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Are your finances at the mercy of a bad ‘money mindset’? Good news – it’s possible to change your thinking and set up a lifetime of rewarding habits. Our experts tell you how.
If this is you, or someone you know, it’s likely that your (or their) ‘money mindset’ is to blame.
Your money mindset is, quite simply, how you approach and think about money and financial matters. It is a result of how your immediate family dealt with money when you were growing up and, to a lesser extent, how your extended family, friends and perhaps even your first employer did so.
There are many different ways to view money mindsets – for example, positive and negative, healthy or unhealthy, or scarcity and abundance.
We asked two experts – financial planner Michelle Stone, who deals every day with people making financial decisions, and behavioural economist and psychologist Phil Slade – for their views on developing a healthier your money mindset.
When it comes to changing or moving beyond your current money mindset, Slade and Stone agree it can be very difficult to shift a mindset, but it is possible to work with it.
Stone says recognising your own ‘financial programming’ is the first step towards creating a healthier mindset.
“Once you accept what your programming is, you put down what your goal is and then you work with someone who can help you achieve that goal, taking into account your strengths and weaknesses,” she says.
People need to understand that the journey is hard, Stone says, but if they really want to adjust their money mindset, they need to do the work. And that work involves setting goals and mapping out paths to achieve those goals – there is no magic bullet.
Slade says it’s important to remember that approaches to money are based on emotion. “If you can start to look at your emotionally reactive side, you can start understanding where some of the blind spots are, and why, she explains.
Stone says that by learning to recognise and understand how you emotionally react to financial situations, you can begin taking steps to, change your own mindset and behaviours.
For example, people who have recognised they have an unhealthy money mindset that prevents them from saving could set up a regular direct debit into a savings account. By doing so, they have taken the emotion out of individual savings decisions.
Repeating small actions like this can help change how you think about money, putting you on the right track to a much more positive money mindset. As our experts say, it won’t happen overnight, but it will happen.
Your 4 money mindset takeaways:
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