Three steps to a money mindset shift

Stop beating yourself up over your spending habits. Try working on your mindset instead.

You’re sweating. Your heart rate is elevated. The email just landed in your inbox. You’re breathing speeds up. 

You click.

You read.

“Hi Alicia,

Your January credit card statement is ready for your review. Please log in HERE to access your statement.

Balance owing: $5,356
Minimum payment: $68
Due date: January 25th, 2021

Thanks for your business.

Sincerely --- your credit card company”

Gulp…

How could it be that much? You had a holiday budget in place...kind-of.

You self reflect. Why didn’t you stop spending when you said you were going to? Did your son really need that new snow racer? Why doesn’t your husband help you out more with the budget? How the heck are you going to come up with the full $5,356? It looks like it’s one of those months where you’ll be carrying a balance over...again! Why aren’t you better at this stuff? 

You pause. How can this negative self talk be healthy? There’s got to be a better way. You want this cycle to stop. Somethings gotta give.

The fact is that negative self talk will never produce a better result; in any area of your life.

But, working on your mindset around spending will. And it’s easier than you might think.

Shifting your money mindset has three steps, and leapfrogging over the first two, to get to the end goal, will never work.

Step 1: Rewards. Everyone is motivated to a certain extent by rewards. Some are healthy, like that glee you feel when you watch your savings grow every day you make a contribution to your savings account. Others are unhealthy like the impulse purchase of another pair or mittens you don’t need. In that case, you might feel a rush of dopamine (the chemical in your body responsible for excitement and happiness) for a brief moment, followed by a low. In the former case, when the reward is fundamentally healthy, like that gleefulness from the healthy act of taking care of your finances, it also offers a hit of dopamine. The big difference though is that it doesn’t wear off nearly as fast. It’s sustaining and up-lifting. 

Knowing this, the first thing to target when working towards a mindset shift is replacing unhealthy financial “rewards” with healthy ones. Saving a little money every day, saying no to an impulse purchase, selling something you don’t need anymore, paying a little extra towards your debts, balancing your budget. These are all examples of healthy rewards. The trickle over benefits of consciously shifting negative rewards to positive ones is a greater awareness of your spending habits and stronger motivation to make better financial choices. When making these replacements, start small such as saving a small amount daily versus spending money on a coffee, and build momentum to then target the larger changes like purging your garage to raise money for your retirement fund.

Step 2: Recognition. Surrounding yourself with financially supportive people, including your spouse is critical for a money mindset transformation. This is why we see such MAJOR mindset shift success with individuals who decide to work on improving their finances within a community - Facebook Groups, courses, coaching and the like. This powerful financial support network is linked to stronger savings habits and greater levels of self-love because it’s an ecosystem of positive recognition and reinforcement, and 360 degrees of support if and when you feel like you might be falling off track. It’s also in this particular phase when financial goal setting, specifically for savings and debt reduction, becomes a greater part of your life, and you begin to derive personal satisfaction by recognizing your own accomplishments as you achieve the goals you set for yourself. 

If you’re ready for this phase, join a financially minded community (the fact you’re here says you’re on the right path), sign up for a class or get some professional support for your finances. AND, set one or two goals for your saving and debt reduction. Here’s a quick pro tip when starting to goal-set...making goals around your finances, and specifically about spending a saving, means saying “no” to other stuff...so start practicing this word!

Step 3: Relevance. Financially secure people, who’ve “made it” themselves and without the lottery or inheritance, are often deeply motivated by their financial “why”. This is the underlying reason for being smart with their money in the first place. It gives them the guiding light, and feelings of relevance, to save and invest for their future. It’s a place of continuous learning and growing when it comes to money, but that development further heightens their relevance. The number one thing that people who reach this part of their money mindset transformation do is they form a clear and customized financial plan for their future; one that’s uniquely aligned to their hopes and dreams for the future, and their financial why.

If you want to get to step 3, you’ll need to start working on a financial plan, too. We have some excellent FREE resources on our blog, including a budgeting template and net worth tracker. Plus we will continue to offer occasional FREE courses to help boost your financial confidence. Otherwise, you may be ready to hire a CFP or money coach to help you. And, check out our program The Secret Art of Building Wealth, where you’ll get a plan, but you’ll also accomplish steps 1 and 2 of the money mindset shift in the process.

A shift in your money mindset always begins with a desire for change. Just like Alicia, in our story above, if you want better results, you’ll need a better money mindset.