
Episode: 311 - Beyond Money: The 10 Mindset Insights for Financial Success
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What's more important to improving your financial life: making more money or gaining control of your mindset? While many might argue that increasing income is the key, understanding and shifting your mindset could be the crucial step to starting your financial journey. We are exploring why changing your perspective can significantly impact your path to financial success.
The Importance of Mindset
It's not about the past; it's about the future. Although financial struggles may have defined your past, the good news is that you are in control of your future. Changing your mindset is essential in this process, starting with the belief that you and only you, or you and your partner if married, can shape your destiny. This belief empowers you to take charge of your financial journey.
Self-Efficacy and Goal Setting
Wealthy individuals tend to have a high self-efficacy, meaning they believe in their ability to accomplish goals and persist through challenges. Conversely, those with lower self-efficacy often maintain the status quo due to a lack of confidence in their abilities to solve problems or achieve greatness. Developing an improved opinion of oneself can lead to clearer and more achievable goals, complete with deadlines and action plans.
The wealthy also view challenges as opportunities, approaching problems with a solution-focused mindset. In contrast, those struggling financially often see hurdles as insurmountable obstacles. Adopting a growth mindset by viewing mistakes as learning opportunities can go a long way in fostering financial growth.
Continuous Learning and Growth Mindset
Embrace being a lifelong learner—learning doesn't stop with formal education. Gaining new knowledge and skills not only enhances your life but also increases your value to your employer or business if you're an entrepreneur. This continuous learning can be achieved through various means, such as reading, podcasts, mentorship, and tackling problems.
Rich individuals typically possess a growth mindset, setting new goals, overcoming challenges, and striving for personal development. On the other hand, the poor often have a fixed mindset, feeling that they cannot grow or achieve their aspirations. Setting goals and embracing growth can open up a world of opportunity.
Abundance and Long-Term Focus
Wealthy people believe in abundance—they see the potential for cooperation and resourcefulness rather than scarcity and fear. This mindset allows them to help others achieve their goals while working towards their aspirations. Shifting to an abundance mindset means rejecting scarcity thinking and embracing opportunities for growth.
Having a long-term mindset enables wealthy individuals to delay gratification, understanding that sacrifices made today can lead to future success. In contrast, those in financial difficulty often focus on immediate consumption, leaving little for future growth.
Risk-Taking and Money as a Tool
Taking calculated risks is another characteristic of the wealthy. They understand that risk can lead to financial growth and personal accomplishment. Instead of avoiding risk altogether, learn to embrace it in a controlled manner to enhance your journey and achieve your vision.
Finally, wealthy individuals view money as a tool—a resource to be grown over time to capitalize on opportunities. They don't see money merely as a means of survival but as a way to secure a brighter future. By adopting the mindset that money can be multiplied, your long-term financial outlook improves significantly.
Conclusion
Your financial journey is unique, and everyone starts at different points. While increasing your income is beneficial, shifting your mindset will ultimately help you create more wealth and financial freedom over time. By slowly embracing these mindset changes, you'll begin to believe in yourself and your future. In doing so, the world will open up, filled with opportunities that no immediate increase in wealth could provide.
Resources Mentioned
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Transcript:
Chris:
What's more important to improving your financial life Making more money or getting control of your mindset? Now, most of you would argue that making more money would be most helpful, but in this podcast, I'm gonna share with you an article that I believe explains why changing your mindset just might be the best place to start your financial journey. This is the Debt-Free Dad Podcast, where we help normal, everyday people like you take control of your finances so you can live a happier, less stressful life. My name is Chris Hawkins and I will be the host for today's episode. From 2005 to 2008, my wife and I paid off just under $100,000 in debt, and we've been debt-free except for our house now for over 16 years.
