What Is Your Money Mindset?

Today I want to share with you the greatest financial advice that I have ever received. (Special shoutout to my friend, Sam Niccolls for the sage advice!) Like a lot of great wisdom, this idea involves a small but important change in perspective.

What Is A Money Mindset?

From my perspective, a Money Mindset is a worldview that influences your behaviors and tendencies with regard to how you use your money.

You can think of it as the unconscious driver of your money-related behaviors. It can certainly be overwritten by conscious thought (“I don’t think I want to pay that much to upgrade to first class.”) but it controls the countless small financial decisions that don’t earn your full conscious attention (“20 cent tax, no problem”).

As you can imagine, your Money Mindset can have a great impact on your life, especially as you’re looking to make smart financial decisions that set you up for success in the future.

The Greatest Financial Advice That I Have Ever Received

The greatest financial advice that I have ever received from an advisor was to acknowledge my Money Mindset and then take an action to keep that normally subconscious mindset in my conscious mind by rewarding myself in an abnormal way. This concept takes some deconstructing in order to fully grasp.

Simply acknowledging your normal financial bias is not enough – you need to give yourself a reward in order to condition yourself to continually keep your financial bias in mind. This way, when it comes to the seemingly unimportant financial decisions of your life, you will know your tendencies and have the conscious awareness and willpower to act against them.

How To Identify Your Money Mindset

To keep things simple, lets identify two extreme mindsets, The Ultimate Saver and the Spontaneous Saver.

The Ultimate Saver – On any typical day The Ultimate Saver tends to save more than they spend. In this mindset, financial priorities are in the future and the present is mainly a pathway to what comes ahead. When friends today invite The Ultimate Saver on a spontaneous trip, The Ultimate Saver politely and eloquently declines thinking that more important experiences may lay ahead.

The Spontaneous Saver – On any typical day The Spontaneous Saver tends to prioritize the here and now over the possibilities that may or may not materialize in the future. The Spontaneous Saver knows that life is unpredictable so they spend their money on what they know for sure will make them most happy now. When their friends invite them on a spontaneous trip they are the first to say yes regardless of how it may affect The Spontaneous Saver’s other priorities. However, they still know and understand the importance of saving for the future.

From what I’ve observed, no person fits either of these examples all of the time. Instead, a majority of people fall somewhere between the two. Money Mindsets exist on a spectrum. People are complex creatures. :-)

To explore this idea further, consider the catalyst for this article, new data on the typical young adult money mindset. (Source: Capital One’s Millennial Mindset on Money Survey : Attitudes on spending, saving and sharing amongst adults under 30 (21-29) – December 2015)

1. Two thirds (67%) [surveyed] said they would rather have a steady job with a modest income than become a millionaire with a chance of going broke within a few years.

2. [With regard to romantic relationships] more than one in ten (13%) say being irresponsible with money is a deal breaker for them, and even more (14%) say being a money moocher is a deal breaker.

3. More than a quarter (27%) said that establishing a solid nest egg would give them the biggest feeling of accomplishment.

4. When asked what they would do with a $100 cash holiday gift, 40% of Millennials said they would use the cash to increase their savings balance.

5. Nearly half (45%) of Millennials say they would use Facebook to access and manage their money – significantly more than any of the other leading social media platforms (Instagram, Twitter, and Snapchat).

I found this research to be an interesting point of reference for comparing to my own Money Mindset. According to these survey results, the typical Millennial is similar to the before-mentioned Spontaneous Saver mindset but with a curious streak of Ultimate Saver mixed in. (See the first result which shows two thirds of respondents (67%) preferring financial security over millionaire status and the fourth result which shows 40% saving holiday cash gifts.)

Applying This To Your Life

So, in my opinion, how does one make this information useful?

Take a moment and think about which of the before-mentioned Money Mindsets matches most closely to your default financial tendencies. (Remember you are unlikely to fit either option 100%, instead look for the option that most closely matches your normal tendencies.)

Which of the two options discussed (Ultimate Saver or Spontaneous Saver) best describe your natural way of being?

  • I tend to be an Ultimate Saver and stash away most of the money I earn for the future.
  • I tend to be a Spontaneous Saver and use my money more in the present, while also saving some of my money for the future.

Identifying your money mindset gives you a powerful advantage over your peers. If you know your default tendencies, you can more accurately predict your future.

Your Earned Reward

Once you have identified your personal Money Mindset, take action and treat yourself by doing something out of the ordinary. This comes in two parts:

First of all, publicly acknowledge your Mindset. Feel free to remain anonymous (after typing your comment below, click into the Name field and then click the checkbox labeled “I’d rather post as a guest”), take action and make your acknowledgment stick by putting it out into the world.

Secondly (this is the fun part), identify one tiny action you can take against your bias to reward yourself. The goal here is to condition yourself to continually keep your financial bias in mind so that you can benefit from positively influencing your small financial decisions.

