Money Mindset: what is it and what can you do about it

The phrase money mindset gets thrown about a lot in the personal finance world. But if it is a concept that is new to you, then you might be feeling that you are missing out on some sort of secret.

Alternatively, you might think that money mindset is some sort of “woo” idea, that only hippies pay attention to and people like yourself don’t worry about this sort of thing you just work harder. Well, if that’s you, then spare me just a few minutes of your time to convince you otherwise.

What is money mindset?

Let’s start my talking about money mindset actually is. It is simple really. It is your internalised beliefs about money. These come from your past experiences and are patched together to give you an opinion of how money works.

But the key word there is opinion. It is not necessarily fact. These beliefs are normally born out of fear or joy, that’s why we remember them. So if you watched a family member struggle with debt, you might believe that is how you meant to feel about money: stressed and anxious. Or if you saw a friend lose money on the stock market, you might think that this is the case for everybody.

It is a multifaceted part of your brain that has more influence over your finances than you think, and until now you may not have even been aware of it.

Why are people talking about money mindset?

The idea of mindsets isn’t new. It was first talked about in the 1920s, but was popularised by Peter Gollwitzer in the 80s and 90s. Our mindset influences all of the decisions that we make across all areas of our lives. That’s why people have become increasinly interested in it.

I first heard the idea of the concept of mindsets about 8 years ago, on a teacher training day. They explained that we need to foster a growth mindset in our students. Meaning that we need to encourage our students to believe that they were capable of achieving anything. They explained that those with a growth mindset were more likely to successful, not because they had any underlying traits that determined it, but just because they believed they could.

Since then I have heard the word mindset used a lot, and now I’m in the world of money, it makes sense that money mindset should be something that I am exposed to. The reason people are talking about it though is that when you put in the work to change your money mindset the results can be huge.

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What are limiting beliefs?

They are the thoughts, feelings and assumptions that you have around money that are holding you back. They literally limited what you are capable of achieving with your money. It might sound out there, so me give you a few examples that can help you understand.

• “I’m good at managing my money.” – I hear this one a lot, and what it is is an excuse that you use to stop you learning the skills that you need. It is like all other skills, you need to commit to do the learning and practice. However, when you cling on to this belief you hold yourself back from making the change that is need.
• “I’d rather be happy than rich.” – this statement implies that the two are mutually exclusive and that it is impossible to be both. When, in reality that is just not the case. You can be both. But if you hold on to this belief, then the chances are that you will keep yourself poor because you don’t want to risk your happiness.
• “You take your money with you when you go.” – this underpins the live life now idea and encourages the need to spend all your money the minute you get it. Yes, by all enjoy your life, but it is possible to have both a rich life and a healthy bank account.

Now these are just a few examples to help highlight my point. In reality, you are going to be holding on to loads of these, but there are some actions that you can take.

What action can you take to address your limiting beliefs?

Thr first step is to discover what your limiting beliefs are. They rarely make it obvious to you so you have to do some work. This can involve journaling or watching yourself when you are around money situations. What do you tell yourself about money?

A good example of this would be when you find something that you want to buy but it is out of your price range. Do you say “I can’t afford that”? Because that is a limiting belief. It is these sort of clues that you can use to figure out what you need to work on.

Another place to look for your limiting beliefs is in your past experiences with money. Journaling can help you process your money memories and see what they might have taught you.

Once you have these beliefs laid bare, then you can start the process of rewiring your mindset. Take the negative thoughts and create positive statements to counteract them.

If, like in the example above, you find that you want to buy something but you can’t afford it now, then try regularly saying an affirmation such as “I have a plan to afford everything I desire.” Or if you think that you are bad with money management, then try “I am learning every day how to become a confident money manager.”

The more that you repeat these statements, the more that you will start to believe them. Furthermore, you will take the action to make them true. You will seek out the tools and knowledge to manage your money, you will create plans to afford those items, and suddenly these limiting beliefs aren’t a problem any more.

Abundance or lack?

A very simplified view of money mindset places people into two categories. Either they have lack (scarcity) mindset or an abundance mindset. Let’s delve into these ideas a bit more.

Lack mindset is where you feel like money will run out. You think that money is finite. This means that you only have a limited amount of money and when you spend it it’s gone. This can either lead to unnecessary hoarding of cash, fear around investing or giving money away, or could create a “you only live once” mindset which causes overspending.

The opposite of this, and what you should aim for, is an abundance mindset. With an abundance mindset, you believe that money is infinite and that there will always be more money available to you. You recognise all the opportunities around you. You manage your money to ensure that you are cared for in the future but also in the present. Making plans to enjoy life.

Now, if you read that last paragraph and disagreed with it, then I’m afraid you have a lack mindset. Interestingly, the research into mindsets says that it doesn’t actually matter what the truth is. It doesn’t matter whether money is finite or infinite. The important thing is what you believe to be true. If you believe in abundance, then you will be abundant. If you believe in lack, then that’s what you get. It just comes down to your own internal thought process.

How to work on your money mindset?

I’m not sitting here saying that my money mindset is top notch. It is not. I work on my money mindset every day to open up new opportunities in my life and to invite more abundance in.

But I go through the same processes as I have outlined in this article. I look for my limiting beliefs, and work on addressing them. I journal, repeat affirmations and listen for the clues in my self talk.

It is as simple as that. But if you need some help on your journey then I have a product that you might find useful.

Final words on money mindset

If you start working on this today, I guarantee that you will changes almost instantly. You will be more willing to jump on new opportunities, you will find money that you have forgotten about, you’ll start new systems that will better care for your finances. Trust me, it’s a game-changer.

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