Chris:
Now it seems like every day I see articles about personal finance on my phone's news feed. Having been a financial coach, a high school personal finance teacher and an overall student of financial literacy, I am always intrigued to see what financial advice is being written. Well, since I love to read, I will often open up these articles to find out whether I agree or disagree with the author. Now they have titles like Five Ways to this or Seven Ways to that or Ten Things, and then fill in the blank. Well, I saw one about a month ago titled Ten Ways the Mindset of the Rich and poor are different, according to psychology. Well, with the title ending with according to psychology, I thought, ooh, this might be interesting. So I clicked on the link to read the article and it was from a site titled New Trader U, with the letter U dot com, and it was written by someone named Steve Burns. And so as I started through the list, I expected at some point to see two or three items that I would completely disagree with, but as I went through all 10 items, I was amazed that I found an article that I completely agree with. Not only were all 10 items on the list ones that I agreed with, but they're also ones that we preach right here on this podcast over and over again. So today I thought I would summarize the 10 ways to change your mindset so you can better navigate your financial journey, and I believe by the end of this podcast you will understand why I say that changing your mindset is probably a better place to start than simply focusing on how to get more money.
Chris:
Now, you've probably heard me mention this before if you've listened to this podcast for a while. It's not about the past, it's about the future. Now, sure, things may not have gone your way financially in the past, but the good news is you can change it moving forward. You see, you are in control of your future. Well, item number one, according to Steve Burns, is that wealthy people believe that they are in control of their future, while those struggling financially tend to believe that others are in control of their future. While those struggling financially tend to believe that others are in control of their lives. You see, one group believes that they are in control of their future, while the other group believes that forces outside of themselves shape their future. So a mindset change towards taking charge of your future and believing that you and only you or you and your spouse, if you're married can dictate your future, that will go a long way in helping you on your journey.
Chris:
Now the next mindset characteristic of the wealthy. It actually relates to the first, and that is that they have a high self-efficacy, which is simply a belief in their abilities to accomplish their goals, their ability to persist when times are tough, and a belief that they will be successful in their financial journey. Those with a low self-efficacy are more likely to keep the status quo Now. That simply means that they either choose not to or they are afraid to attempt change. So people who have a low opinion of themselves think they can't achieve great things or they don't think they can solve problems, and so they take shelter in the comfortable, even if they know that the comfortable thing is also not good for them. Now, several of the mindset changes on this list are going to help with this.
Chris:
Having an improved opinion of yourself leads to the next item, which Mr Burns says is that the wealthy have clear and achievable goals and have a deadline and a plan of action on how to achieve. The poor tend to lack specific plans. They tend to lack any type of action plan. Now we talk about having goals and dreams, aspirations. On this podcast a lot. We talk about having a vision or a why for your life, something that is so important that you can weigh every decision against to help you stay on track towards meeting that goal. This leads me to another mindset difference mentioned by the author, and that is that wealthy individuals tend to look at challenges or problems as opportunities to be solved, and when they fail at something, they look at that failure as an opportunity to learn from the mistake. So the wealthy are solution-focused individuals. Those who struggle financially tend to be problem-focused, meaning they look at the challenges as difficult and therefore convince themselves why the obstacles are too difficult to overcome. So looking at challenges and problems as an opportunity to grow and enhance your journey by providing additional satisfaction that comes from knowing that you accomplished something difficult, well, that will go a long way in helping you on that journey. So making a decision that problems are only speed bumps that are meant to be solved is a great way to change your mindset.
Chris:
So now the fifth way to change your mind is to embrace being a lifelong learner. Now, many think that learning ending your formal education is that you, you can start to learn the things that are most important to you. So in doing so, you constantly gain new knowledge. You gain new skills, which not only enhance your life, but also makes you more valuable, either to your employer or yourself, if you're a business owner. So learning doesn't have to come just through reading, although that's a great way to do it, but through podcasts or YouTube videos, such as the Debt-Free Dad podcast, finding a mentor, or even embracing a challenge or problem Even if you aren't successful at solving the problem. Well, those are all examples of ways to continue learning.
