65: Cultivating a Healthy Money Mindset: Tips and Strategies

In this week's episode we explore the various types of money mindsets and their impact on our economic health. Financial Wellness is not merely about the numbers; it's about empowering you to embrace healthier financial habits and attitudes!

Understanding your approach to money is crucial in making empowered and effective financial decisions. We explore the mindsets that people commonly have towards money and how these perspectives can significantly influence financial behaviours.

You'll discover:

• Scarcity Mindset: How a feeling of never having enough impacts spending and saving habits.
• Avoidance Mindset: The tendency to ignore financial issues and how to overcome this through practical steps.
• Security Mindset: Prioritizing safety and stability in financial decisions and understanding its benefits and limitations.
• Status Mindset: How the desire to impress others with wealth can lead to unhealthy financial choices.

Tune in to this enlightening episode to understand how your mindset shapes your financial life. It's a crucial step in elevating your financial wellness This episode is more than just a listen; it's a journey towards transforming your relationship with money and sets the stage for financial stability and growth in 2024 and beyond.

Links mentioned:
2024 Planning Toolkit 

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Transcript

Ep 65

[00:00:00] Carolyn: You're listening to Elevate Your Paycheck, the podcast that is dedicated to transforming your financial journey. I'm Carolyn, your host and money coach that will guide you out of that paycheck to paycheck cycle and onto a path towards financial independence. Are you ready? Let's do this. 

[00:00:23] Hello, everyone. Welcome back to the show. Today, I'm a little bit under the weather, but I wanted to make sure that I released this episode because it's actually Super important in the way that we treat our money and the way we elevate ourselves. So I had to record this episode, even though I'm feeling a little under the weather, so if my voice is a little bit off, you're going to have to forgive me.

[00:00:48] What I wanted to share today was how we develop a healthy relationship with money. This is such an important key concept because a lot of the [00:01:00] time, the way we spend, the way we saved, it all is derived from the relationship that we have with money. So when I was a young child, My mom got my brother and myself a paper route.

[00:01:14] Now, back in those days, we had to deliver the paper door to door. And at the end of the week, you'd have to go to each house and collect the money that was owing on the accounts. So for my brother, he would deliver the papers door to door inside of a condo. So, he'd just go from floor to floor, deliver the papers, he's done.

[00:01:38] At the end of the week when he had to collect, for the most part, they were retired individuals. So excited to talk to a young person and were happy to give them their money that was owed and even maybe a little gift on top. So, you know, not a bad gig. Now, me, on the other hand, had a totally different [00:02:00] scenario.

[00:02:00] My route was outdoors, in a neighborhood, so I had to walk from door to door, but a much more difficult route, because, again, the weather conditions, dogs, all sorts of things, right? So, I do my thing, I pile up the papers, and I go and I deliver them door to door. Well, that was only the start of the problem at the end of the week when it was time to collect.

[00:02:25] I knocked on the door of various different types of people. So some of them were young families, some of them were elderly, retired, some of them were New to Canada, you know, it was a whole range of different people. And the responses were quite different too. So you know, some people you knock on the door, they have their check ready, it was all good.

[00:02:49] You knock on another door. And I know that the person's in there because I've saw them, but they're hiding because they really don't want to pay the amount that is outstanding because I'm there every week at the same [00:03:00] time. You're knocking on another door, and you know, they're giving you an argument that the paper wasn't delivered on time, or whatever the story may be.

[00:03:09] Every door that I knocked on had a different outlook on paying their weekly bill and this is where I kind of got the early understanding that the way that people treat money is very different. So having a healthy money mindset is really crucial for your overall financial well being. What I thought we would do is just kind of explore four different money mindsets.

[00:03:35] Now there are several more. But these are the top four, so I thought that we could dive into them a little bit deeper and see if any one of these resonate with you. So the first is a scarcity mindset. Now, This particular mindset really is characterized by the belief that there's just never enough money, and this is often demonstrated [00:04:00] by fear, right?

