It you are having difficulties in your pursuit of achieving your financial goals then I encourage you to take a few moments to answer the following questions?
I’ve formulated these questions based on research completed by Carol Dweck. Carol Dweck is an American psychologist known for her work on mindset and its role in relation to improving the chances of success. One of the best ways to start is to watch her TED talk and if you like that then look at working through her resources including the book Mindset.
- Do you avoid your financial problems?
- Do you feel overwhelmed and give up when you try and fix your financial problems?
- Do you avoid improving your financial literacy as it seems too complex and you don’t know where to start?
- Do you automatically feel defensive when others offer constructive criticism to your financial situation?
- Do you feel discouraged when you see someone else hitting their financial goals?
If you answered ‘No’ to the questions above its likely that you have a growth mindset when it comes to your finances as described by Carol and as a result have a greater chance of success in what you put your mind to.
If you answered ‘Yes’ to any of these questions, then it may be that your mindset towards all things financial may be fixed and it might be holding you back from achieving your financial goals.
Why do I want a growth mindset when it comes to my finances?
People who have a growth mindset regarding their personal finances are wired to:
- Embrace the challenge and the steep learning curve that comes with improving their finances.
- Keep trying even in the face of financial setbacks (they get back up again and try again).
- They understand that knowledge and mastery of a subject such as Financial Literacy doesn’t come easily, and only comes with persistent effort (and incremental learning).
- They take on constructive financial criticism from others and try and incorporate it into their lives.
- Celebrate and share other people’s financial wins and take inspiration and lessons from them.
Those with a growth mindset generally reach higher levels of achievement through their mindset’s ability to view the world in a way that tells them ‘that they can do and learn anything they put their mind to’.
Those with a fixed mindset often struggle to reach higher levels of achievement as their fixed mindset tells them ‘that there are fixed limits to what they can do and learn’. It’s important to note that often these mindset limits may be based on previous trauma, personal experiences, or other factors.
I’m sure you can now understand why mindset is such an important tool for achieving your financial goals. The good news for those whose fixed mindset might be holding you back when it comes to your finances is that you can change it (yippee!!!).
So how do you change your mindset?
First off changing your mindset from a fixed mindset to a growth mindset takes effort, consistency, and time. Carol Dweck states that self-awareness is the key to developing a growth mindset.
Self-awareness is put simply the act of being aware of your own feelings, actions, desires in relation to our internal values or standards. By being more self-aware and by actively practicing self-awareness you can start to see your triggers and make steps to avoid falling into previous fixed mindset traps.
Tips for changing your mindset
These tips are adapted from Carol Dweck’s website, and I’ve put my financial spin on them.
- Be aware of your fixed mindset, identify your triggers and write them down e.g. ‘If seeing someone hit a financial milestone makes you automatically want to spiral and throw in the towel’.
- Know your choices. You always have a choice regarding how you react to challenges, and the things that happen in your life. When a trigger occurs think about the choices you have and write them down e.g. ‘I can choose to let an unexpected $500 financial setback without an emergency fund be a failure, or I can use this as an opportunity to learn and plan to avoid it in the future’.
- Take action today. Once you know your fixed or growth mindset choices in regards to a trigger start practicing what you preach. At the start it will be difficult, but over time you will become more self-aware and choosing the growth mindset choice will become easier:
- When you see someone hit a financial milestone reach out, congratulate them, and ask them how they did it (without hesitation).
- When you hit a financial speed bump and regret a purchase take responsibility and work out what you can learn from your mistake (instead of focussing on it as a failure).
- When someone offers you constructive criticism on your finances, take it on board, and try it even though your mindset tells you that it won’t matter that much anyway.
- Remember that knowledge on any subject let alone financial literacy doesn’t come easily for anyone even the experts so keep going, don’t stop, and be a life-long learner.
If this subject was interesting and you want to learn more about mindsets I recommend
- the following website https://www.mindsetworks.com. This website is also the main reference for this article.
- reading Carol’s book Mindset: The New Psychology of Success.
- watching this video by Carol Dweck.
Or to read about ‘5 simple ways to increase your chances of achieving your financial goals’ check out my article here.
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