Would you like to know what makes someone successful with money whilst others are more challenged? It’s simple. It’s their money mindset!
In 2017-2018, Ramsey Solutions conducted a study of over 10,000 millionaires, and the common denominator for 97% of millionaires studied believed that they could become millionaires. [1] They also believed that being a millionaire was within their control and that they held the key to their own success. It was their mindset that caused them to succeed, not an inheritance, fancy education or wealthy parents.
What is money psychology?
Money psychology is the study of your behaviour with money. Your behaviour is driven by your thoughts, beliefs and emotions with money.
Interestingly, your unique beliefs and attitudes around money are often embedded during childhood. These are a collection of your thoughts, feelings, emotions and behaviours. At its core, your beliefs around money, yourself and the world determine the life you live.
These are some examples of Money Mindsets in action:
Abundance Mindset: If you grew up in an environment where there was a lot of money, you’re more likely to have an Abundance Mindset towards money and opportunities. Often there is a feeling of financial security and openness to investing, with setbacks seen as temporary.
Scarcity Mindset: On the other hand, if you grew up in an environment where money was limited or irregular, you could be influenced by a Scarcity Mindset with a belief that “there is never enough money “, “you have to work hard for money”, “I’m not worthy of …money or a good income.” This is often characterised by emotions of stress, worry and anxiousness.
Fear or Guilt of money: Can stem from negative associations around wealth, including where money has been used as a form of control, where money has been received as a result of a loss, or where individuals have prioritised the creation of wealth over the needs of family members. This in turn can lead to self-sabotage with money such as rejecting money whether consciously or subconsciously or not feeling worthy of having money.
Money as a tool: Individuals view money as a tool to support their lifestyles and achieve their goals. This usually entails a more practical and unattached approach to money. Individuals prioritise healthy money habits such as improving financial literacy, budgeting and investing to improve their financial well-being.
Helpful tips
- Explore your own relationship with money and bring awareness to your thoughts, beliefs and behaviour. Questions to ask yourself include: How was money handled in your household growing up? Was it talked about? Was money in abundance or scarcity? This will help you to understand the foundations for your own beliefs around money.
- If you’re in a relationship, getting clear on your own relationship with money can also help you to understand why your beliefs around money may be different. The reality is, often your partner’s experience growing up was different to your own and so you could be discussing money from two completely different perspectives. Consider exploring the above questions together.
- Set clear financial goals and put in place action steps to move you towards achieving your goal. If you need assistance, working with Wealth Maximiser can help you to get clear on your financial goals by taking you through a comprehensive questionnaire and providing you with a Statement of Advice that includes personalised actions steps to move towards achieving those goals. This is supported by a Wealth Coach who can provide more detailed guidance and additional accountability where required.
If you are struggling with your money mindset, we recommend you seek professional assistance which could be via a money coach, financial counsellor or financial therapist.
Disclaimer
This information is of a general nature only and does not take into consideration your objectives, financial situation, or needs. Before acting on this information, you should review the Wealth Maximiser Financial Services Guide and Wealth Maximiser Terms & Conditions and consider this information in light of your own objectives, financial situation, and needs. Wealth Maximiser is operated by NobleOak Services Limited ACN 112 981 718 AFSL 286798.
Sources
[1]. The National Study of Millionaires: https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research#:~:text=STUDY%20SUMMARY,%2C%20teacher%2C%20management%20and%20attorney