The secret to establishing stability and increasing wealth may all come down to attitude.
Money mindset definition
A money mindset is the overriding attitude that you have about your finances. It drives how you make key financial decisions every day. And it can have a big impact on your ability to achieve your goals. If you change your mindset about money, you tend to make better choices about how to overcome challenges. In this case, the power of positive thinking really does matter.
Characteristics of a bad money mindset
Your money mindset is like emotional inertia – it drives you to take action. If you have a positive money mindset, you are more likely to be decisive and take the steps that you need to take to succeed. On the other hand, negativity breeds emotions that prevent action:
- Fear or intimidation
If you don’t feel like you can succeed then you’re less likely to act or even think about acting. It seems easier just to ignore your finances because the challenges seem insurmountable. Seen in this light, it’s not debt or a low credit score or limited income that’s holding you back; it’s your perspective that you can’t do any better.
When you change your mindset about money to focus on the positives and what you can do, it’s easier to see the path forward. So how do you establish a positive money mindset?
Qualities of a positive money mindset
When you embrace positivity in finance, you come to recognize that no problem is insurmountable. Whether you have $5,000 in debt or $50,000, it can be eliminated. Your credit score may be 500, but no credit penalty lasts forever; it will get better!
When you have a positive money mindset you…
- Look for opportunities instead of seeing roadblocks
- Recognize that every financial situation is fixable
- See the value of asking for help instead of struggling silently
- Accept that even small steps add up to progress, even if it’s slow
Using a positive money mindset to overcome financial challenges
Positivity can be tough to foster when you’re in a negative situation, but it’s essential. Let’s say you have that $50,000 credit card debt problem mentioned above. There are likely several factors driving your negativity:
- Your minimum monthly payments are around $1,250, so money is probably extremely tight
- But in spite of paying that much, your balances never seem to go down
- In fact, high interest charges are eating up 2/3 of every payment you make
- As a result, if you stick to minimum payments it’s going to over 40 years to repay everything you owe
Turn your attention away from what’s wrong
If you focus on what’s wrong like all of the above, it’s almost impossible to get motivated. Instead, your financial focus needs to be aimed at finding solutions. You’re not the first person to be this far into debt. Look at some of the case studies we’ve gathered from clients around the country.
Start with what you know: minimum payments aren’t making enough of an impact, so you need a better strategy. Even if you just fix your payments at $1,250 instead of following the minimum payment schedule your situation drastically improves. Instead of 502 months to reach your payoff date, it would only take 62. Five years is actually a reasonable amount of time for a debt elimination strategy.
And that’s just making one small change in your budget. If you look for other solutions instead of focusing on feeling stuck, avenues open up. For instance, if you’ve maintained your credit score then you have options for consolidation. If you take out an personal consolidation loan, even at 7% APR you could pay off your debt in 4 years with monthly payments of $1,200.
And what if you don’t have a good credit score? You’re still not stuck. You may be able to enroll in a debt management program, which put a whole team on your side. Credit counselors negotiate with creditors and work on your behalf. As a result, most clients see their total payments reduced by 30-50% and programs typically complete in 36-60 payments.
Basically, by adjusting your mindset you will look for opportunity instead of focusing on all of the reasons you can’t succeed.
Other elements of a good money mindset
Find Financial Balance
Attitude isn’t the only element of a successful financial mindset. You also need balance. Balance in your financial life is what fosters stability. If you spend all your time focused on debt elimination, you won’t have savings ready in case of an emergency. Or if you spend all of your time focused on your budget today, you can’t prepare effectively for retirement.
This infographic can help you understand how to achieve financial balance in your life:
Set SMART Financial Goals
Setting goals is great, but unless they’re specific and defined they can’t motivate you to success. We teach you what it means to set SMART goals and how you can use SMART goals to actually achieve your financial objectives.
Develop a Personal Money Mantra
Another element that can help you foster a successful money mindset is to create a personal money mantra. A money mantra focuses your financial efforts on a specific goal. It helps you manifest success by pinpointing a positive direction for you to take. Instead of saying, “I can’t possibly eliminate this debt,” which breeds defeatism that holds you back, you create a mantra that inspires success. “With my plan in place, I will be debt-free in five years,” or “If I pay my bills on time, good credit is around the corner.”
To help you get inspired, Consolidated Credit also has a Money Mantra Video Contest that we run each month. Simply record a selfie video with your money mantra, upload it to your favorite video social site and send us a link. Every 3 months we give away a $250 Visa gift card for the best money mantra we receive.