[00:04:01] So the fear of living paycheck to paycheck, the having anxiety about any kind of financial crisis, worrying about their financial habits, like these are the characteristics of someone that sometimes lives in a scarcity mindset. Now people are not just born this way, right? You experience life. And unfortunately, you know, there are people that have gone through financial hardship or instability.

[00:04:26] Maybe they're seeing their parents struggle, in the past. And so developing that is something that happens over time. It could be a personal experience, something that you've witnessed, or even something that you personally haven't gone through, but you've watched other people go through it.

[00:04:43] And so you develop this kind of mindset, where you tend to be frugal, you're kind of holding on to your money, you're really hesitant to spend. So in order to identify whether or not this is ringing true in your life, maybe ask the question, do you [00:05:00] often find yourself worrying about not having enough money, regardless of what your financial situation is?

[00:05:07] Many people have the misconception that when you have money, then life's going to be great. And yes, money does provide some freedom, but if you still have that scarcity mindset, it doesn't matter how much money you have, you're still going to experience and demonstrate those type of characteristics. Now the next mindset is the avoidance mindset, right?

[00:05:32] So this is where many people, they tend to be overwhelmed by financial management, and they really try to just avoid entirely dealing with their finances and this can look like neglecting to track your expenses, not planning for the future, maybe even ignoring bills and debts, this mindset can stem from that true lack of confidence, because they don't have financial knowledge or skills.[00:06:00]

[00:06:00] Now, if you listen to last week's podcast, we were talking about, doing a financial kind of checkup. And now this person with this avoidance mindset is definitely not going to go through a financial checkup because they're worried about what they might find out, they're worried about what their outcome will be.

[00:06:20] So instead of really digging in and really Figuring out what the problems are and, you know, trying to find solutions, they'll run the opposite way and just ignore everything until it's put right in front of them so that they have to face it now How do you develop an avoidance mindset?

[00:06:39] Well, it can be really one of two things First of all, you could be just carefree, right? You want to live in the moment, you want to be spontaneous, and honestly, there is nothing wrong with that. I love a little bit of secondly, it could just really be true knack of knowledge, right? A lot of the time, [00:07:00] financial literacy is not taught in the school system.

[00:07:03] We're starting to see it come out now. My niece, when she was younger, I remember when she learned something about financial literacy, it was about interest. And she was so excited to tell me she was like, Yes, you know what, Auntie Carolyn, you learned about interest in school and how it compounds.

[00:07:21] And I was like, that is awesome. Because I didn't learn about interest until I was knee high in credit card debt and realizing that they were putting more and more money onto the account. So for them to teach it in school at that young age, they're going to know better. They're going to do better, right?

[00:07:39] So unfortunately for, this generation, they're coming out of an education system that does not teach financial literacy. And so I know I'm preaching to the choir because you guys are listening to this podcast, but this is why I stress that we should share this knowledge with our friends and our family.

[00:07:59] Many [00:08:00] of us learned by mistakes, right? Mistakes that we've made along the way. And that's how we've developed the patterns and the mindsets that we have today. So in order to identify whether or not you are part of the avoidance mindset, ask yourself this question. Do you tend to put off or avoid dealing with financial tasks like a reviewing bank statements, budgeting or planning for long term financial goals?

[00:08:29] If this really makes you cringe, then perhaps you're falling into this category. All right, next up, we have the security mindset, and this person really focuses on saving and ensuring that financial security. is there. It's prevalent. It is the number one thing in their household, right? And this is especially prevalent amongst those who love to prioritize stability, right?

[00:08:58] Stability for [00:09:00] themselves, stability for their family. If you're a longtime listener, this podcast used to be about saving for your first home and having a big purchase like that really secured this type of mindset, right? They would ensure that, my family is now protected. We have an asset and they're building equity for the future.

[00:09:23] Now, all of those things are amazing, but it can sometimes lead to some missed opportunities. Right? And this is where financial growth comes in. Although a house is a great investment, there are other types of investments as well that perhaps may have a little bit, you know, higher returns depending on where you are in life.

[00:09:44] You may want to take a little bit more risks. So a person with a security mindset will definitely not be looking into any of those kind of investment type vehicles because they want to make sure that they're secure. financially. So here's the question to [00:10:00] identify whether or not you fall into this mindset.

