Money mindset: How to change your thinking and achieve your financial goals

Find out what your "money mindset" is and learn how to create a more successful way of thinking that could help you achieve your long-term financial goals.

You may have a default set of beliefs and attitudes about money that you’ve developed since childhood – your “money mindset”. But you can change this pattern of thinking if it’s holding you back.

Indeed, developing your money mindset to focus on efficiency, growth, and data-driven decisions could help you achieve your long-term financial goals.

Read on to explore what type of money mindset you might have, and discover how to create a more effective way of thinking about money that could help move your financial plan forward.

Identify your money mindset

It’s likely that you have built money mindset up over many years.

It could stem from a complex mix of life experiences, such as:

• How you were raised
• Your parents’ or guardians’ attitude to money
• How your partner manages their finances
• Important financial events such as having a child or starting a business.

The first step towards changing how you think about money is to identify your current money mindset.

Authors Karen and Jo Singh Sutton-Johal describe four “money mindsets”:

1. In-debt – You are driven to frequently borrow and spend due to a constant feeling of not having enough money – regardless of how much wealth you accumulate. You have often spent some of your income by the time you receive it.
2. Break-even – You cover your expenses and then prioritise spending all your remaining money until it’s gone. However, you never take on debt.
3. Comfortable – You see financial threats everywhere so prioritise saving a proportion of your earnings regularly and living within your means. You may have built up a large financial nest egg but have few plans for spending it.
4. Rich – You see potential resources for building your wealth everywhere. You are an expert at leveraging resources such as time, money, skills, and technology to help you achieve maximum returns for minimum input.

Understanding your money mindset could allow you to identify your financial strengths along with areas you might look to improve.

How to create a “rich” money mindset in 4 simple steps

If you have an in-debt, break-even, or comfortable money mindset, you could look to “level up” your thinking by following these four simple steps:

1. Challenge negative self-talk about money

Once you have identified your money mindset you could start to challenge any beliefs or behaviours that may be preventing you from achieving your financial goals. These could look like:

• Telling yourself you don’t deserve a certain level of success
• Being held back by your previous mistakes
• Associating wealth accumulation with feelings of guilt or shame.

Dismantling these “money blocks” is likely to be an ongoing process. It may take time to change your patterns of thinking and adapt how you manage your wealth.

You might find it helpful to try the following exercise.

For one day, take a moment after each financial decision you make and note down your thoughts and emotions. Do you feel guilty? Excited? Anxious?

Look for patterns in how you instinctively think about money and challenge any thoughts that aren’t based on evidence. From there, you could begin to shape a healthier relationship with money, enabling you to pursue the wealth you deserve in an efficient and informed way.

2. Create a short- and long-term financial plan

Having a clear understanding of your income and expenditures, as well as identifying your long-term financial goals, may help you to shed an unhelpful money mindset and adopt a more suitable perspective.

Additionally, creating a plan featuring short-, medium-, and long-term milestones could allow you to monitor your progress and quickly spot if you’re veering off course. For example, if your “in-debt” money mindset takes over, leading you to spend more and save less than you planned, referring to your financial plan could help you remain disciplined.

In other words, focusing on your plan could lead to better financial decision-making and increased confidence in how you manage your money, helping you to change a limiting money mindset into a wealthy one.

3.  Avoid comparing yourself to others

Comparing yourself to others may lead to negative self-talk such as, “I’ll never have as much money as them” or, “Everyone is doing better than me, so I must be a failure with money”.

Conversely, working on your money mindset, removing mental blocks, and monitoring your progress based on self-defined goals, might help you to feel more in control and confident about your finances.

Remember: you are on your own unique path, and only you can identify, tackle, and change your money mindset for the better.

4. Seek help from a financial planner

If you’ve always thought a certain way about money, this might be a habit that’s hard to break without help.

A financial planner can act as an objective sounding board and offer you a new perspective on your attitudes and behaviours around money. Working with me could allow you to identify your money mindset and challenge any thoughts, emotions, and behaviours that are preventing you from moving forward.

Get in touch

If you’d like to learn more about how to change your money mindset and create a financial plan that moves you closer towards your goals, I can help.

Please get in touch either by emailing lottie@truefinancialdesign.co.uk or calling 07824 554288.

As a new mummy, I will be on maternity leave until July 2024, so I appreciate your patience until I am back at my desk.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.