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What is a money mindset?

Looking at your bank account sends you spiraling? Read more here to find out where positive and negative money mindsets come from, how they influence your daily life, and how you can rethink yours.

7 min read

Leaving bills in the mailbox opened, avoiding checking your bank account balance, or assuming that it’s impossible to save money — any of that sound familiar? While some people find it easy to manage their money, others have a hard time even looking at their own finances. The differences in how people handle their money partly come down to their individual money mindset. In this article, you’ll learn what a money mindset is, how it develops, and how you can influence yours. Let’s get started! 

What is a money mindset?

A money mindset is the umbrella term for our basic attitudes toward and core beliefs about money. Our financial self-esteem is often linked to our own attitude toward money, regardless of whether we actively chose it or learned it somewhere else. 

Consciously or not, these attitudes affect our financial decision-making — for better or for worse, depending on whether we have a positive or a negative money mindset. That’s why our money mindset has a direct effect on our current and future financial situation. 

Your money mindset, for instance, plays an important role in how you handle salary negotiations. It affects not only how you perceive yourself and your own value, but also how firm you are when negotiating a raise with your boss or clients.   

Characteristics of a positive money mindset

Financial independence and a calm feeling about your bank account balance — sounds pretty good, right? If you already have a positive money mindset, you’re closer to this goal than you might actually think. Taking a positive approach to money and your own finances often acts as a catalyst for success and financial freedom. Plus, it comes with plenty of other benefits.

People with a positive money mindset:

  • see opportunities instead of obstacles
  • ask for help rather than struggle by themselves
  • know there is a solution for every financial problem
  • often deal proactively with difficult decisions 
  • are open to learning new things
  • generally have a solution-oriented attitude
  • have a more optimistic outlook — even in uncertain times

Characteristics of a negative money mindset

Just like a positive attitude toward money can also motivate you toward your goals, a negative mindset can thwart your plans, hold you back, or — in the worst case — even harm your financial future. Often, a negative money mindset is masking emotions like fear or anxiety, or feelings of weakness or helplessness. Financial matters often seem insurmountable to people with negative money mindsets. The result? They don’t take charge of their finances, or avoid dealing with them altogether. 

These feelings are understandable and actually pretty common. Unfortunately, they often lead to negative thought spirals and catastrophic thinking. The consequence of a negative money mindset can be a money mindset that’s even worse, and which stops you from taking back control over your financial situation. 

People with a negative money mindset:

  • are scared of or intimidated by financial topics
  • don’t feel confident that they could learn about finance or develop any skills
  • procrastinate or avoid financial tasks
  • feel a lack of control and generally have a very negative attitude toward money

Where do money mindsets come from?

Your own money mindset is often formed by a number of different factors. These end up manifesting over the course of your life as subconscious beliefs. One of the main factors that affects your attitude toward money is the environment you grew up in. The way your parents or caretakers talked about and dealt with money influenced your opinions about money and finances — even if you didn’t realize it. Other people in your environment might have played a significant role too, for instance relatives, friends, acquaintances, and teachers.  

You might have been exposed to negative talk such as:

  • Money can’t buy happiness.
  • Being rich doesn’t solve your problems either.
  • We can’t afford this.
  • Money is the root of all evil.
  • You can’t take money to the grave with you.

We could go on — but the more often we hear negative phrases like these, the more our subconscious will internalize them. People who grow up in a more positive environment also internalize the messages they receive about money, but that actually helps them to build a positive money mindset.

How economic challenges affect your money mindset

Even people with a positive or neutral money mindset can find themselves sliding into negativity when external circumstances change. Inflation, rising prices, and growing uncertainty in the job market, like Europe is seeing right now, can trigger existential fears that might negatively affect your money mindset. In times like these, it’s especially important to stay calm and not make decisions out of fear or panic. You’re not not the only one facing this situation!

When people fall into a negative money mindset, they imagine the most horrific future scenarios and events — which often don’t prove to be true. In periods of inflation, central banks and financial policymakers use any means they can to avoid hyperinflation or recession. By raising the key interest rate, the European Central Bank is using its most powerful weapon to slow down inflation and stabilize the economy and currency.

How do I know what money mindset I have? 

Wondering whether you have a positive or a negative money mindset? One way to find out is to observe what feelings come up for you when you think about money. A quick look at your bank account balance can be pretty revealing. Is your heart beating faster, or are you suddenly feeling nervous? Then you’re probably experiencing some anxiety around money. Or do you pay your bills the minute you receive them and don’t procrastinate? That can be a sign that your money mindset is pretty positive. 

How can I develop a positive mindset?

Here’s the good news: No matter what environment you grew up in and what core beliefs you have, your money mindset isn’t set in stone. The first step to changing your money mindset — and probably the most important one — is to identify the core beliefs you have about money. Admittedly, this step is often the hardest. That’s because these beliefs can hide below the surface and steer our behavior subconsciously. Asking yourself questions is a great way to uncover what’s going on for you. For instance, ask: “How did my parents behave in situations that involved money? How did they talk about and use money?”

As you do this, you might discover similarities between your parents’ behavior and your own. Closely observing your reactions to financial tasks or topics can also help reveal your current money mindset. Once you have an idea of what drives you and your money mindset, you can start creating a more positive one. 

The following steps can help you change your money mindset. 

1. Take back control People with a negative money mindset often feel like they’re not in control of their money — even though you’re the only person who actually has a say in your own finances. Starting something new can be difficult, but even little steps can lead to great results. For instance, you can start saving a small amount of money each month, simply by setting up automated Rules in your N26 bank account.

2. Be ready for self-improvement Changing your money mindset means facing your own fears or core beliefs — and that’s easier said than done. However, once you uncover your core beliefs, it becomes a lot easier to spot your behavioral patterns and habits and gradually change them. Use our monthly budget calculator to sort out how much money you earn and how much you spend each month. This way, you can keep track of your finances and your spending behavior. 

3. Avoid negative self-talk It’s really hard to break out of long-standing behavioral patterns. Once you start working on your money mindset, you might notice a critical inner voice trying to put you down. Don’t give in to this discouraging self-talk — remember that the changes you make will be worth it in the long run.

4. Read books about money and finance There are hundreds of books by different authors about finance and money mindsets. Educating yourself can help you gain a completely new perspective and change how you think about your own finances. The following books are a great place to start:

  • “Rich Dad Poor Dad” by Robert T. Kiyosaki
  • “Think and Grow Rich” by Napoleon Hill
  • “You’ve Earned it, Don’t Lose it” by Suze Orman

5. Believe in your own success New healthy habits are great, but the most important thing is to believe in yourself. Remind yourself of why you want to change your money mindset and stay focused on your goal — you can do it!

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