And how can changing the way you think improve financial outcomes
by Kaitlyn Ranze
There’s a lot we can’t control – the weather, the traffic, the actions of our loved ones/political leaders, the past, the future…. wheezing into a bag yet?
Most things might be out of our control, but that may not be as important as how we think about the things out of our control.
As money coach Whitney Hansen once pointed out, “our thoughts create our feelings. Our feelings create our actions. Our actions create our results.” With the right mindset, we can break free from limiting thoughts to increase possibilities for success throughout life, business, relationships, and our management with money.
Mindset (noun)- a person’s way of thinking and their opinions
We’re talking about mindset because the way we think (mindset) can improve how we manage money.
Psst… If you’re working on your money mindset and want to help others at work thrive too, request a Nav.it at Work Demo!
In a Ted Talk, Dr. Carolyn Dweck of the University of Stanford, talked about an experiment she conducted for ten-year olds. Much like the challenges we face in life, the ten-year-old participants had a problem that was slightly too hard for them.
Those with a growth mindset said things like, “I love a challenge,” and “I was hoping this would be informative.” On the other hand, those with a fixed mindset were troubled they couldn’t solve the problem easily. They felt that they had failed, that they were “dumb”.
Long story short, Dr. Dweck’s research shows that those with a fixed mindset avoid challenges, and those with a growth mindset exhibit a willingness to learn and grow from problems.
How does this mindset apply to our money management?
For starters, persistence is key.
Take investing as an example:
“Although short-term volatility swings can be difficult to stomach, it’s important for long-term investors to persevere,” Franklin Templeton writes. “While it may be tempting to pull out of the stock market, investors may miss out on a potential market rebound and opportunity for gains while they are on the sidelines.”
Learning is part of a growth mindset.
Not even sure where to begin? Don’t worry. Part of having a growth mindset is remembering that skills can be learned. Specifically, financial literacy is learned. We aren’t born understanding the power of compound interest, difficulties of refinancing, or the basics of investment. With a growth mindset, we believe in our ability to acquire knowledge about personal finance. Having a growth mindset about money means being open to learning more about it.
Pro Tip: Take the quizzes inside the nav.it money app.
Building Habits with a Growth Mindset
A growth mindset builds habits that become second nature. Instead of feeling the restrictions of a budget and the negative feedback loop of avoidance and indulgence (for example a drive-thru latte addiction), a growth mindset helps create systems for positive financial outcomes – like making coffee at home. If we focus on the opportunity to improve and change, we shift the mindset, modify behavior, and improve spending habits.
Improving Your Relationships with a Growth Mindset
Lastly, a growth mindset perpetuates positive relationships with money and with others. Rather than focus on what’s lacking especially in comparison with others, a growth mindset drives positive action. If you notice yourself falling into patterns of jealousy or frustration about what you don’t have especially versus others, think about ways in which you can help those around you, by donating time, money, or skills. Thought patterns of jealousy and frustration take up energy that could be better occupied with learning from a friend’s success. After all, we can learn from the successes of others.
Instead of focusing on a lack of savings or being overwhelmed by debt and avoiding it, a growth mindset will help you set achievable goals to build positive momentum. Progress, especially when broken into smaller steps, is exciting and motivating, but a growth mindset will build resilience after a setback.
How to shift mindset from fixed to growth?
If you feel like you can’t change something, that you’re not able to do something, or quit before trying, you may need to shift your thinking. Find some common examples in the infograph below.
Looking for a more actionable way to shift your mindset? Try tracking it.
You could journal, talk with a counselor, or even cultivate accountability partners online. With the nav.it money app, we built-in a system to help you track your money mindset.
Money Mindset = Your overall feeling towards your money. It impacts how you make financial decisions every day and can either accelerate or derail achieving your financial goals.
“We believe taking the time to check in on your mood throughout the day, week, month, gives you a chance to reflect on if your emotions alter your financial picture and if trends emerge that reveal something deeper, you can change.” Erin Papworth, Nav.It CEO and Founder.
Simply tap on the small yellow icon at the bottom of your home screen. Select your money mindset. After checking in, you’ll get free actionable tips and advice from behavioral scientists and financial experts to foster a growth mindset and positive money management skills. Then you can navigate through your insights for the month.
Challenge yourself to shift your thoughts towards a growth mindset, but make it easy with the nav.it money app, downloadable Google or Apple.