Everything I have been talking about up until this point will help you on your financial journey. However, it does not compare to the importance of what this blog is about: your mindset. Your mindset is the number one factor that determines your financial success in life. Those who have a great mindset will often withstand the challenges of building wealth, while those who have a bad mindset may lose money and not understand why. So without further ado, let’s dive into it.
A Positive Mindset Leads to Better Financial Decisions
The difference between a positive and negative mindset will be reflected in your various accounts. People with a negative mindset often avoid taking risks, which is not always a bad thing. However, when considering your entire financial outlook, taking little risk often means receiving little reward.
Those who have a positive mindset can view a new investment opportunity optimistically and be willing to invest even if the risk is slightly higher than normal. Sometimes you will lose, but other times you will win big. The most important thing is to approach different investment vehicles with a positive attitude instead of shying away from new opportunities.
Your Mindset Affects Your Spending Habits
Many people do not see how mindset and spending habits are interconnected, but it is something that subconsciously affects them. If your mindset is to always hoard money to prepare for a rainy day, that can be good up to a certain point. However, once it becomes detrimental to your financial health, that mindset becomes a problem.
On the other hand, if you are always spending money impulsively, you will look back at the end of the month and wonder where all your money went. God forbid you don’t have enough money to pay your bills. These are both extremes, and you need to find a healthy balance in the middle. However, what you should do is intentionally examine how you are spending your money.
Mindset Will Affect Your Financial Goals
When setting any type of goal, it’s important to approach it with a growth mindset. This will enable you to be more ambitious with your financial goals and work hard to achieve them. You will learn to value the money that you make, but ultimately, you shouldn’t sacrifice your quality of life just to reach a financial goal.
A fixed mindset is someone who will likely stick to the status quo when it comes to different financial patterns and will probably avoid risks if they are presented. The status quo is not necessarily a bad thing because the stock market has returned an average of 10% every year over its entire history. However, when new vehicles or investment opportunities become available, make sure to take a look and understand the potential they have.
How Mindset Influences Your Relationship With Money
Your mindset will ultimately affect your relationship with money. Now, this is not necessarily your fault because often, our relationship with money comes from learned behavior during our childhood. If you grew up poor, you will likely appreciate and value money more than someone who never lacked for anything.
This could even be looked at in the sense that if you didn’t have much money growing up and your relationship with money is not necessarily a good one, if you ever come into a lot of money, it will often bring a lot of stress, anxiety, and sometimes even guilt for having this kind of money. That’s why you will see lottery winners go back to how they were before winning a year or two after they get the money.
Mindset Can Help You Build Long Term Wealth
Now for the icing on the cake, we all want to have long-term generational wealth, and mindset can be the difference between you having abundance and you only having just enough. When building long-term wealth, it comes with being intentional with different financial decisions that you make throughout your life. You want to create a solid foundation with something that is sustainable because that will last for generations.
