindset, you may convince yourself that it is not worth setting goals because it will only lead to disappointment when you don’t achieve them. If you have a positive mindset, you may be more likely to set challenging goals and work hard to achieve them. Even if you fall short on the goals that you set, you will much more likely come out better off than setting no goals at all.

MONEY MANAGEMENT

Your mindset can also influence how you manage your money. As mentioned before, a scarcity mindset can cause you to impulse spend to purchase things you feel you need to have. On the other hand, it can cause you to save your money excessively. You may avoid investing your money because you want to always have it easily accessible feeling like there will never be enough. With an abundance mindset, you may be more likely to invest your money so that you can be better prepared for future goals. Having a fixed mindset may cause you to avoid budgeting if it’s something you have not done before or something you have not succeeded at before. If you have a growth mindset you will be more successful with budgeting because you will be more willing to figure it out, learn, and get better at it as you go along.

THINK ABOUT WHERE YOU STRUGGLE MOST WITH MINDSET

Think about where you struggle most financially. Is there something you can do to improve your mindset to change some of your financial situation? While mindset will not increase your earnings or change your financial situation immediately, it can impact the long term. It can also help you open your mind to alternative solutions more easily. So, the next time you are approaching a financial challenge or a decision involving money take a moment to consider the mindset you are approaching the situation with.

Thanks so much for checking in! If you would like to hear the podcast version of this topic check out Lola’s Frugal Life Podcast! Also, be sure to check out my other blog posts on this site!

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