Using a Growth Mindset to Improve Your Finances

You have likely heard of the term “growth mindset”. The term was originally coined by Carol Dweck, the Lewis and Virginia Eaton Professor of Psychology at Stanford University. Having and honing this mindset seems to be the secret to success, as many will claim. 

Let’s explore this a little further. To start, there are two mindsets, growth and fixed.

In a fixed mindset, people see their qualities as fixed traits that cannot change. People with this mindset believe that talent alone creates success–without any effort required. Meaning that your effort, talent, and intelligence are a fixed point that can’t be improved over time. 

In contrast, with a growth mindset, people believe that their most basic abilities can be developed through dedication and hard work—brains and talent are just the starting point. This view creates a love of learning and resilience that is essential for great accomplishment.

A growth mindset is a favorite among entrepreneurs for many reasons.  It allows you to be able to take risks, increases motivation, reduces stress and anxiety, improves relationships, increases work performance, and fosters higher achievements overall.

 Like the little engine that could, it’s all about thinking you can. Thankfully a growth mindset isn’t something you are born with, it’s something that can be developed. In this article, we’ll take the concept a step further and see how you can use a growth mindset to improve your finances. 

Fostering a Growth Mindset to Help You Achieve Your Goals

I’ll address four ways you can develop and nurture a growth mindset and then apply each topic to that of achieving your goals, or for the purposes of this article, to improve your finances.

1 – Journaling

Understanding your current mindset and habits is key to creating your growth mindset. Journaling is one way to help you understand yourself, from your moods, emotions, thoughts, and goals on a day-to-day basis. Journaling boasts many health benefits and can show improvements in your goals and mental health over time.

By journaling regularly, you can gain insight into yourself, sort out your thoughts, gain better control of your emotions, and better understand your triggers.

Applying this to finances:

No matter what your financial situation is, you can utilize journaling as a way to keep track of your spending. Understand what your financial habits are and perhaps gain insight into what may drive those habits.

Are you an emotional spender? Did you make a big purchase as a reaction to something good or bad that happened? Are you impulsive? Did you go over budget? How do you feel when you go shopping? 

These are all questions you can address in your journal. Writing out your thoughts and feelings can give you great insight into what drives you. Once you see it all on paper you can make intentional decisions about your finances and change up any bad spending habits!

2 – Establishing a Daily Routine

Another must-have habit for anyone looking to create a growth mindset is to follow and use a routine. Daily routines allow for a state of flow, which can help you be more productive and reduce decision fatigue.

Decision fatigue occurs when you have to make too many choices over a given period of time, for instance in a day. The more you have to think about your daily choices, the more mental strain you put onto yourself. Establishing a routine is one way to streamline your actions, remove unnecessary decision-making, and free up your mind for tasks that really need your attention.

In addition, a routine can help you manage your time with some structure and discipline, ensuring efficiency and completion of the tasks that must get done regularly.

Applying this to finances:

Get in the habit of developing a routine around your finances. Pay off your bills at the same time each month. For instance, I get paid at the beginning of the month, and that day or the next I’m sitting down to get my bills done. 

In addition, approximately once a week I go through my investments and look to see if there’s anywhere I could invest more or make adjustments. Once a month I review my savings and determine if I can spare extra to pay down debts. 

For you, a financial routine can involve anything. It doesn’t matter what your cadence is; what matters is that you establish a pattern that you stick to. In this way, you’ll never forget a bill, miss an investment opportunity, and likely will pay off your debts faster. 

3 – Exercising Regularly

A healthy lifestyle includes not just maintaining your physical health, but also your mental health. Exercise is a great way to work on both.

There are many health benefits to exercise, such as increased stamina, strength, and an improved immune system. Exercising regularly can also be extremely beneficial for your mood, and can increase your attention span, focus, and productivity.

With a growth mindset, you believe that no matter where you start you can improve. Combining your exercise routine with a growth mindset is a great way to see how hard work and determination can pay off for your long-term physical health and wellness.  

Applying this to finances:

Of course, you can’t go running and weight lifting with your money, but I like exercise as a way to say that you need to develop self-discipline. 

Just like exercise requires time, patience, and perseverance to establish a routine and see results, so does improving your finances. 

Financial freedom or a strong financial foundation do not happen overnight. So while that is the end goal, be sure to focus on the day-to-day habits you can develop that will eventually get you to where you want to be. Work on your patience, and understand that every little bit you do today will have huge results later on.

4 – Continuous Learning

Learning new things is the epitome of a growth mindset. It is a testament to how hard work and dedication can transform your life, as long as you are willing to put the work in. 

Thankfully there are tons of options available to us nowadays. Whether reading every day, listening to podcasts, joining webinars, or taking classes, there are endless ways to learn something new each day.

Being open to new ideas and skills can also help you stay inspired, puts things into perspective, and even help push you out of your comfort zone.

Applying this to finances:

Managing finances is not difficult to learn, but that’s the thing, you need to do the work and learn about it. Whatever anyone tells you, or advice you receive, do your own reading. Look up the terminology, read the definitions and concepts and understand them for yourself. 

Empowering yourself with the information will go a long way to not only helping you improve your finances, but also protect you from potential pitfalls.

Final Thoughts

A growth mindset is a great way to continue to improve, learn and be the best version of yourself. However, it doesn’t just apply to your health and wellness. A growth mindset can be used in any area of your life that you want to improve. Use the same habits and channel them where you need them. 

Over time, with effort towards continuous self-improvement, and hard work, you can change your life. Like all skills, it takes time and practice, but the return on your investment in yourself is lifelong.

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