Your money mindset shapes the quality of your lifestyle. It may not be the main thing but it has a significant role in your life.
If you’ve been trying to be financially stable, then you need to start with your mindset to make the situation better.
You’ll be financially savvy once you learn how to develop (and keep) a positive money mindset.
That’s why I put together this handy dandy 6 easy-to-follow steps to develop healthy mindset about money.
Money-related issues can significantly impact your well-being.
But did you know that changing your finances could be as simple as changing your mindset?
By changing how you view money, along with how you use it, you’ll find that it’s easier to get into a better financial situation.
After reading this post, you’ll be ready to start improving your financial situation right away.
Note. This post will focus on personal finance only, you know, just the basic stuff, no investments or any complex money matters.
So let’s get started…
Disclaimer: I’m not a financial advisor. What I will share in this article is a combination of knowledge I learned from personal life experiences, people in my life and books I’ve read. What worked for my family is not guaranteed to work the same way in your situation. Consider reaching out to financial advisors if you need professional help with your financial situation.
And when you finish reading, if you’re keen to start immediately, you can join my newsletter for more tips about intentional living including money mindfulness by downloading these free money trackers.
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What’s a mindset?
Let’s begin with understanding what mindset is first.
Wikipedia defines a mindset as a set of assumptions, methods, or notions held by one or more people or groups of people. A mindset can also be seen as arising out of a person’s worldview or philosophy in life.
Some familiar mindsets which you may have already heard are fixed and growth mindsets. There are rich and poor mindsets as well, but those will be for another blog post another day.
For now, we are going to focus on the money mindset, particularly the Positive Money Mindset.
What is a positive money mindset?
A positive money mindset is your positive attitude about money. This is about how you view money and everything related to it. It impacts how you make financial decisions and it can even influence your well being and quality of your life.
If you frequently struggle financially, it could be partially down to your mindset. This isn’t to say that it is the only reason why you have money struggles, but mindset certainly plays an important role in your money situation.
The way you think about your finances can have a surprising impact on how successful you become.
If you’ve ever read “The Secret”, you’ll know that what you think becomes what you experience.
So, if you want to be financially successful, you have to think you’re going to be financially successful.
There’s certainly some truth to this, but how exactly does it work?
Well, it starts in your mind. Develop a positive money mindset and you’ll be closer to your financial success.
Benefits of having a positive money mindset
A positive money mindset has a lot of benefits that are too good to ignore.
Less stress because you’re in control over money when you have a positive mindset.
Being in control with money means you know your numbers: your income, expenses, savings and debts ( if you have any).
And when you know your numbers, you are more likely to be wise when it comes to using your money. For example, if you have debt then you wouldn’t spend your money on non-essential items. Instead, you would direct that money towards paying off your debts.
When you have a positive money mindset, your lifestyle is also better. It’s because you use your money in a more meaningful way. A positive money mindset promotes generosity and an attitude of gratitude. It makes you feel that you always have more than enough.
Living with a positive money mindset means your happiness doesn’t depend solely on the amount of money in your bank. It also means that you appreciate money as a powerful tool that enables you to support the life you want and to create a positive impact on others.
Peace of mind
You’ll have peace of mind when you have a positive money mindset because even if your financial situation isn’t good right now, you know you can make it better.
Continue reading and follow the 5 steps so you can start developing a positive money mindset. Most of the steps can be put into action right away.
6 Easy-to-follow steps to Develop a Positive Money Mindset
Now that you know the importance of mindset when it comes to your financials, the question is how do you develop a positive money mindset?
There are a lot of tips and tricks you can try out to turn that mindset around.
This image is a photo of my finance spread of my Bullet Journal in 2019. Every year, I create a spread like this to make sure we know where are money goes. And then adjust as we go if needed.
Please note that managing money is not a-once-a-year activity. So obviously this is not the only thing we do. There are other money habits that we practise regularly throughout the year.
Step 1: Establish Awareness
To develop a positive money mindset, start with awareness.
Being aware of your finances means you know when you need to cut back on expenses or when you need to find a way to increase your income.
So to keep a positive mindset, pay attention to your money. You need to have an honest look at your current situation. Do this by taking notice of your thought patterns, your current money habits and your current financial situation.
To start, pay attention with your thoughts.
- What are your current thoughts about money?
- Do you have a fixed or growth mindset about it?
- What are the limiting beliefs that you have right now?
