Guest Article by Alayna Pehrson – Content Management Specialist for BestCompany.com
You’ve probably heard the phrase “mind over matter.” According to the Merriam-Webster Dictionary, the phrase is used to “describe a situation in which someone is able to control a physical condition, problem, etc., by using the mind.” How can you apply the “mind over money” concept to financial situations?
Money and finances are obviously some of the biggest stressors in the average adult’s life.
Those who are in rough financial situations may live their lives with the mentality that they have no control over their current financial circumstances. Granted, some financial situations are the result of extremely unfortunate circumstances; however, many people may find that their mentality is what’s holding them back from reaching their financial goals. That’s where the “mind over money” idea comes into play.
A person’s psychological situation has proven to play a part in that person’s financial decisions. Financial psychologist and associate professor, Brad Klontz conducted a study to test if positive memories connected to sentimental items could have an effect on a person’s financial decision-making process. The researchers concluded that “it may be possible to successfully harness a person’s positive emotions related to their past to facilitate healthier financial decision-making.”
Your mentality can potentially influence everything from how you save money to how you manage your credit. A recent Forbes article explained Klontz’s four different types of money scripts (things that describe our core money beliefs):
- Money Avoidance: People who “believe that money is bad” or that they don’t personally deserve money
- Money Worship: People who believe money will automatically provide them with a sense of joy, happiness, or fulfillment
- Money Status: People who equate their self-worth with their net worth
- Money Vigilance: People who keep a very careful and strict watch on their finances
These four very different money scripts have shown to be psychologically-based and can influence a person’s financial actions. Those who can understand and recognize the four money scripts are usually more likely to achieve more control over their financial situation, according to the article. Having this understanding may help you take a step toward adopting a “mind over money” mentality.
The Credit Hurdle
The “mind over money” mentality can also apply to credit. Statistics have shown that less than one percent of the entire U.S. population has a perfect 850 FICO credit score. One factor that likely holds people back from achieving their credit score goals is their mental perspective.
Most people know that credit is important, yet many fail to truly understand credit and how it works. Since many people lack proper credit knowledge, they tend to get intimidated by the varying aspects of credit, especially credit cards. People, especially the younger generations, get intimidated by credit cards because they feel that they won’t be able to keep up with payments and that it’s too easy to accumulate bad debt with a credit card. This fear and intimidation of credit cards have dissuaded many people from opening a credit card.
With no account and/or credit, the ability to build good credit is limited and people tend to have lower scores. Although you can repair your bad credit with the help of a professional credit repair service, it’s still important for people to have the right mentality and take the initiative to learn how to build good credit. Again, adopting the “mind over money” mentality might just be the thing you need to help you with credit.
To start taking control of your credit and finances in general, you may just have to adjust your current mentality.
Here are three things that can help you improve your financial mentality:
1) Set goals: Setting both long and short-term financial goals can help you see where you want to go with your finances. Having a clear path or plan of action can shift your financial mentality. For example, if you are struggling with debt, try creating a few short-term debt goals, then move on to creating a long-term goal of getting out of debt completely. Many people in debt give up mentally and accept their debt-ridden fate. If you are one of these people, the first step is getting in the habit of setting goals for yourself.
2) Get a mentor: Relying on others to help you improve your financial outlook can be tough, but if you can find a mentor or someone who can help you with your financial journey, you may be able to get out of your financial rut. This person can openly discuss financial topics with you and hold you accountable until you achieve better self-management. Over time, you may find that your financial perspective has changed.
3) Focus on the good: This may sound obvious, but focusing on the good when it comes to finances can help you improve your financial mentality. When you actively make an effort to focus on what is going well with your finances, you may start having a brighter, more positive financial mentality. The more optimistic you are about your finances, the more likely are to start improving them.
Adopting the “mind over money” mentality can be difficult for some people. However, taking smaller steps like seeking out a mentor or simply focusing on the good can help you improve your financial mentality and help you get closer to being in control of your finances.