Here are some examples of what you might comment and do:

  • I tend to be an Ultimate Saver so I am going to treat myself to a special coffee to celebrate today.
  • I tend to be a Spontaneous Saver so I am going to open a savings account with an automatic savings plan.
  • I tend to be an Ultimate Saver so I am going to put a little bit more of my paycheck into my “spending money” account this month.
  • I tend to be a Spontaneous Saver so I am going to put all of my coins into a jar in my room and put the money into savings when it gets full.

I am looking forward to reading everyone’s acknowledgments below!

The simple acts of acknowledging my Money Mindset and then rewarding myself for doing so has made a tremendously positive impact on my financial life. You can benefit from this too by taking the steps yourself. The best way to improve yourself is to take action while surrounding yourself with others who prioritize these positive actions.

Disclosure: This post is sponsored by Capital One; however, all opinions expressed are my own.

Comments on this entry are closed.

  • Thomas Brunk

    This trick is neat! :-)

    I tend to be a Ultimate Saver so I am going to buy myself off my Amazon wish list. I have been meaning to do this for awhile but hadn’t gotten around to it.

    • That is a good one, that way you might think about your money mindset anytime you see or use whatever object you are gifting yourself. What are you buying? Anything fun?

  • Matty C

    This feels goofy but I like it!

    I am usually an ultimate saver so I am going to donate some of my bonus this year to Charity Water. Its a good cause and a reminder that I could be be more helpful with my money

    • It is too easy to get into a mindset of only looking out for oneself. Thanks for the helpful reminder. :-)

  • Here are a bunch of other ideas for acts you can take:

    I tend to be a ultimate saver so I am going to buy myself a small treat to celebrate today

    I tend to be a spontaneous saver so I am going to put $1 bills in all of my jean pockets

    I tend to be a ultimate saver so I am going to get a simple gift for a friend

    I tend to be a spontaneous saver so I am going to put all of my coins into a jar in my room

    I tend to be a ultimate saver so I am going to literally put $5 under my mattress to find later

    I tend to be a spontaneous saver so I am going to open a savings account

    I tend to be a ultimate saver so I am going to pay myself a little extra out of my savings account

    I tend to be a spontaneous saver so I am going to pay down a bit more than usual on my debt

    I tend to be a ultimate saver so I am going to invest in myself by taking an premium online class

    I tend to be a spontaneous saver so I am going to buy one less thing than than normal today

    • Donald

      lol, I am stealing that $1 bills in all of my jean pockets idea. I love when that happens naturally, this way it will happen more frequently.

    • Ben J

      I read this while on my commute and followed through by buying myself a small treat upon arriving at work.

      No one ever said that you can’t both be a saver and live it up at the same time! Thanks Danny!

      • :-) Nice! I totally agree, you can do both at the same time! It just takes some discipline.

  • Scott Willoughby

    I very recently had my Ultimate Saver come-to-Jesus with myself after switching jobs. When I left my high-paying career to begin a new startup, it cut my income by more than 60%.

    I always felt tightly budgeted with my old income, so I worried things would be near-unmanageable with my new income. The first thing I knew I’d have to cut back was my savings level.

    As I did so, I realized I’d been ‘Ultimate Saving’ at a rate of 55% of my income, which made me feel broke in the present. I’ve rebalanced things in light of my new income, which has allowed my saving strategy to feel much more “Spontaneous” despite the change in my income level.

    • Wow Scott, that is a huge personal change and shift of priorities. Nice work :-) It sounds to me like you are doing it for all of the right reasons. That is inspiring!

    • Anon

      Wow! 60%! That is impressive. Nice work!

  • Megan Singley

    First of all I’m really surprised to see that only 14% of people surveyed say being a “money moocher” is a relationship deal breaker. That’s wild! I would not be ok with that unless it was some extenuating circumstance.

    Anyway… I tend to be a spontaneous saver so I’m going to skip buying coffee more often and make it myself to save a few bucks.

    • I was surprised by a few of the data points too! That is what I like about these kind of surveys, they can unveil so much that is hidden in plain sight.

      Best of luck on your saving plan! Sounds like a smart one to me! Cheers!

  • Allyn1

    I’m more of a spontaneous saver and self aware of it – so I started doing the “automatic round up” idea in my checking account back when I was in my early 20s. (using a manual ledger, if a debit is $9.25 you actually subtract $10 from your balance in your ledger, effectively saving $.75 without seeing it) and I was surprised how quickly that would add up. And soon it became a game of “how much can I round up?” until I wasn’t just rounding up $.75 but many times $20 or more each time — which is a lot when you are on USAF E-3 pay of $1100 per month. But it changed my mindset, and I still do that today! But I don’t cash it out every 6 months anymore. I just let it ride. My reward will be someday soon, maybe. :)

    • A $20 round up? That sounds like a pro at work! Thanks for sharing your story Allyn, you are inspiring me to step up my game!

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