Then, look at your current money habits.
- Do you save regularly?
- What’s your current spending pattern?
- How about your saving habits?
Once you’re aware of your thoughts and money habits. It’s time to look at your reality.
Look at your real numbers.
The following questions can help you.
- Is your incoming higher than your outgoing?
- Do you have savings?
- What about debts?
A few things to remember
- Your numbers are the result of your past money decisions and habits. If the numbers are not looking good, it’s ok. You can always turn things around.
- If you made money mistakes in the past, let go of guilt and blame. You didn’t know what you know now.
- You can’t change the past financial mistakes and holding onto it only limit your future. So, let go.
- Remember this. You have the power now to make better and wiser decisions to make your future better.
- If you’re in debt now, it’s pointless blaming yourself and beat yourself up.
Reset and start developing a healthier money mindset.
Step 2: Set intentional money goals
Grab your Mindful Money Goals Setting workbook here . You can also click the message on the left.
Setting intentional money goals gives you a reason to do better and make wiser decisions about money.
By now, you have a clear picture of where you are and what you need to pay attention to.
Is it the income, the savings or the debts?
If you have consumer debts like loans or credit card debts, it’s best to prioritise getting rid of those. Maybe you don’t have debts but you want to start or boost your savings. So you would be making ways to save wherever you can to boost those savings.
Once you know which one needs your attention the most, it’s time to start setting intentional money goals.
To create intentional money goals, you need to look at your core values. What do you care about most?
A goal based on your core values is much more meaningful than goals that are set out without a deeper purpose. You’re more likely to follow through with your goals if your goal is meaningful.
To make a meaningful financial goal, attach a non-monetary and not materialistic reason with your goal. Something that connects with what’s important to you and that’s usually deeper than money. Remember, money is just a tool.
For example, if you want to save for “something”, reflect and find out why you want that something? What’s the “real value” it will give you when you have it.
Do you get what I mean? Let me share a real-life example.
When we came to Australia I had $0 and R had $6 with (5 figure credit card debt). We were so lucky we had the in-laws who supported us until R got a job.
So we set out a goal. Can you guess what it was?
The goal we set out was: Freedom. We wanted Freedom.
Freedom so we can move out and have our place of our own and for me to continue to be a stay at home Mumma.
Had we set our goal differently, we would have not been able to follow through successfully. It was hard. Imagine the struggle of paying off a debt that is higher than your yearly income?
And by differently, I mean the goal would have looked like: Save $_____ and also Pay $ _(5-figure debt) instead of “Goal: Freedom”.
Having that as a goal helped us work as a team to follow through until we became debt free after 3 years. (2013).
Up to now we are still happily living without debt and living debt-free gives us so much freedom.
I shared some of our wins related to money in this post: How to be intentional with your Money
Step 3: Manage your thoughts
You cannot have a positive mindset if you have unhelpful thoughts so the key is to manage those thoughts
When it comes to managing your thoughts, the best place to start is to check if you have limiting beliefs.
To do this, you need to start taking notice of your words. What do you always say about money? Notice your thoughts about money?
Examples of limiting beliefs are words and thoughts like:
“I can’t afford …..”
“My income is limited”
“I am not good with money”
“Money is limited”
“It’s so hard to save money”
“Managing money is stressful”
“Money is the root of all evil”
These are unhelpful thoughts and when you catch yourself having thoughts like any of these, do not indulge. Reframe your thoughts. It will take a little bit of practice but you can do it.
Using affirmations can help or you can journal your way to turn those limiting beliefs around.
You need to believe you can achieve something to actually achieve it. So, instead of entertaining these limiting beliefs, try and challenge them.
Think that you can manage your money well and you can change your money situation for the better.
Step 4: Be in charge of your money situation
If you’re in a money pickle, you can make things easier for you by taking charge.
It means owning your situation and being accountable.
You’re in charge of your thoughts, your feelings, your actions and your results.
So when you think that you can change your financial situation for the better, then you got to believe you can.
Doing the following will help.
- Establish awareness
- Avoid comparing your finances to others
- Make time to manage your finances
Circling back to step 1 above, by being aware of your current money situation, you’re already a few steps ahead of the game. Knowing what you’re dealing with helps you become creative and resourceful so you can figure out to improve your situation. You can figure things out. There’s always a way.
