Let’s talk about your money mindset–how to think about it, how to leverage it, and ultimately how to get where you are going.
Check out these four tips.
- Your Mindset Affects Your Reality
- Be Proactive with Your Money Mindset
- Be adamant about Maintaining Your Mindset
- Create a Plan Based on Your new Money Mindset
- Stick to the Plan
1.Your Money Mindset Affects Your Reality
The first tip doesn’t involve a fancy excel spreadsheet, the best app out there, or a pimped-out banking system with a financial advisor hotline.
Nope.
It starts with your thought life.
Internal Dialogue
The thoughts you let run through your head brew emotions and ultimately project who you will
be tomorrow. They also play a significant role in the actions you will take.
Our brain is like a muscle. In essence, the more you think about something, the easier and more frequent it gets. If you repeatedly think about how you don’t have money or how bad your money habits are, it gets easier to think that way and ultimately behave that way.
On the other hand, if you actively switch your thoughts to being proactive about money, you will find that it is easier to be creative with saving and disciplined with staying on track with good money habits.
Placebo Effect
Your mindset affecting your reality is a phenomenon that has been studied repeatedly.
Take the placebo effect. This term references controlled drug trials where it was found that patients resulted in feeling better following a dose of the placebo sugar pill.
In the same study, patients who focused on the negative side effects of the drug resulted in experiencing negative side effects even after taking the placebo sugar pill.
There is still much to study about the mind-body relationship, but it is safe to say the mind does affect the body.
Stress Test
Another example of this phenomenon is a study referenced by Kelly McGonigal in her 2013 TED talk. The study found that people who lived high-stress lives only presented negative side effects and an increased risk of death if they believed stress was unhealthy.
Those who lived under the same amount of stress, but didn’t believe stress was harmful to their health, remained unaffected.
2. Be Proactive with Your Money Mindset
If your mental habits dictate the scoreboard of life and ultimately your reality (to a degree, of course), it’s worth assessing and improving.
When it comes to your money mindset, take stock of your thoughts. Avoid thinking things that are negative and instead replace those thoughts with proactive and positive thoughts.
Think This, Not That
With regards to money, avoid thinking: I’ll never have money in life, I’m just not good with money, I have bad money habits, or I’ll never be able to retire.
Instead, implement new thought patterns like Today I’m going to learn about money, I get to budget for the future, or I will grow into good money habits.
The key is to determine what your ‘why’ is regarding money. What are your ultimate goals? And why are they important to you?
Be Willing to Improve Yourself
The main takeaway here is to be willing to grow and improve.
Someone who is psychologically able to implement a growth mindset has a greater potential to improve and succeed. Compared to someone who will never have the awareness or psychological know-how to assess and adjust negative thought patterns.
Be adamant when it comes to establishing new thought patterns. Have a plan. Stick to the plan.
3. Be Adamant about Maintaining Your Mindset
Once you’ve started down the track of changing how you think about yourself and money, be adamant. Think about yourself as someone who will learn about money—how to use it, save it, and reach his or her goals by leveraging it.
With goal-setting be adamant about taking the steps to reach those goals and be willing to assess and adjust them along the way.
The point is, it will take work to revamp old thought patterns. Don’t be afraid of the work.
Perspective and Action
Once you start doing some groundwork on your overall perspective of money, you can be
adamant about the actions you take to reach your financial goals.
Be aware that this goes hand in hand with denying yourself. It’s not the easiest thing, but denying yourself is a healthy habit. It enforces the ability to tell yourself “no” more down the road where it counts.
Telling Yourself No
Once you say things like ‘I’m not going to spend the $5.98 on a Grande latte, I’m going to make coffee at home’, it will be easier to deny yourself something on a larger scale. Maybe that something is a pair of shoes, a new vehicle, or a new iPhone.
I’m not advocating a rigid, no-fun-allowed-lifestyle, we will address this more later, but I am
saying that telling yourself, “no.” in the now for the greater good of later is one of the best things you can do to start changing your money habits and enforcing your new money mindset.
4. Create a Plan Based on Your New Money Mindset
Where are you headed? Keeping the end in mind as you step forward will help
you maintain the hard job of self-denial and discipline while also giving yourself a way to track your progress.
I worked as an Executive Assistant for a few years, and I can tell you this, the CFOs and the CEOs of the world don’t just roll out of bed in the morning and see what they feel like doing.
They regulate their time and their staff by keeping tangible ‘to-do’ lists and organizing their lives to meet time-sensitive deadlines. Write it down. Put pen to paper and line out what you are trying to accomplish.
Give yourself deadlines.
Maybe you want to save for a house or big ticket item that will propel you down the road, or maybe you want to start saving a certain amount a month or shoot for a certain percentage a month. Whatever it is…. it’s your goal.
Write it down and move towards it. You can always adjust this later as you make moves and hone in on your goals and get more information.
5. Stick to the Plan
Sticking to the plan means keeping yourself accountable. With money, accountability looks like keeping track of where your money goes.
Once you have started changing your thinking and created a plan, tracking what you spend on the day-to-day helps you understand the holes in your mental game and your weaknesses based on your actions. Once you know where your money goes, you can adjust.
Excuses
Many argue they don’t have time for tracking their money and maybe don’t see the purpose or blah, blah, blah, but I want to encourage you that:
- If you don’t have time, it hasn’t yet become a habit. Just schedule the time until it is a habit
- You won’t have to be this anal forever.
Don’t fool yourself into thinking you know your problem areas and will be able to change your
spending habits overnight or by making a few small changes. Also, don’t fool yourself that improving your money mindset stops at your mind. Taking action on the new mindset is just as important as the mental game.
Did I Mention Be Adamant?
Take a week or two and track your spending. Write it all down. Jot it down in the notes section of your phone, snap pictures of your receipts, keep a log book, use an old dusty deposit book from your bank, or write down every cent you spend in the margins of your planner/calendar.
You probably won’t be shocked by how much you spend on bills… you will be shocked by the groceries/food or the extracurricular activities. Who knows? I don’t. You don’t….. not until you are diligent and assertive with yourself and see where you’re putting your money.
Take Heart, This Won’t Last Forever
Once you have made large adjustments to your money mindset and your money habits, you can be a little more lax. The new norm will become a habit and you’ll simply need to maintain what you started.
A word to the wise, don’t think you can be lax too early. I’d give it at least 6 months of tracking and acting on the goals and thought patterns you started with to improve your money mindset.
Some Helpful Reading
Need help with a savings plan?? Visit Money Mustache for a great % of savings for retirement graph.
Something about percentages and visceral numbers helps me push through the last days of a month when I’m trying to hit my savings goal. Also, it may help to see your savings rate translated into an estimated time until retirement or financial freedom—a real and tangible goal of exiting the Rat Race.
Check out this excerpt from Mr. Money Mustache’s article:
“The most important thing to note is that cutting your spending rate is much more powerful than increasing your income. The reason is that every permanent drop in your spending has a double effect: it increases the amount of money you have left over to save each month and it permanently decreases the amount you’ll need every month for the rest of your life.”
