Change Your Money Mindset

Money Mindset: What It Is and How To Change It

When most people talk about entrepreneurship, they talk about the external stuff: how to secure funding, build a business, market your service, and so on. And while these things are important, there's an even more fundamental step to succeeding as an entrepreneur that many people skip or overlook entirely: adjusting your money mindset. 

Having a money mindset that works for you rather than against you is an essential part of being a successful entrepreneur. A good money mindset will help you create wealth, achieve financial freedom, and grow in the direction you want. Most importantly, your money mindset is the difference between controlling your cash and allowing it to control you. 

So What Exactly Is a Money Mindset?

If you're wondering what a money mindset is, or are skeptical of the impact it can have on your life and work, you're not alone. But before you dismiss the idea as being too new-agey or insubstantial, ask yourself this question: do you believe in the power of psychology? If so, then you believe in the power of a money mindset. 

More and more, the field of cognitive science is recognizing the power that our thoughts have to affect our realities. A large part of this stems from something called your self-concept, which is the set of beliefs that you hold to be true about yourself. Your self-concept might include beliefs such as, "I am good at playing poker. I am bad at water skiing." However, it also includes deep-seated feelings about your identity as a person, like, "I am unlovable. I can't do anything right." 

The power of this dynamic comes from the fact that the beliefs that make up our self-concept influence our behavior—and thus, the way we interact with the world. For example, if one of your core beliefs is that no one likes you, you're probably more likely to isolate yourself, skip social events, and avoid interacting with others because you've already convinced yourself that you're going to be rejected. In acting on this core belief, you've created a self-fulfilling prophecy. 

Here's where your money mindset comes in. Your self-concept includes beliefs about the way you interact with money, such as, "I'll never be able to make as much money as I want to; I'm always poor;" or, alternatively "I am financially comfortable; I am capable of managing my money effectively." These beliefs are your money mindset. As in the example above, your beliefs can change your reality. If you believe you're bad with money, you'll stop trying to save or look for ways to increase your wealth because you already believe it's a lost cause. On the other hand, if you believe in your ability to make money and keep it, you're more likely to be conscientious in your spending, or take the kind of risks and ventures that will allow you to get that bag. 

How To Change Your Money Mindset

In the same way that going to therapy can produce positive change in your life because it helps you to dismantle your harmful subconscious beliefs, changing your mindset about money can improve your relationship with money—and, in doing so, make you a better entrepreneur. Here are some guidelines to help get you started moving away from a money mindset anchored in scarcity and towards abundance:

1. Do the deep work. Understanding where you picked up your beliefs in the first place can help you understand how they need to change. Your money mindset beliefs are shaped by a variety of factors, from your parents' socioeconomic status when you were a child to your own employment experience.  Do some reflection or journaling on how you were raised to think and act toward money. Which of these attitudes are harmful? Which are helpful?

2. Keep your eye on the prize. As with any goal, achieving your financial dreams requires knowing the what and the why. Take some time to daydream or envision what you want your future to look like from a financial perspective. Does that mean retiring early? Becoming a millionaire? And don't stop there—take the time to articulate why that goal is important to you. Being clear about your reasons will help you make decisions later on.

3. Make friends with your budget. No one likes the feeling of being trapped. This is one of the big reasons that budgets tend to fail: we feel constrained by them. Instead of focusing on your budget as a source of restriction (and therefore a negative influence in your life), think of it as something that makes your long-term happiness possible. Focus on solutions, rather than limitations.

4. Surround yourself with positive influences. The best way to maintain your new abundance-based money mindset is to continually expose yourself to voices that support your resolution. Finding a mentor or a support group can help you stay focused. Reading books and listening to podcasts about money and finances will also ensure that you're continually educating yourself and improving your money mindset.

5. Be kind to yourself. Everyone makes mistakes, and if you're human, there's a good chance that you will cheat on your budget or slip back into limiting beliefs at least once. When that happens, don't beat yourself up. Acknowledge the mistake, learn from it, and move on. 

Sky's the Limit is a nonprofit organization that is committed to helping members of underrepresented communities succeed. We provide invaluable resources for entrepreneurs, including Economic Capital in the form of business funding and Social Capital via one-on-one mentors who can steer entrepreneurs through the difficulties of starting a business. If you are an entrepreneur looking for capital or other resources, sign-up today to join the Sky’s the Limit community!