The Psychology of Money: Understanding Your Money Mindset and How to Improve It

Photo by Karolina Grabowska: https://www.pexels.com/photo/person-counting-cash-money-4475523/

Overview

Ever wondered what makes someone to be successful with money and another one lead a stressful life? It's all about their money mindset. To start with, your money mindset dictates your core beliefs about money and influences how you spend, save, and deal with money. This article will discuss how the money mindset is formed, how it is created or formed, and how one can improve or change it for the better, among other related ideas.

How is your money mindset created?

Before we dive into how you can shift your money mindset, there is a need for you to understand how your money mindset was created or formed in the first place. Just like other conventional beliefs, the money mindset was first formed when you were a small child. Whether the core beliefs about money were negative or positive, trust that you learned something about how your parents or those around you used money.

Let's say, John was raised in a family where his guardians, brothers, or parents used to be spendthrifts, be certain that he will always have a difficult time anytime he wants to save money. On the other hand, John was raised in a setup where saving money was the order of the day, be certain that John's attitude towards saving money would change. This means that John will no longer misuse his dollars. Since these behaviors are nurtured from childhood, most people hardly outgrow them and thus end up manifesting them even in their adult life.

Benefits of understanding your money mindset

Once you know your current money mindset, you will be able to change your attitude toward saving money, handling it, and even spending it. Remember that all these factors contribute to how financially successful you will be in some years to come.

If by any chance you used to misuse your money, it is never too late to start saving or even investing it. Even if you grew up seeing people spend money without any care in the world, be certain that you can change that belief and appreciate the need of saving your money.

Besides this, knowing your money mindset helps you to identify the milestones you have made in life. This way, you will be able to set your priorities right and thus achieve your goals in life in the long run.

Tips on How to improve your money mindset

The following are the tips that can help improve your money mindset and thus allow you to build more wealth soon:

Believe that you will one day be wealthy

What you believe in, so you become. If you want to be rich in say, 5 years to come, there is a need for you to change your money mindset. Let's say, you used to be employed, you have to start thinking of how you can be self-employed. Better still, think of how you can start working from home and earn more money.

This means that you should start thinking of how you can drop that job bad try self-employment. Here, you will be your boss and can employ other people in the future. Since you no longer report to another senior person, you have the freedom to explore new opportunities and generate more income.

Ensure that you have a budget list before going shopping

A budget list is very important whenever you want to go shopping. Whether you want to shop for groceries or electronics, just create a short list with the respective prices of these items. Doing so, helps you to stick to your budget all the time and thereby reduce misuse of money. This ensures that you will hardly spend your money on things that you do not need at all. If anything, consider creating a loose budget so that you can remain within your spending parameters.

Know what consumes your money most

It is no secret that different people pay different bills back at home or their respective offices. Although paying these bills is important, you must track them and know where you spend more money.

For instance, if you normally spend more money on energy, consider looking for ways to reduce the overall energy bills. Better still, if you spend more money on shopping items that you hardly need, cease that behavior and only be purchasing those items that you require. Keeping track of your daily or monthly spending can help you improve your money mindset significantly.

Do not compare yourself with others

Although most people tend to compare their financial progress with their fellow friends and family members, this behavior can be detrimental to your money mindset. To start with, comparisons are not always correct.

Life will always be skewed, the moment you start comparing yourself with other people. Instead, the purpose is to improve more on yourself. For instance, your friends might have a bad attitude towards savings simply because they are always moneyed.

On the other hand, you might only have one source of income that enables you to pay your bills and so on. Comparing yourself with them might make you make bad financial decisions so that you can fit in that category. Consequently, you might find yourself in bad debt unawares. To improve your money mindset, stop comparing yourself with others and start focusing on your own goals.

Try to share your money with the less fortunate

It has been proven that giving or sharing what one has makes one less selfish. Money is not exceptional either. Since you might not be used to sharing what you have, you might find it difficult to get started. However, if you continue sharing what you have, your money mindset will shift and improve. To start with, try with a few dollars and then increase this amount over a certain time.

Imagine that you will retire soon

Most people hardly imagine that they will ever retire. Whether you have just joined the job market or are just 40 years, be certain that one day, you will retire and leave your workplace for good. Thinking about retirement sets your mind to think of how you can start saving more so that you can have a better life even after leaving your workplace.

Having known this, you might have to change a number of your financial habits and starts saving more. If anything, consider setting aside emergency funds to cater to any eventuality that might come soon. All these measures will improve your money mindset drastically.

Read books that inspire you to change your money mindset

It is said that the books one reads can change his or her life tremendously. If you intend to improve your money mindset, perhaps, it is time to invest in books that talk more about this financial concept

You can even look out for soft copies online and purchase them right away. Besides these books, consider listening to podcasts that discuss how one can change his or her money mindset. Either way, you will learn a few nuggets of wisdom that will make you introduce a paradigm shift to the way you spend, handle and save money.

Do not be a prisoner of your past financial mistakes

Although you might have made bad financial mistakes in the past, feeling bad about it for eternity is not a good idea. Instead, you should let go and use that opportunity to learn how you can avoid them soon. This includes changing your money mindset so that you can achieve your financial goals in the long run.

Be grateful to yourself

Meeting one's financial goals in life is everyone's dream. However, life presents different situations that hinder you from achieving this goal. This does not mean that you are a failure. Instead, start seeing the milestones you have made in life.

For instance, if you have managed to purchase a piece of land, you deserve a pat on the back. If you have managed to clear your car loan halfway, you deserve a treat. The moment you start being content with your current achievements, you will feel good about yourself and even feel motivated to do better. Ideally, money should not take the better part of your thoughts. Instead, you should purpose to control those thoughts around money. This in turn will help improve your money mindset.

Conclusion

Despite having a bad money mindset in the past, there is room for you to change it for the better. Whether you want to start investing or would like to do away with a scarcity mentality, trust that changing your money mindset is fundamental. After improving your money mindset, your financial life will no longer be the same. You will be happier and more content with what you have. If you want to know more about how you can change your mindset, consider visiting https://thriftyfinanceblog.blogspot.com/