Wanting to be more in control of your money and spending habits is a common goal. Intuitively, most of us are aware that our spending habits impact our financial health just like we know that our eating habits impact our physical health. But just because we know donuts are not our friends, doesn’t make it any easier to stop eating them nor does knowing excessive spending cripples our financial health making saying no to impulse buys any less challenging. 

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Why is this? 

Since our thoughts precede behavior, understanding the way we think and feel about things at our core can shed light on why we do what we do and therefore how we can change those behaviors when necessary. 

What is your mindset when it comes to money? How does your mindset impact your approach to handling money? These questions are important to ask when embarking on a journey to improve your financial health and wellness. 

Understand Your Money Mindset: Improve Your Financial Health and Wellness

Psychologists have taught us that the way you think significantly impacts the way you behave. Your mindset with money determines how you spend, save, invest, and in turn, how likely you are to achieve your financial goals. It is crucial to understand your money mindset in order to achieve lasting financial health and wellness.

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Here is a list of 3 factors that impact your money mindset along with their effect on your spending and saving habits.

Your Past

How you experienced money as a child will have a long-term impact on your mindset and behaviors with money as an adult.

1. Consider how you grew up financially by responding to the following:
   • Was there never enough money to make ends meet?
   • Did money topics cause stress or confrontation in your home?
   • Did your family spend freely?
   • Were finances rarely or frequently discussed?
   • If money was talked about often, were those conversations positive or negative? 
2. Growing up where money was scarce might have caused you to develop a scarcity mindset, meaning you never feel like there is enough. A scarcity mindset often leads to cautious and frugal spending habits. Alternatively, growing up wealthy might have led you to develop an abundance mindset where you see limitless potential and opportunities when it comes to your money. 
3. While fear and scarcity mindsets focus on limitations and potential loss, an abundance mindset typically centers on opportunities and growth. A fear-based mindset might lead to hoarding money or avoiding spending even when necessary. However, it may also protect against taking unnecessary or unwise risks and excessive spending habits. Though an abundance mindset often fosters a healthier approach, allowing for confident and purposeful spending when within one’s means, it may also lead to risky behavior when not combined with a healthy dose of caution and reality. To find a healthy balance between the two, first pinpoint where you lie on the spectrum and then consider how you might adjust your mindset. 

Your People 

The way the people you do life with handle their money, impacts the way you handle your money by either normalizing or rejecting certain behaviors. 

1. Consider how the people around you impact your spending by responding to the following:
   • How do the people you interact with talk about or handle their money?
   • Are they frugal?
   • Risk-averse?
   • Do they spend without limits?
   • Do they worship wealth and material possessions?
   • Are they private or outspoken when it comes to their finances? 
2. If you spend time with people who frequently discuss investing or saving money, you will likely place a high value on such behaviors. Similarly, if you spend time mostly with those who live paycheck to paycheck, struggle to make ends meet, and are victims of their circumstances, you might have adopted similar thoughts and behaviors. 
3. Take a close look at the people around you. Your mindset and therefore your behaviors when it comes to money are likely a reflection of the people you spend the most time with. If you want to improve your financial health and wellness, you don’t necessarily need to ostracize your friends and family. However, being intentional about spending time with people who have healthy mindsets and relationships with money will likely encourage your progress and positive development. 

Your Personality

Many people have studied the fascinating concept that is our inherent personality. Personality impacts so much of how we think and feel about various topics. 

1. Consider your personality by responding to the following:
   • What are your natural inclinations when it comes to money?
   • Are you more of a saver or a spender?
   • Do you avoid money talks or does finance feel more like an exciting high-stakes puzzle to be solved? 
2. Understanding who you are and how you see yourself and the world around you will shed light on your mindset when it comes to money. A saver may naturally be more cautious and strategic but distrusting of growth opportunities like investing in the stock market or starting a business. A spender may be prone to impulse purchases but may also be more open to opportunities for growth. 
3. Consider the money on the table question to start to analyze your innate money personality. If you had a million dollars sitting on the table to do with as you please, what is the first thing you would do? Trust your initial response to that question before logic or outside pressures and expectations set in to reflect your core personality. 

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Conclusion

Understanding your money mindset is a foundational step toward improving your financial behaviors like spending and saving. By recognizing the influences and beliefs that shape your financial behaviors, you can consciously cultivate a mindset that aligns with your goals and values. This shift will ultimately lead to more intentional and satisfying spending habits. 

Emotional spending, influenced by joy, stress, or even boredom, can lead to impulsive purchases.  Your beliefs about the relationship between money and self-worth contribute to your overall money mindset. If you tie your self-worth to material possessions, you may engage in status-driven spending. Alternatively, a belief in financial independence might lead to more conscious and goal-oriented spending. Being mindful and managing emotions related to money helps foster more intentional spending habits. 

Mindfulness involves being present and aware of your financial decisions, while intentionality refers to making choices aligned with your values and goals. A mindful and intentional money mindset promotes conscious spending. It encourages you to consider the impact of each purchase on your financial goals and overall well-being. When you are focused on your financial goals and making intentional decisions with your money you will soon discover that improved financial health and wellness are well within your reach.

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