We’ve talked before about raising financially independent kids, and how parents are responsible for teaching their kids how to be good with money.
But, have you considered how your own upbringing has impacted your relationship with finances, or what exactly is influencing your day-to-day money habits?
Even if your parents didn’t consciously teach you about money while you were growing up, their behaviours and attitudes will have gone a long way to influence your own. Whether you’re a complete carbon copy, or you decided to go in the opposite direction.
Everything you learned and experienced while you were growing up, and even today as you wander through the world, has shaped how you feel about money.
We call this your money mindset
What’s a money mindset?
Your money mindset is your overarching – and often subconscious – attitude towards money, and drives how you make key financial decisions.
There are two core mindset types. A negative mindset, also referred to as a scarcity mindset or poor mindset, and a positive mindset, also referred to as an abundance or wealth mindset.
Someone with a negative mindset feels like getting in control of their money, growing wealth or financial success is out of their control and something they could never achieve.
On the flip side, someone with a positive mindset will feel in control of their money and financial outcomes. They’ll make decisions based on the financial implication and feel in control of their money, rather than controlled by it.
How does my money mindset impact my financial situation?
A negative money mindset can create a barrier between you and financial success, leading to bad money habits that sabotage your ability to save and improve your financial situation, or worse, get you into a spiral of debt. It’s also likely to cause stress and anxiety, as stressing about money leads to declined mental health.
People with a negative money mindset often feel like there’s only so much money to go around, and they’ll never earn enough to get themselves into a better financial situation – even if they’re earning a decent wage and able to meet their daily costs. They may make no effort to earn more, either because they don’t believe they can, they don’t deserve to, or because they think having a lot of money is ‘bad.’
A positive money mindset on the other hand empowers you to recognise that even if you’re not in the financial situation you’d like to be yet, it is in your power to get there, and you’re actively taking steps to improve your situation. Someone with a positive money mindset recognises that they will make mistakes, and they’ll learn from those mistakes and recover any losses.
Someone with a positive mindset sees the opportunities that money provides them to grow wealth, whether that’s through saving, investing, or educational opportunities that improve their earning potential. And this doesn’t mean they’re a modern embodiment of Scrooge McDuck. They are just more aware of what money can help them achieve and are willing to take action to get there.
The good news: you can improve your money mindset
The good news is that even if your money mindset isn’t at its finest right now, there are things you can do to change it.
- First, take a look into your past and see what might have influenced your current, negative mindset. What lessons did your parents teach you about money, or what did you pick up from them based on their financial situation and behaviours?
- Then, try and turn any negative self-talk into positive self-talk and recognise that you have the power to make changes. Remember: you aren’t subject to the whims of the universe.
- Start taking steps to improve your financial situation – even if they’re small. Think about where you’d like to be financially and set some goals – short or long term – that will help you achieve them. Then start chipping away at them. If something unexpected comes along, don’t just throw in the towel and give up. Recognise that it’s a setback, but that you’re also able to recover and achieve your goal, even if it’s a little later than first intended.
And remember that comparing yourself to others isn’t a good reflection of your own financial potential. It’s not that the rich or financially better off got a bigger piece of the pie. There’s more than one pie and you get your own one – so go ahead and take all of it.
Do you have some specific questions about how you can turn your financial situation around, create a more positive mindset, or improve your financial behaviours? Join enable.me founder Hannah McQueen and Sue Kohn-Taylor from The Mental Fitness Company on the 26th of July. Together with enable.me coach Nadine Higgins, they’ll take a deep dive into how your day-to-day habits – and those learnt from your parents – impact your financial decisions and answer your questions on the psychology of money in a live Q&A. Register today.