[00:10:03] Is your financial decision making primarily driven by the need for security, stability, and possibly at the expense of enjoying your current financial situation or taking a little bit of calculated risks for growth? Now, how does this develop? Again, it's always about our past, right? It's about the things that we experienced ourselves or the people around us.

[00:10:27] And a lot of this one comes from a desire, right? There's a desire there to have financial independence, freedom to make life choices without monetary constraints. And so security provides us with that, right? Then lastly, we have the status mindset. And this mindset really views money as a means to achieve and display social status.

[00:10:55] Now, I don't have to tell you where that comes from. It is all around [00:11:00] us. Social media has really perpetuated this, right? Because all we do is scroll and see what other people are doing and what other people have. And that is developing the mindset that having more means more status, therefore means more happiness.

[00:11:21] And it can actually put on a little bit of pressure, right? Remember peer pressure? It's the same thing that need to keep up that need to appear like everything is okay. That is where a status mindset can be developed. Now, unfortunately, this type of mindset can really lead to spending beyond. one's means

[00:11:43] Because they want the appearance of wealth, they want to look like they're successful. And sometimes they do that at the expense of their own personal financial well being. And to identify yourself with this status mindset, I want you to ask yourself, do you often make purchases [00:12:00] or financial decisions based on how they're perceived by others?

[00:12:04] or just to maintain a certain social image. Now that we know who we are, and to be honest, you can be a little bit of this one and a little bit of that one. It really depends on your scenario, it depends on your age. So many things kind of go into this, right? We're not just static people. We ebb and flow based on, our personalities and our environment.

[00:12:25] So one size does not fit all, definitely. But I thought I'd give you some practical steps to kind of change and improve your financial mindset so that you can actually achieve those goals that we always talk about. So if you fall into the scarcity mindset, I want you to do a couple things. Number one, I really want you to practice gratitude, every day, just jot down things that you're grateful for financially like, for example, I don't know, having a steady income, being able to actually pay your bills, shift [00:13:00] the focus from what's lacking to what you actually have.

[00:13:03] There are probably so many people that are in harder and more difficult situations than yourself so having this gratitude about what it is that you do have is really going to help. To change that focus and then on a week to week basis, just write down some small attainable goals something really small that you can just kind of build on

[00:13:27] and it's going to help you to manage and grow your money. So whether that be, I don't know, opening a GIC, not too risky, but just something that is, you know, a little bit of outside of your comfort zone and start to put money in it slowly and surely. And it's just kind of, again, changing that mindset and it's going to help you to achieve some of those financial goals.

[00:13:50] And of course, keep learning. Keep learning more about financial planning, how your money can work for you. And this will take away [00:14:00] the fear and feelings of scarcity. Okay, for my avoidance friends, here's a couple of things that I want you to do. Number one is to schedule some money dates. We talked about this.

[00:14:13] Dedicate a specific time each week to review your financial situation. And this can include spending, savings, or investments. You know, talk about anything. Don't talk about everything. Just pick one and make it a regular thing. The next thing you can do is to try and Automate your finances. So for payment, bill payments, transfers to savings, investments, really kind of set it up on a schedule.

[00:14:40] You know, if you have a budget already kind of follow that pattern and put the money aside without you even thinking about it. That way the bills are paid. You don't need to avoid anything because things are being done automatically. And also for my avoidance friends, I do encourage you to seek some professional help

[00:14:58] you may need a coach to [00:15:00] help you to set up the budget to see How your money can actually be managed a little bit better, you know There's nothing wrong with reaching out for help and guidance and advice, Even if it's just to set it all up for you and all you have to do is follow it afterwards, right?

[00:15:16] Seeking out these things and these resources is really going to help you to stop avoiding the problem and heading it face on All right, and so for my friends that love security, those security mindset, I want you to look into exploring investment education. So this is different than money management.

[00:15:36] Now you're going to look into how you can actually grow your money. So you want to be secure, but you also want to kind of identify growth. How can I make my money work for me? Right? You don't want it just to be about your paycheck. You want your money to grow and build income without you having to do anything at all.

