Molly @ MM Strategic Advising
Unlocking Your Money Mindset: Empowering Entrepreneurs and Creatives
Knowing your financial mindset lets you establish a strong foundation that can help you find success while pursuing what matters most to you. Having a deeper understanding of money, its value, and your relationship with it empowers you to make decisions that are in line with your values and goals. And understanding how money works can give you the ability to make smart choices when investing or managing your finances that ensure both financial security and creative freedom. Having insight into your personal money mindset can make all the difference in your success when it comes to making financial choices for your future.
What type of relationship do you have with money?
Have you thought about it before? When considering how to approach money, your attitude can be divided into a few categories. Are you a saver or a spender? Are you risk-averse or risk-seeking when it comes to investing for the future? Do you prefer to focus on the present or the future when it comes to what to do with your money? Does money elicit emotional responses from you, and if so, do they impact your decisions regarding your finances?
People have a wide range of habits and feelings when it comes to money. Some may feel resentment or fear, while others may have an unhealthy attachment. Others still may have a healthy, balanced relationship with money—recognizing both its value and importance in life while also understanding that it is not the only source of happiness. No matter how you feel, understanding your relationship with money is essential for achieving financial security and establishing peace of mind.
Overview of different ways people feel about money
Do you identify as a saver? Spender? Perhaps a risk-taker, a giver, or maybe a money hoarder? How about an entrepreneur, someone who is always looking for new and creative ways to make money, or an optimist, someone who believes everything will turn out alright and that they don't need to plan out their financial future? Regardless of your money habits, it's important to acknowledge your beliefs about money and how your past may have influenced these beliefs.
Money can elicit a range of emotions from people. Some regard it with awe and admiration, while others may feel anxious or overwhelmed when they think about it. Some people might have a love-hate relationship with money, where they love the potential of making more but have difficulty controlling their spending and making sound financial decisions. Others are more pragmatic, taking a utilitarian approach to understanding their personal finances and budgeting accordingly.
Read on to identify what kind of mindset you have when it comes to money so that you can be more aware of your tendencies as you work towards your financial goals.
Gaining Insight into Your Personal Money Values
Below are the 6 top money personalities that I see in my work as a financial consultant:
Money Avoidant Mindset
People with a money avoidant attitude can find it difficult to talk about money or even think about finances. They may be prone to procrastination and generally do not enjoy engaging in financial activities such as budgeting, investing, or looking for ways to save. Many may also feel overwhelmed dealing with their finances, often worrying that they will make mistakes or won't understand the language used in banking and investing. Common symptoms of this type of mentality are avoiding conversations about money, hesitancy to commit to any financial decisions, and an overall aversion to taking risks with their funds.
Positives: They may focus on the joys of life that can't be bought with money, such as relationships and experiences
Negatives: They may have difficulty saving and, therefore, avoid setting themselves up for a secure lifestyle in the future; financial anxiety and may not make rational money decisions due to fear or financial illiteracy; may miss out on financial opportunities; and most importantly, may not have a sense of their financial standing
Money Scarcity Mindset
People with a money scarcity mindset often see money as a limited resource. They are fearful of not having enough, regardless of their actual bank about balance. With a scarcity mindset, you believe that there will never be enough money. People with this mindset might live paycheck-to-paycheck or have a checking account with millions. Regardless of their bank balance, they have a fear of spending money. They might have difficulty enjoying experiences due to their stress about finances. They can also become anxious when presented with unexpected bills or expenses, believing that any extra cost may cause them to slip into debt. Those with this type of attitude towards money can be hesitant to take risks, such as investing or starting businesses, and instead prefer the safety of a steady job for reliable income.
Positives: They often live within their means, they are mindful of every spending decision, avoid frivolous purchases and maximize value of what they do purchase; are hard workers to secure more finances; keep spending low even when presented with more income
Negatives: discomfort with spending including necessary items like groceries or health care; guilt around spending money
Love-Hate Money Mindset
People with a love-hate relationship towards money often love the thought of having it, but fail to see the value in actually keeping or managing it. They may be drawn to opportunities that promise financial gain and are willing to take risks in order to make more money. However, they have difficulty controlling their spending and making sound long-term financial decisions. This mindset can lead to overspending, accumulating debt and experiencing financial insecurity if they don't seek help from a professional money manager or budgeting expert.
