Why money mindset matters and how to improve it
Apparently, our money mindset matters. And it matters more than our ability to deal with the figures. That’s what the research is telling us anyway. A scientific study done in collaboration with the BBC Lab UK, the Open University and University College London, brought up some fascinating facts. By surveying more than 100,000 people they found that your money mindset, or psychological make-up, has a huge impact on your finances. It’s not just down to the figures and to how much money you have, “….your relationship with cold, hard cash has a real impact on going into the red.” *
Why is money mindset so important?
Before we can even think about improving money mindset we need to understand WHY it is so important.
What difference does it make?
The main reason that it matters, is that it is your mindset that controls your money. It is your mind that decides how you feel about money and decides what purchases you will make. With a negative mindset and outlook towards money, you are likely to feel that your financial life (and perhaps other areas of your life) are a constant struggle. If you want to live a happy, abundant, and free life, then your mindset matters. Without a positive money mindset, you will not be able to live as fully as you deserve.
I just need more money
You might find this hard to believe, and think that the problem is the money itself.
“If only I had more money, then life would be perfect.” “I wouldn’t feel like this if I was rich.”
However, often this is not the case.
If you think that more money will improve your situation, then you could be sadly mistaken. Let me show you how.
Take the executive who spends all her salary every month on shoes, bags, and clothes, until she is just longing for pay day to come. What happens when she gets a pay rise? Does she suddenly transform into the person who has money left at the end of the month?
Not a chance!
Because she is the problem, and this has become her habit. She just buys more stuff, or more expensive stuff, and no matter how many pay rises she gets, that is what she will continue to do. She is stuck in this cycle of believing that she doesn’t have enough money, so she craves more, then discovers that she still doesn’t have “enough”. This won’t change, unless she looks at her mindset.
A different problem
Let’s take the teacher who gets promotion to principal teacher. This will be the answer to her problems. She will have £10,000 a year more, which means that she will be able to enjoy more holidays and more meals out. She will even treat herself to new work clothes, as hers are certainly past their best.
Then she looks to the future and thinks about the mortgage, the kids going to uni and her future plans to retire early. She increases the mortgage payments, pays more into her pension and sticks some in a stocks and shares ISA for her kids. She would really have liked some extra money in her hand now, to be able to enjoy life more. However, her worries about the future drive her so much that, she puts more into savings for this.
Is this a problem? It might be!
We are only around for approximately 85 years, so making the most of each one of them is vitally important. People who get stuck thinking so much about the future, that they can’t enjoy the present, are rarely truly happy.
What happens if she drops dead before she hits 60. She has been busy denying herself for all these years and certainly won’t get to enjoy the fruits of her savings.
She then looks for another promotion, for more money, thinking that then she will be happy. Only she’s not. She still feels the need to put more money away. There is a need for more in savings. She will never be truly happy and content, until she looks at her mindset, and works out why she feels the need squirrel this money away.
This used to be me! Working on my own mindset has really improved this, but my natural tendency is to revert back to that. However, I know that I am now so much happier, and much less worried about my future security than I once was. I have exciting things to look forward to, but still enough money to enjoy things in the here and now too.
Start working on your mindset today by taking this quick quiz.
Generous and loving
What about the nurse who continually spends more than she earns? She never looks at her bank statement and doesn’t think twice before whipping out her credit card to pay for everyone’s dinner. Her natural trait is to be the most generous, loving, happy and giving person. She is absolutely the life and soul of every party, giving lavish gifts and donations to charity.
The letters are landing on the doorstep reminding her that her credit card payment is due. She looks at the minimum payments due and sets up a transfer. She doesn’t even look at the total amount owed, because if she can make the minimum payment, then she is happy.
However, fear and doubt are there. Deep down. Hidden from her friends, her partner, and even hidden from herself.
Will cutting up the credit cards or putting them in blocks of ice help her? It might stop her from spending more on the cards, but will it help her out of debt? She dreams about winning the lottery – surely that will solve the problems.
But would it? The problem isn’t money. The problem is deep-rooted mindset issues that are causing the overspending in the first place.
Getting the debt paid off, and not addressing the issues that caused the overspending, will not help. It’s like putting a piece of material over a hole in the ground – it will cover the problem, but it won’t stop you falling down the hole.
Without addressing the issue, you can bet that no matter how many times the debt gets paid off, the problems will reoccur, because the problem is not the money. It’s her mindset.
Think about the mum returning to part-time work, after having children. She barely makes anything after the childcare has been paid, but she feels she has no option. She feels stuck. It’s important that she keeps her job, because once the kids are all at school, she can go back full-time, so she slogs along in the meantime. Her dream of being a midwife, is too difficult; it’s too much work. She doesn’t have enough money. She wouldn’t have the time. And so on…..until she reaches retirement age and realises that she has been making the same excuses all along. Is it the money? Is it the lack of time?
No, it’s none of them.
It’s her confidence, her self-belief and her mindset that is keeping her stuck.
With a bit of encouragement, and a bit of positive thinking, she absolutely can change her situation into one that serves her well, both now and in her future.
These are just 4 examples of where money mindset matters, but there are loads of situations where the actual issue is mindset, rather than money.
Money can give you all the things you want, or money can make you miserable! If money is keeping you stuck in your present situation, then changing your mindset if often the only way to improve it.
Is my money mindset causing problems?
Do you think that you have a healthy relationship with money? Or do you think there is a possibility that your money story is keeping you stuck?
Find out now if your mindset is affecting your relationship with money. It is a quick, fun quiz, which will give you an insight into your money mindset.
After taking the quiz, you might find 5 easy ways to improve your mindset helpful. It’s full of great suggestions for helping you to think about your current money mindset, and start thinking about how you can change it into one that serves you better.
I am Eileen Adamson, Your Money, Sorted coach, working online with UK based women. I can help you to develop a better relationship with money and feel calm, relaxed and positive about money. This will allow you to feel confident, in control and able to make good financial decisions. Through creating a good relationship with money you can then live the life that YOU want to lead.