The importance of a positive money mindset

As with the rest of your life, it is important to have a positive money mindset. It is important to visualise the life you want or the goals you want to achieve. If you do this, put in the work and believe it will happen, you are much more likely to achieve it than someone who doesn’t.

I hear many people say they are not wealthy because they don’t earn as much as their friends or family. Your relationship with money is more important than the amount you earn or what you own. After all, you can earn $1 million a year, spend it all and still not be happy.

A well known psychologist, Dr Carol Dweck, wrote in length about mindsets in general. In particular she talks about two different mindsets. A “fixed mindset” assumes that our character, intelligence, and creative ability are static givens which we can’t change in any meaningful way. A “growth mindset,” on the other hand, thrives on challenge and sees failure not as evidence of unintelligence but as a heartening springboard for growth and for stretching our existing abilities.

The two money mindsets

When it comes to money it is similar. The two mindsets people have are scarcity and abundance. Those with a scarcity mentality are constantly worried their money will run out and they won’t be able to do the things they want in life. Besides constantly worrying about their money, these people often miss all the opportunities that come their way. I remember working with someone who was like this and they were constantly going on holidays and buying new clothes. Her reasoning was I will never be able to afford a house, so I might as well just spend it. This can obviously be self-fulfilling.

Those with an abundance mindset believe that opportunities will open up that will provide everything they need. Note that this doesn’t mean they will have a never ending source of money without having to work for it. It means that they are open and willing to explore opportunities. They put in the hard work to make sure they are ready to take on opportunities when they come up.

Before I go into how to get a positive money mindset, consider the following random facts:

  • There is $80 billion worth of banknotes in circulation in Australia.
  • The average household in Australia has a net wealth of over $1 million.
  • The Australian minimum wage is $750 per week and the average is $1,400. The average wage in Vietnam, India and Bangladesh is $65 per week.
  • Around the world, 50 billion chickens are killed for food and we eat 150 million tonnes of seafood.
  • 3 million tonnes of potatoes are grown in Australia each year.
  • Australians consume around 9 billion litres of milk a year.
  • There are 10 million dwellings in Australia.

My point with this is there is a lot of everything. Most of us have the ability to get something if we want it. Yes, it might take hard work, but the most important thing is to remain positive and work for it.

To demonstrate the importance of a positive mindset, Dr Brad Klontz did a study with two groups of people. The first group were given an hour education on financial literacy. They were shown practical steps for how to save, get out of debt and invest. The second group spent an hour talking about their money mindset, which included discussing how they felt about it and the importance of setting goals.

At the end of the study, the first group had increased their savings by 20%. The second group increased their savings by a whopping 73%.

How to get a positive money mindset

Here are six easy changes I encourage you all to make.

  1. Be thankful for what you have. If you focus on what you don’t have, you will never have enough.
  2. Be open to opportunities. When a coincidence arises, don’t ignore it. Ask yourself what the significance of it is. As Albert Einstein said, “coincidences are God’s way of remaining anonymous.”
  3. Be positive. Instead of saying money doesn’t grow on trees, say things like money comes easily and effortless to me.
  4. Put money aside for fun. This removes any guilt about taking holidays, eating out or whatever your idea of fun is.
  5. Educate yourself. The more you know, the easier it will be to see opportunities when they come along.
  6. Be generous. Buy local, support family and friends, donate regularly.

If you would like to discuss what you need to do to have the freedom to do what you want and value, click on the button below and book in for an obligation free discussion.

About the Author
Phil Harvey is an independent financial adviser. In 2017 Phil set up his company Construct Wealth to help clients best manage their finances so they focus on what is important to them. He is a founding member of the Profession of Independent Financial Advisers and a tax financial adviser, registered with the Tax Practitioners Board.

General Advice Warning
This advice contains general information. It may not be suitable to you because it does not consider your personal circumstances. Phil Harvey and Construct Wealth are authorised representatives of Independent Financial Advisers Australia (AFSL 464629)