I have discovered we sleep fewer hours and work diligently every day to make more money, yet we fail to reach financial stability. We tend to focus on the main goal that is making more money, yet a limited number of us understand how our mindset shapes how we think about money in terms of saving, investing and earning more. ‘Mindset’ refers to our beliefs, perspectives and attitudes that determine the way we look and act towards our surrounding environment. It influences how we think, act, and tackle setbacks and opportunities.
From my research from interacting with successful people and through reading books, I uncovered that the way we think about money shapes how we succeed financially. Money is not only a medium of exchange; it is a controller of our thoughts and behaviour. Our money mindset is shaped by our past experiences, culture, who we surround ourselves with and our spending habits.
What causes two people with the same occupation and income to be in different financial situations is their mindset. I observed that attitudes towards money affect how you take opportunities, how you invest, save and spend your money. In this article, I intend to disclose how best we can handle money with the right mindset.
Disclaimer: This article is written for educational purposes; please be advised that I am not a financial expert, but I am a researcher.
The hidden forces are family, society and culture.
Family, culture and society affect our beliefs, values and behaviour towards our financial outcomes. I uncovered a painful truth: our mindset towards money is shaped by the types of environments that we are socialised into, the types of friends we hang around with, our background and the type of media content that we consume.
Family
Our upbringing shapes our financial attitudes by instilling certain beliefs and values about how we understand finances. Our parents’ financial habits shape our financial outcomes; for example, being raised in a wealthy home awards one with good money management skills. The way we view wealth, the way we spend, and our passion for savings are all shaped by the family we were raised into.
Culture
Culture is arguably another factor that affects our mindset towards money. Our shared norms, values and beliefs affect our financial outcomes. For example, being raised in a collective culture which emphasises personal wealth affects how you view spending. Our ability to make financial decisions is largely affected by the cultural norms and values we are internalised into.
Society
The attitudes that we have towards money are largely shaped by the society we come from. Society affects our spending habits. Individuals from elite societies may be pressured to spend more due to societal standards, and that will affect their spending. While individuals from low-class societies may prioritise financial needs of building wealth for the long run, thereby sacrificing their short-term needs,
Problem of fear and anxiety surrounding money
Fear and anxiety affect our ability to make financial decisions due to our emotional response that shapes our behaviour on how we choose to use our finances. Uncovered from my research, your ability to take risks with money is associated with your level of anxiety; an individual with low anxiety has a high chance of taking risks compared to an individual with high anxiety.
From interacting with people I observed that some of us can’t handle money because we have less confidence when it comes to dealing with money; we fear the “what if” mindset: “I am making a mistake.” The fear of making a mistake is contributed to by our mind: when you choose to make an investment, and that investment fails, it means you are a failure. Therefore, I discovered that most of the people tend to fear making investments, and thereby they keep their money in cash and miss investment opportunities that could grow their money.
In conclusion, our mindset is everything to us. How we spend and invest our finances is influenced by our mindset. Be it an investment or not, mindset determines everything that you choose to take in life. So in everything you do, the right sense of mindset is key. Moreover, who we choose to socialise with affects our mindset. In this article I have uprooted how our mindset shapes the way we understand finances. Understanding our mindset is crucial when approaching money.