Build a wealth mindset
Tell us if this sounds familiar:
Your smartphone stopped working but you need to wait until your next paycheck to fix it or replace it because you can't afford it now. Or an unexpected bill throws your budget completely out of whack.
You tell yourself that you need to be more conscious about your spending and start cutting some "luxuries." You start brewing your own coffee instead of buying it from Starbucks. You cancel some of your subscriptions. And you start eating at home more often.
You're saving some money and you feel good about your effort. But is this a wealth mindset?
According to experts, it's not.
This is a scarcity mindset, the belief that you don't have enough resources, so you need to be very frugal and prepared for the next crisis.
If saving up is not really the answer, then what is a wealth mindset and how do you develop it?
What Is a Wealth Mindset?
Developing a wealth mindset doesn't mean you become obsessed with making money. It refers to a set of beliefs, behaviors, and attitudes that influence your perception of the world and your actions.
A wealth mindset means seeing opportunities when they arise, making strategic decisions, and spending less time worrying about work and money, and more looking for ways to use your money more efficiently.
Here Are 4 Steps to Build a Wealth Mindset
If you've spent most of your life thinking that you don't have what it takes to get out of the credit pit, then developing a wealth mindset is going to be hard. We're not saying it's impossible, but it will require constant effort to change your worldview and adopt a new mindset.
Here's how you can do it.
Step 1: Set Your Goals
One of the first things that you need to understand is that building wealth takes time. One way to get started is to make sure to set realistic, achievable goals. Of course, we would all like to become millionaires in one year, but is that an attainable goal?
Instead, focus on something you know you can achieve, such as having an extra $15,000 in your bank account by the end of the year.
Once you have your goal, try to find ways you can make it happen. The first place to start is with a strong budget. This will help you understand how you spend your money and where you can save. Once you have a budget that works, try to find growth opportunities. Maybe you can get a pay raise or find a job that pays better than your current one. Maybe you have skills that you can monetize and set up a side gig.
Step 2: Don't Squander Your Money Recklessly. Invest It.
There are two main attitudes when it comes to money:
Some people like to splurge themselves, justifying their spending as a treat after hard work.
Others are very frugal and like save as much money as possible.
Both attitudes make sense. If you work hard, it can feel nice to spoil yourself with something nice like a new phone or a vacation. At the same time, seeing money piling up in your bank account can be a great motivator to save up even more.
However, people with a wealth mindset make their money work for them. They are constantly looking for low-risk investment opportunities that will allow them to multiply their resources over the years.
You may think that leaving your money in a bank account is a good investment strategy too, but it really isn't. Because of inflation, when you finally decide to use the money that you saved, it will likely be worth less than now.
Step 3: Invest in Your Skills
Perhaps the most significant investment you could make is in yourself. People with a wealth mindset invest time and resources in perfecting and developing new skills. You can never know when a new skill can turn into an opportunity later in life.
Bill Gates reads about 50 books every year and makes sure he absorbs the information he's read. Warren Buffet reportedly spends six hours a day reading. Entrepreneur Noah Kagan takes time every morning to read and sets aside every Tuesday morning for learning.
Step 4: Find Balance
People with a growth mindset understand that while it's essential to work hard to achieve their goals, their time and energy aren't endless. So, they take time to replenish themselves and engage in activities that nourish their spirit and energize them.
Look at this as another investment in yourself. You can't build a wealth mindset if you are constantly drained. So, take the time to relax and unwind. Go to yoga, take up a tennis class, enroll in a book club or painting class or simply give yourself 30 minutes every day to go for a walk and clear your mind.
It's in your hands
People with a wealth mindset understand that they are in charge of their destiny. They decide how to use their skills to grow their revenue, how to invest it, and how to benefit from it.
It can be hard to change your mindset if all your life you saw things through a different set of lenses. But hopefully, these steps will guide you in the right direction.