Avoid comparing your finances to others
We’re humans and sometimes it’s hard to not look at others who seem to be doing better financially than we do. However, just because you see someone who you think is doing much better than you financially, that doesn’t necessarily mean they are.
That new shiny car they’re driving could be on finance, and the lavish lifestyle they’re funding could have pushed them into a debt they’re now paying off. What you see isn’t always as real as you think it is.
Everybody’s situation is different. Focus on you and your money goals.
Make time to manage your finances
To control your finances, make time to manage them. Do a weekly review of your budget or a daily check-in.
I don’t like the term budget, it has this restricting vibe so I use the term “cash position”, which feels more like freedom. But of course, the term doesn’t matter. What matters is you make time to take responsibility on your finances.
Step 5: Educate yourself
Self-education is empowering and there are so many ways you can educate yourself on finances. But in the spirit of being intentional, I’m going to suggest just a couple of ways for you to start with.
- Read books and apply what you’ve learned (as soon as you can). But take it easy. Do not apply everything at once.
- Be hands-on with your finances because you’ll learn by doing.
Everything I share with you now is the result of reading books and applying what I’ve learned. Start with one book, pick a few relevant lessons and take action. The key is to pick the tips that are most applicable to you and implement them. You may find that not all tips will work for you, and that’s ok. Treat it as an experiment. Keep the tips that work for you and leave the rest.
This is how a set up our yearly finances.
I’ve read heaps of articles and lots of books about managing personal finance. I’ve read about using apps to manage money, using software and using spreadsheets.
Unfortunately, they didn’t work for me. I tried them but I kept going back to pen and paper. There was absolutely nothing wrong with those suggestions. They just didn’t work for me. I’ll be always old school, I guess and I will always have something like the above Bullet Journal Spread. That works for me.
Maybe for you, a digital app, a spreadsheet or a software will work better. Don’t be afraid to try things out and you’ll find the best that will serve you well.
Now, for financial self-education through reading books, here are my top recommendations.
- The Barefoot Investor
- The Barefoot Investor for Families
- Kekeibo The Japanese Art of Budgeting and Saving Money
You can also check these books:
Step 6: Practise good money habits
Finally, a surefire way to get a positive money mindset is to develop good money habits.
That means saving money where you can, working to pay your debts off and not giving in to impulse buys.
Start with one habit at a time and be consistent. You may find it takes a while to alter your negative money mindset but the more you persevere, the better you’ll become at building up those good habits.
Some good money habits you can start doing are:
- Avoid emotional spending
- Save regularly. Pay yourself first.
- Do a finance check regularly and make it fun, use trackers.
- Set mini money goals for quick wins and reward yourself.
Avoid emotional spending
It simply means you don’t spend money to satisfy emotion. Spending money to lift your mood is not a good idea because it may lift your mood temporarily but it will not make you happier in the long run. The initial joy you feel from the purchase will then be replaced by guilt, shame and worry.
When you have a healthy money mindset, you’re less likely to partake in impulse spending. You’ll be careful about the money you spend, helping you to achieve much greater financial freedom.
With impulse spending, you don’t think about whether or not you need the item you’re buying. It could be that you’re trying to make yourself feel better, or you’re just reckless with your spending. So, training the brain to have a healthier relationship with money, it’s going to avoid overspending and making impulse buys you don’t need.
Pay yourself first
One of the most useful habits you need to start doing (if you aren’t doing it ye) is to pay yourself first. Every time you get paid, the first thing you need to do is pay yourself first. This is doable no matter how much you get paid.
I once suggested to friend to set aside just $1 every time she gets paid and forget about it. Soon enough she had a good amount of money saved (increased from $1 to higher amount). She developed a habit of saving regularly. That friend is now debt free.
Review your finances regularly
Set a day or a time at least once a week to review your money. Doing this will help you stay in control of your finances. You can adjust as soon its needed.
So, there you have it – 6 Easy-to-follow Steps to develop a positive money mindset.
I am lovingly encouraging you to please apply at least one of the tips if you need to improve your financial situation. The steps are all actionable so pick one that’s easier and more fun for you.
Just to recap, here are the 6 steps:
- Establish Awareness
- Set intentional Money Goals
- Manage your Thoughts
- Be in charge of your money situation
- Educate yourself
- Practise Good Money Habits
Remember, you’re going to need to be persistent when trying to develop new habits. While each of the tips above can help, you’ll need to be dedicated to working on them for them to be effective.
You CAN DO IT. I believe in you.