How to Change Your Money Mindset for the Better

Posted by Nailah Herbert in Personal FinanceAugust 16, 2022(Last Updated August 16, 2022)4 min read
Key Takeaways
  • A mindset shift is important when you want to become financially secure and comfortable. 
  • Your money mindset determines how you think about your finances.
  • Your money mindset plays a significant role in your long-term success.
Are you ready to make some real money moves?

A mindset shift is important when you want to become financially secure and comfortable. 

Your money mindset determines how you think about your finances. Your money mindset plays a crucial role in your financial success. 

 

If you have a poor mindset when it comes to money, it can become challenging to accomplish your financial goals. Below are five tips to use your money mindset to make your daily financial decisions easier, improve your finances, and work toward achieving success.

 

Step #1: Reflect on Current Money Mindset

 

The first step towards attaining a positive money mindset is to reflect on your beliefs about money. For example, if you have a scarcity mindset, you believe that wealth is limited, making it difficult to save money to have a comfortable financial future. As a result, this negative mindset view on money can hinder your future financial plans. 

 

On the other hand, another money mindset you may have is the “abundance mindset.” This money mindset is a positive one as it means you understand there are sufficient resources to help you achieve your financial goal. Therefore, your objective should be to move from a scarcity mindset to an abundance one, as this change can be the first step towards a financially comfortable life. 

 

Therefore, if you wish to develop a healthy money mindset, reflect on your current relationship with money; if it is not positive, then begin making subtle changes until it is. 

 

Step #2: Figure out Financial Goals

 

It can be difficult to determine how to modify your money mindset so you can make long-term positive changes. As a result, to help you determine which direction you want to go in your financial life, begin writing down your most important financial goals. For example, a couple of your goals could include attaining a mortgage and becoming a homeowner, paying off debt, or having a set amount of money in your investment portfolio. 

 

financial goals

Image Credit: Nokuro / Shutterstock.com

 

These goals give you a better understanding of how you wish to improve your personal finances and, by extension, your money mindset. When your goals have been determined, you can move on to the next step: creating a sustainable budget so these objectives can become a reality. 


Step #3: Implement a Sustainable Budget


If a sustainable budget is not implemented, achieving your goals can become difficult or impossible. As a result, to ensure you are managing your money to the best of your ability, try to implement a sustainable budget that allows you to still spend money on items you desire but also put money aside to achieve your goals. 


Having a sustainable budget can play a significant role in changing your money mindset. If done correctly and long enough, you will notice a pleasant increase in your funds. Consequently, the higher amount of money allows your mentality to change from believing wealth is limited to having the necessary resources to help you achieve your goals. 

 

Recommended Read: Why People Use Automated Savings Plans


One of the most common budgets people use to improve their financial situation is the 50/30/20 rule. This budgeting technique says 50% of your income will go towards needs, such as rent, food, and utilities, 30% for wants, such as streaming service subscriptions, and 20% for savings.

 

people looking at reports

Image Credit: Indypendenz / Shutterstock.com

 

This budgeting technique allows you to spend money on necessities and set money aside for long-term financial goals. There are many different budgets, and your goal should be to find one that works for you. The budget should provide a balance of spending and saving money. Once you determine the best balance for your financial situation, you can then begin to follow your budget constraints to achieve your goals. 

 

Step #4: Track Transactions

 

After creating your sustainable budget, your next plan of action is to track your spending. Regardless of the budget you have in place, it will not do you any good if you cannot manage your spending habits. As a result, consistently track your spending at the end of each month, whether using a debit or credit card. 

 

woman tracking transactions

Image Credit: Andrey_Popov / Shutterstock.com

 

Doing so gives you a better idea of how much money you are spending and where it is going. In addition, tracking your spending allows you to determine whether you are staying on track with your budget. If not, you can see where the issue lies and the steps you can take to resolve the issue. Also, tracking your spending allows you to improve your money mindset as you can see the progress your budgeting has made on your end goals. 


Step #5: Fail Early, Fail Often


When making financial decisions, there will always come a time when you make a mistake or feel like a failure. Mistakes are a natural part of the learning process. When making a shift in your money mindset, there will come times when you do not follow through on your new, better money habits. When you make these mistakes, take advantage of them and reflect on what led to you making this mistake and how you can fix them in the future. 

 

The sooner you make a mistake, the faster you will be able to correct the mistake. Failing often and early will help you to learn how to be resilient with your mindset and finances.  


Recommended Read: Seven Tips to Improve Your Financial Position


The Money Wrap-Up


Although changing your money mindset can be uncomfortable, it’s important to remember that growth starts at the end of your comfort zone. 


While on your financial journey, continue to be self-aware because it can help you to become a better decision-maker. Self-awareness also allows you to become more confident, intentional, and forgiving while on the road to becoming a better version of yourself.

 

As a result, if you wish to achieve your financial goals, reflect on your current mindset, make the necessary changes, and do not be afraid to fail. 

 

Main Image Credit: Vitalii Vodolazskyi / Shutterstock.com

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