Chris:
Now, the next two items on the list are similar, but they're also distinctly different. They're very similar to the ones that I've mentioned above. The first of these two is that the rich have a growth mindset. They may be content with their current situation, but they also know the importance of continuing to grow through setting new goals, overcoming new challenges and just simply believing that they can and should grow. You see, to them, growth is why we live. It's what we should strive to do. The poor, on the other hand, they have a fixed mindset, choosing to believe that they can't grow, they can't achieve their goals, so they choose to begrudgingly accept that they will never be successful. So making the changes I've mentioned so far will go a long way in helping you come to the conclusion that there's a whole world of opportunity just waiting for you to take advantage of Now.
Chris:
From that is the seventh mindset characteristic mentioned in the article, which is that the wealthy believe that there's an abundance of resources, there's an abundance of opportunities for us all, and that we don't have to be greedy, but rather we can help others achieve their goals and aspirations, because we believe that we have't have to be greedy, but rather we can help others achieve their goals and aspirations, because we believe that we have the ability to take control of our lives. They believe that they can set goals, achieve success. They believe that we owe it to others to help them achieve their goals and dreams. So believing in abundance means the wealthy see the world as a means to cooperate, while the poor believe that scarcity means they have to tightly hold on to what they have, even if it means they miss out on an opportunity because they're fearful. Economically, it's true that there are fixed resources, but believing in the abundance that is possible and rejecting the idea that there is only a fixed or scarce amount of resources that must be hoarded and protected will open up an opportunity to look for solutions to create abundance, not only for you, but also for your family and for others.
Chris:
When you have the belief that you're in control of your life, that challenges are opportunities, that you can constantly learn and grow, thus accomplishing your goals, you begin to move away from a focus on today to focusing on the future. By having a long-term mindset, you are then able to delay gratification, knowing that one day that sacrifice will help you accomplish your long-term vision for your life. Gratification to the future as a means to become wealthy, accomplish their goals, help others along the way so as to have more fulfillment, not only now, but moving forward. Now. Those who struggle financially they can't understand that a better future is possible. So, as I've mentioned, they tend to focus on the now, which ultimately leads to them consuming now, leaving nothing for the future to build Now.
Chris:
That leaves me with two mindset differences between the rich and the poor. Recognizing that we can grow, we can embrace opportunity. We can learn continuously. We can then embrace taking on risk. Learn continuously. We can then embrace taking on risk, knowing that the reward, even if we fail a few times, will allow us to grow, not only financially but also in terms of our feeling of accomplishment. The wealthy understand how to accept limited and more controllable risk to enhance their journey, allowing them to multiply themselves by having their resources work for them in addition to them working for them. Someone who embraces all of the negative mindsets that I've mentioned will tend to shy away from risk, immediately thinking about the potential for loss. So over time, with the changes that I've mentioned, you can better understand that it's okay to take on some limited risk in order to accomplish your vision for your life. So these nine items listed by Steve Burns in the article concludes with an important mindset change.
Chris:
Money is simply an object. It's a tool to be used not only to provide for today, but also the future. That's how the wealthy view money. They believe that it is a resource that they themselves can grow over time, thus providing an increased means to take advantage of additional opportunities and challenges. The wealthy don't look at money simply as a means to survive.
Chris:
By embracing the previous nine items on the list, the wealthy believe they can use money as a tool to further entrench these mindset changes, making the future even brighter and bigger dreams and aspirations available. Now, everyone listening is somewhere different in their journey and everyone has a different situation. So I hope this helps you understand that, although money is necessary, and that having more of it can help, it's your outlook on life that will help you create more wealth over time, resulting in you having more money in the future to live the life that you want and to enhance the lives of others. Simply getting more money without the mindset that it can be multiplied doesn't help in the long run. So my hope is that all of you listening will begin to slowly, slowly embrace these mindset changes so that you, over time, can start to believe in yourselves, you can believe in your future, and if you can do that, the world is full of opportunities that, no, no additional amount of money right now can buy.