Positives: comfortable taking risks, creative approaches to money management, generous with donations and/or gift giving
Negatives: Binge spending, guilt around finances, vacillating between wanting to give away money or feeling bad for not having accumulated more
Frugal Money Mindset
People with a frugal mindset towards money are often diligent planners and budgeters who prioritize saving their money over spending it. Unlike those with a scarcity mindset, people with a frugal money mindset are focused on putting money away for the future and making smart decisions. Unlike individuals with a scarcity mindset, they are not operating out of fear- they are operating out of hope for the future, but at the expense of the present. They may practice mindful spending habits such as cutting out unnecessary expenses, tracking their purchases and shopping around for the best prices. This mindset can also lead to thinking of money as a tool for investing in one's future goals, rather than something that needs to be spent immediately. Those with a frugal attitude towards money will likely focus on saving and building wealth, as well as taking advantage of tax breaks or other incentives that can help them further save for future endeavors.
Positive: may be well set up for the future; mindful with spending and resources; stretch limited resources; take calculated risks
Negative: may become obsessed with frugality and not recognize when a purchase is necessary or beneficial, may miss out on experiences with loved ones, guilt around spending, may avoid putting themselves in situations to bring about monetary wealth due to risk-aversion
Money Abundance Mindset
People with a money abundance mindset have an optimistic outlook when it comes to finances. They tend to focus on their potential earnings rather than the lack of resources they may have. This positive attitude allows them to make more daring decisions, such as investing in new opportunities or starting a business. As well, people with a money abundance mindset often take risks and can be more comfortable when discussing financial topics or making big monetary decisions. They understand that if something doesn't work out, another opportunity could be just around the corner. Abundance mentality people believe that money, resources, and opportunities can be created with enough effort and creativity.
Positive: confident in money decisions, budget and plan for the future, generous with resources, benefit the community, not afraid to talk about money and the benefits of having money
Negative: overly focused on achieving material success; may acquire great amount of wealth while lacking empathy for others without monetary resources or opportunity; complacent with their financial situation and may mismanage resources over time due to the belief that there will always be more; excessive spending, fail to recognize value of their posessions/resources; numb to the effect money has on their lives, may use money as power, attitude of entitlement
Carefree Money Mindset
Those with a carefree mindset towards money often prioritize living in the moment and experiencing all that life has to offer. They might value experiences such as traveling, dining out and exploring new hobbies over saving for their future. People who have a carefree attitude may engage in impulse shopping, prefer not to think about budgets or worry about their financial future. This carefree perspective on money can be liberating, but it does come with risks if one neglects to save for the future or build a cushion for unexpected expenses.
Positives: less worried and more relaxed about finances and financial decisions, optimistic, less fear of failure, sense of freedom from traditional notions of success
Negatives: financial instability due to risky decisions or mismanagement of money, guilt for not caring more in a capitalistic society
Common Money Beliefs
Now that you have identified your money mindset, it is important to take a deeper look into the beliefs you hold about money. Here are some common money beliefs:
Money is power
Money equals success
If I work hard, money will come
Having more money will make me happier
Making money should be easy
Money is the root of all evil
I cannot be successful with money
Being frugal is always the best option
I am not good with managing my finances.
There's not enough money to go around
Money Values and Mindful Decision Making
Your money mindset may have informed your money beliefs, but more often than not, your money beliefs are something that you learned from people around you long ago. These beliefs feel like truth because we learned them from people we trust...but they aren't truth and these beliefs don't hold water once you really started questioning them. Below are a few questions to ask yourself regarding your money beliefs and suggestions on how to combat some of the most common money beliefs.
Combatting Negative Money Beliefs
Belief #1: Money equals success
Your self worth being tied up into how much money you make, believing that money gives you more opportunity to be successful and resenting people that are financially showy.
If money equals success, power, or happiness...
...if you didn't make money, were you not successful?
Do you have other wonderful qualities besides the money you make? Are you just your salary? (the answer is "no", you are so much more!)
Is it true that having more money gives you more chances to be successful? What are some other factors that inform the chance of success? What does success mean to you?
Are people who are showy with money truly successful? How do you know? Could they be running on debt? (Hey, guess what...a lot of "wealthy" people actually work the bankruptcy cycle every seven years... look it up)
Again, what does success mean to you? Is it simply monetary wealth?
Is there a possibility that imposter syndrome is informing your belief or causing you to compare yourself to others?
Take away: People associate wealth with financial stability, status, and power. But success can be defined differently, such as achieving personal fulfillment or personal goals.
Belief #2: Money is evil
This looks like avoiding money, perhaps earning less because if you earn more, you would be a "bad guy". You see money as a source of greed, corruption, and injustice.
If money is the root of all evil...
Is it true that all wealthy people are only focused on accumulating wealth for themselves versus helping those in need or working for the good of society?
What is the good that can be done with money?
Is it not true that the more money you have, the more you can spend in your community, donate to organizations you care about, and give to friends/family in need? Is money evil when it is utilized in those ways?
What are some examples of ethical investments?
Take away: You can use money to do good in the world. Capitalism is a reality. How can you make it work for you and your values?
