Saving Advice - Ask most people what their most valuable asset is, and they’ll say, “My house,” “My brokerage/savings/crypto account,” or even “My car.” Sometimes someone will list their family or “love” as a valuable asset. All of these things are valuable, it’s true. However, when it comes to finances and your ability to weather storms, none of these are as valuable as your money mindset.
What am I talking about when I say “Money mindset?” I’m talking about how you think about money and how you think/feel about issues surrounding money and finance. Some people have problematic thought patterns around money that make it very difficult for them to get ahead. Beliefs such as “I’ll never succeed,” “The system is rigged against me,” and “I’ve always been poor, so I’ll always be poor” are difficult to surmount and often negatively impact the ability to make sound financial decisions. Other problematic beliefs or feelings include, “I need to keep up with my friends,” “I don’t know anything about money so I can’t make good decisions,” “Finance is too hard to figure out,” or “You can’t take it with you, so you might as well live for today.”
Other people have more positive beliefs and thoughts about money. They think, “I can learn more about money and make better decisions,” “I need to think of the future because I’ll probably want to retire someday,” “I know how to save money and manage my affairs if something terrible happens,” or, “I’m not going to worry about what my friends think, I’m going to do what’s right for me.” People with a strong money mindset believe they can figure out their financial lives and either cut expenses or make more money to get ahead. They believe in their abilities and creativity and trust that, while obscene wealth may not be in the cards, they can make their situations positive.
Note that a strong money mindset isn’t necessarily all about positive thinking. Sure, that’s helpful to a point, but many people who are good with money are realists. They know everything isn’t always going to go perfectly, and they are prepared to deal with that. They build contingency plans and take steps to protect themselves from disaster. Waiting for fate to handle problems isn’t how these people approach money.
People with strong money mindsets see money as a resource, nothing more. It’s there to be earned, spent and managed. It’s not something that’s out to get them, or something that only certain people can have. They don’t ascribe mythological qualities or superstitions to money. To people with a strong money mindset, money is a resource on par with water. Necessary, but generally not difficult to find or deal with. Even if it does become difficult, they trust that their problem-solving abilities will get them through.
When you believe that you can always make or save more money, the prospect of losing everything becomes far less frightening (as does the likelihood that you would be in that position, to begin with). When you have frugal skills and understand basic personal finance, the thought or a layoff or other calamity isn’t as scary. It’s easier to shrug and say, “Well, I’ll just have to work harder, find a different job, or get more creative.” Even, “I’m starting over,” isn’t as terrifying as it might otherwise be. Financial trials are not a reason to throw hands in the air and say, “Well, I’m doomed.” They are opportunities to retrench and deploy skills and knowledge to turn the situation around.
So how can you cultivate a better money mindset? First, it may be helpful to speak with a professional. A good therapist can help you with beliefs that might stem from family or childhood issues or from some trauma you may have experienced. Even just dealing with the world we live in can create negative money beliefs. (There’s a reason why people who went through the Great Depression or Great Recession tend to behave very differently around money than those who avoided those calamities.) A professional can also help you break free from the need to impress or keep up with others. They can also help with impulse control, negative self-talk, issues surrounding depression and anxiety, or just a general lack of belief in yourself.
If you don’t need a professional or have the mental side under control, start with education. The more you know about money and finance, the less scary and intimidating it becomes. Get some books out of the library, find some good online blogs, podcasts, or videos, and start learning. You don’t have to get into the deep end of things like options trading, annuities, economic policy, and advanced tax topics right off the bat. Start with the basics of insurance, frugality/budgeting, credit, and debt. The more you know, the better able you are to deal with whatever arises. Your confidence will grow, and it won’t feel like doom is lurking around every corner. You want to take control of your finances rather than letting things happen.
Next, make certain you’re protecting yourself financially. Security is key to a good money mindset. Make sure you’re properly insured. (Yes, I know it’s expensive, but it’s sometimes what stands between a small problem and a crippling financial disaster.) Keep your money safe in a proper bank account or brokerage, not in the mattress or a shoebox. You don’t want to lose everything if someone breaks in. If necessary, keep track of your credit and freeze it to prevent identity theft and the associated problems. Have an estate plan and care plan in place if something happens to you (yes, bad things happen even to young people). It’s much easier to be positive about money when you don’t go to bed every night with a sword of doom hanging overhead.
Also, work on developing your skills. Get better at some DIY projects. Learn basic household maintenance. Become a better cook. Master a budgeting/expense tracking tool. Learn skills that will level up your career and earning potential. Anything you can learn that bolsters your ability to save, earn, or better manage your money will improve your mindset. Competence leads to confidence, which is the best mindset booster out there.
Yes, money is a valuable asset. However, you can have a ton of money and, if you lose it, be unable to get it back. Think about lottery winners who had lost a boatload of money. Their mindset is likely what caused them to lose the money in the first place, and it’s what keeps them from recovering from the loss. How you relate to and deal with money is far more important than money. People with a strong money mindset are better able to bounce back from setbacks and build wealth along the way.
This article was originally published on Saving Advice