[00:15:54] So kind of explore that and see, where you feel comfortable in investing your money. [00:16:00] And then we start to balance, right? We're going to start to balance saving and spending, things for enjoyment and for experience and not just about savings and paying off debt. Even if it's just one thing that you do within a year that is going to, create some enjoyment in your own personal experience or your family or whomever.

[00:16:21] Pick one thing and then use that savings pool just for that. And then finally, you want to create a well rounded financial plan. This is where sometimes we're seeking out a financial planner. They can help you with retirement planning, setting up those investments. Putting your emergency savings into a proper fund and they can do that all by looking at your risk tolerance.

[00:16:46] So very important to seek out these types of professions to help you create this. balanced mindset. And finally, for my status mindset folks. Now, I'm not going to be hard on you, but [00:17:00]there are a few little things that you need to do. Firstly, let's reflect on your purchases, right? So before you buy, I want you to ask yourself, is this purchase for your personal satisfaction or is it to impress somebody else

[00:17:15] aim to make purchase based on your personal value and not external validation. It's important to kind of recognize the difference between the two. Sometimes we don't even realize we're doing it, just take a minute, take five minutes, take a day to think about that purchase and determine is it really for me or is it because I just want the external perspective to be different.

[00:17:40] And then I want you to Set up some personal financial goals. There is a toolkit that I put out at the beginning of January. I think this is going to be super helpful for you because it's a really easy way to set up a goal set up a goal for saving or for a dream trip or for your retirement or whatever it is,

[00:17:59] [00:18:00] trips to the spa. You set up this goal and You're going to actually create and follow a budget. And when the money goes into this pool and it's building up and it's ready for that trip, that's when you take it. That's when you make the purchase and buy the plane ticket. And this toolkit is for all of you.

[00:18:19] I hope that you've been listening since January and have already done this exercise. But if you haven't, head to thefinancialmoment. com backslash smart goals. And you can get an instructional video that's going to explain exactly how to set up the goal. You're going to get some worksheets and you're also going to get a habit tracker.

[00:18:43] This is an easy way to build in some weekly habits that you can track to see at the end of the year, have I actually attained the goals that I set out. Be sure to download that and especially for my status friends. I think this would be a really good tool that's [00:19:00] helpful for you. Now, you know, putting it all together, like I said, we don't live in silos.

[00:19:06] And so some of us may have more than one mindset at any given time, but in all, what we want to do is really regularly reflect on our financial decisions and the emotions and the beliefs that are really driving them. I want you to be mindful of your financial habits, as we together are going to cultivate this healthier money mindset.

[00:19:30] So, I highly encourage you to seek support and community. The Financial Moment, I built that so that this would be a supportive community that would be able to talk about financial topics, issues, provide support. And so, if you haven't downloaded any of my guides, I suggest you go to the show notes and I have a multitude of things that you can access.

[00:19:55] If you are on social media, then you will find me on Facebook and you'll find me [00:20:00]on Instagram. And it's a great community. People are, you know, always commenting on different things and I put out fun surveys and it's just kind of a fun way to learn more about money. And finally, I have a newsletter that goes out once a month, and it just gives a highlight of, all the things that are happening with the financial moment, all the talks that I do, and that you can always pop in on.

[00:20:24] You definitely want to be a part of all of this, right? This is the way we change our mindset, we change the way we think about money. So you can see now why I had to fight through and make sure that this episode was released. It is one of the key components to elevating our money. So I'm glad I didn't burst out in a cough and I hope that you guys have a wonderful week and we will see you here same time, same place. 

[00:20:51] Thanks for listening to the elevate your paycheck podcast. If you love this episode and need deeper [00:21:00] support, head to thefinancialmoment. com backslash support to see how we can support you no matter where you are at today. We help our clients organize their finances, create savings, eliminate debt and create a roadmap to their financial goals, which makes them more in control than they ever dreamed possible.

[00:21:21] So head to thefinancialmoment. com backslash support and make this the next step in your financial journey.