Blog Getting started How to Build a Healthy Financial Mindset

How to Build a Healthy Financial Mindset

date October 12, 2021 time 5 min read 1316 views

Adopting a financial mindset will set you on a path towards success and stability. It involves a combination of learning, investing, and proactivity, but it’s essential to understand that it’s not just about saving as much as you can. Your enneagram core motivations and enneagram types core motivations might affect how you treat money and the way you manage your finances. There are other elements at play, like how you spend your money in a way that enriches your life.

Introducing the financial mindset

Your thoughts and beliefs about money and the world significantly impact how you live your life. Whether you’re aware of it or not, your financial decisions are deeply rooted in your financial mindset.

Building a healthy financial mindset is like putting together a puzzle, but no puzzle is the same for everyone.
Building a healthy financial mindset is like putting together a puzzle, but no puzzle is the same for everyone. (Source: Pixabay)\

Your financial mindset is your unique set of beliefs about money . It drives your spending habits, behavioral patterns, and emotions regarding money. It reflects your willingness to take risks, attitude towards debt, and affinity for saving and investing.

There are four major contributing factors to your financial mindset:

  • Personal experience and background
  • Family circumstances
  • Social circle
  • Income level

For example, if you had to take up a part-time job in school or how your parents behaved with money will influence your financial attitude. 

Money isn’t everything. It might make it easier to be happy but consider this carefully. Money doesn’t buy happiness, but it affords you choices. In our pursuit of happiness, we use money as a means to an end. Consider experiences, knowledge, and relationships that matter to you and give you a sense of fulfillment.

For example, suppose you want to earn enough money so you can spend more time with your family. In that case, you need to reduce your expenses, then save and invest more so you can afford to work fewer hours while your money grows. You’re more likely to hit your target with a clear goal in mind.

When it comes to improving your financial health, your financial mindset is a critical foundation. It can significantly impact whether you succeed or fail. Examine your beliefs and make positive changes because you can’t achieve your goals without the right mindset.

Tips on building a healthy financial mindset

Building a healthy financial mindset is a lifetime commitment. It involves investigating your current philosophy and not being afraid to make changes where needed. You need to adjust your beliefs, get comfortable with being uncomfortable, and stay disciplined doing what it takes to achieve your financial goals.

Determine your financial personality

Your approach to spending, saving, and investing money is significantly dependent on your financial personality. It reflects your traits and attitudes regarding money. Whether you pay your bills on time and how comfortable you are with debt is an indicator of the financial personality profile you belong to.

Your financial mindset is influenced by many factors in your life.
Your financial mindset is influenced by many factors in your life. (Source: Pixabay)

There are five main financial personality profiles. 

The big spenders

Big spenders love to live life to the fullest. They’re style connoisseurs always looking to make a statement. If you’re the first to purchase the latest gadgets, don’t fear debt, and have a big appetite for investment risks, you most likely belong to this group.

Tips:

Make efforts to reduce your purchases and increase your savings. Ensure all your future purchases are justified. Take it off your cart if it won’t be important to you in a year.

The savers

Savers are frugal, not concerned about trends, and prefer to watch their money grow. They use credit cards sparingly, stay away from debt, and don’t take big risks when investing. Savers take their finances seriously and plan for their future meticulously.

Tips:

While planning for the future, make an effort to also live in the moment. Saving and investing are great, but don’t let that stop you from enjoying life today. Take on bigger, well-informed investment risks to maximize your returns.

The shoppers

Shoppers derive great satisfaction from spending money. They live for bargains, buy things purely out of impulse, and are likely to go into debt because of it. Some shoppers take investing seriously, while others reserve the thought for the distant future.

Tips:

Investing in financial education is the best course of action for a shopper. Learn about saving, budgeting, and investing. Avoid credit cards and make efforts not to spend money you don’t have. If you believe you make impulsive purchases to fill an emotional void, try to see a mental health professional and address the root cause.

The debtors

While debtors aren’t interested in making fashion statements or following trends, they spend more than they earn and are in debt. They don’t spend time thinking about managing their finances and investing for the future.

Tips:

Get a professional financial adviser to help you manage your finances and set up an investment plan. This needs to be done immediately because most debtors are one emergency away from total financial ruin.

The Investors

Investors have a deep understanding of their financial situation and actively put their money to work for them. An investor’s primary financial goal is to live off the income provided by their passive investments. They carefully plan and make financial decisions, especially regarding investment risks.

Tips:

If you belong to the investors’ category, keep up the excellent work. Keep doing what you’re doing and continue educating yourself. Stay informed in order to stay ahead of new trends in finance.

The key is to find a strategy that suits you, which may not come straight from a book.
The key is to find a strategy that suits you, which may not come straight from a book. (Source: Pixabay)

Knowing which personality profile matches your current behavior will help you make the right changes to improve your financial mindset in order to achieve your financial and life goals. 

Improving your financial mindset is a marathon and not a sprint. Make the right changes and stay disciplined. You will reach your desired goals earlier than you’d expect.

Investing with MyConstant

As a beginner investor, you might want to begin with an easy-to-use, relatively low risk platform. MyConstant is one such solution, and we have a proud record of no investor losing their initial investment to date. You definitely can lend money online with us or deposit your USD.

Furthermore, if you own some cryptos and haven’t planned to buy more yet, you can totally earn interest on crypto up to 7% APR.

Benefits:

  • Up to 7% APR on fixed term investments
  • No fees for USD investments
  • Anytime withdrawals
  • Minimum investment just $10
  • No maximum investment limit

Sounds interesting? Sign up for a free account today and start investing.

Share this article

George Schooling

George Schooling

Gift card

Tags: money mindset

0 0 vote
Article Rating
guest
0 Comments
Inline Feedbacks
View all comments

Related Articles