How Your Mindset Toward Money Affects Your Financial Decisions
SOURCE: Freddie Mac
Learn how changing your perception of money can help set you up for financial success.
How to Determine Your Money Mindset
When faced with a financial challenge, how does it make you feel? Do you worry about a lack of funds? Or are you motivated to overcome the challenge?
How you feel about money is important because it affects how you think, and how you think affects how well you make financial decisions — also known as your “money story.” If your outlook toward money is positive, you have a strong base on which to build wealth and achieve goals. If it’s negative, you may be reluctant to take the steps you need to establish a strong financial history.
Common mindsets associated with negative money and spending habits include:
Money status: Those who overuse credit to portray wealth or exaggerate image.
Money avoidance: Those who withdraw from communicating with creditors or talking about money.
Money worship: Those who associate personal value with debts or view money as a solution to all problems.
Money vigilance: Those who are preoccupied with financial success to the point of extreme anxiety; financial security is important, but once you reach your goal, learn how to reward yourself.
Recognizing which negative behaviors you hold is the first step to changing your money mindset for the better.
How to Change Your Money Mindset
Once you’ve identified your money mindset, you can begin to change it. By recognizing the factors that influence your money story, you can intentionally make new choices and write a new story that better supports your financial goals.
Do not allow your net-worth to define your self-worth. Instead, choose a new story and act on it by committing to slight changes, forgiving yourself for past behaviors and visualizing future success. When your money story aligns with your financial goals, you’ll be in better control of your financial future.
SOURCE: Freddie Mac