Belief #3: Money buys happiness
This looks like spending "big", buying rewards, and having an emotional mindset when it comes to money management. You might believe that material posessions and experiences are a sign of self worth.
If money buys happiness...
Is it the only source of happiness? Money may buy some happiness because you have access to material comforts, experiences, and luxury spending...but are those the only three factors that affect happiness?
At what point does financial security become a moot point in the pursuit of personal fulfillment? Studies have shown that a certain level of financial security boosts well being and reduces stress, but then the correlation between money and happiness is non existent.
Is it possible that too much focus on wealth building can lead to greater feelings of unhappiness and dissatisfaction?
Take away: Having money is no guarantee of happiness since material wealth alone cannot fill emotional gaps in one's life.
Belief #4: Being frugal is always the best option
Looks like money avoidance and believing that money and resources are limited. Therefore money must be carefully managed and conserved. You may have difficulty taking risks or investing in activities that would bring prosperity or happiness
If money is a limited resource...
Are you truly powerless when it comes to money and earning potential? Dig deep and be honest.
Did you give up before trying to make money?
Is there a potential long-term upside to an investment?
Could you afford this purchase without compromising your financial goals? Or are you saying no for "no's sake"
Takeaway: While practicing frugal money habits may seem like the best way to save and have financial security, it can limit opportunities for growth and enjoyment. Strict frugality can make it difficult to take advantage of investments or affordable experiences that could lead to more meaningful success in the long run. There are times when responsible spending is actually a better choice than being overly frugal.
Belief #5: Hard work = money
You might have a strong work ethic and are driven to achieve goals, whether or not they actually come to fruition. You are goal oriented and driven to succeed and enjoy focusing on the task at hand.
If hard work is your ethos for building wealth...
Are the extra jobs or overtime work adding to your happiness and home life? Or are they only adding to your bank account
Does your hard work always equal more money? When does it add to your bank account and when does it not? What does your hard work add to?
If you put in enough dedication, are you guaranteed financial gain? Be honest.
How do you account that some people are born into wealth and do not need to work hard for what they have?
Belief #6: There's not enough money to go around
Many people believe that there is not enough money to go around, leading them to think that they can never have enough. This kind of scarcity mindset often leads to fear and anxiety about money, as well as a scarcity-driven approach to managing it. People with this type of belief may save money excessively, cling tightly to their possessions and look for ways to make every penny count, focusing more on cutting costs than increasing earnings. They might also avoid taking risks with their finances, thinking it's better to be safe than sorry.
If there isn't enough money, ask yourself:
How can I create more financial opportunities for myself?
What sources of income do I have access to?
How much money do I need in order to achieve my goals?
What steps can I take to increase my financial security?
Is it possible for me to make better use of the resources available to me?
Takeaway: The world is actually abundant with resources. Sharing knowledge and experiences, investing in education, and creating innovative ways to make money are just a few of the ways we can ensure economic equity for everyone. Furthermore, money is a finite but renewable resource- it can be generated over and over through conscious effort, investment, innovation and collaboration.
TLDR: Understanding Your Money Mindset
Money beliefs formed at a young age such as "I don't deserve wealth" or "rich people are greedy" can be deconstructed and re-crafted in order to develop a healthier relationship with money and wealth. Working on developing a healthier money mindset means understanding that money does not equal worth, that it can be used as an instrument for good, and that money should not control but rather enable your life. Building financial literacy allows us to create better spending habits and make smart decisions about our finances. It is possible to separate our individual self worth from our financial status, maintain healthy expectations about spending, investing, and saving, balance giving with receiving and have an overall attitude of abundance. By challenging negative beliefs we have developed from childhood, we can gain control over our finances without sacrificing our personal happiness.
Making Mindful Financial Decisions
It's never too late to start forming new habits when it comes to money. Start small and set achievable goals for yourself. Focus on developing healthy financial habits and spend within your means. Keep track of your progress, celebrate the milestones and stay motivated by writing down all the personal achievements that you have experienced in relation to your finances. Having clear financial goals can help you stay organized and keep up with more ambitious plans as well as build confidence, allowing you to make smarter decisions about how best to use your money.
Meet Molly, the Financial Advisor for Creative Entrepreneurs, Artists, and Small Business Owners!
Talking about money is hard. I make it easier.
After 20 years working in, managing, and eventually leading multi-million dollar arts organizations, AND the start-up of my own two successful businesses, I decided my passion was found in helping other creatives not only gain financial control, but thrive in the creative arts.
I want to help YOU have the freedom to live a creative life with a solid financial footing so that you can create your best work.
My goal is to help 300 individuals and creative business owners get solid when it comes to money and building the lives they want. Will you be one of them?