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Harness the Power of Your Money Mindset, No Matter What It Is

By Bonnie Schiedel

Published November 22, 2023 • 5 Min Read

When it comes to money and investing, everyone seems to tackle things just a little differently. Are some people right and some people wrong? Not necessarily. Rather, it often comes down to how you think about money. In other words, your money mindset.

A money mindset is quite simply your attitude about money and your unique set of beliefs about financial matters. Your money mindset affects how you think about finances, how you plan, how you deal with setbacks, how you save and spend, and how you deal with debt.

Understanding the kind of money mindset you have is powerful. It can help you figure out the best way to meet your financial goals, and be aware of possible pitfalls, obstacles and challenges. “It is very important to acknowledge your money mindset; to understand how you approach money, spending, and saving. It will help you to understand what you may need to tackle to achieve longer-term goals,” says Stuart Gray, director of RBC’s Financial Planning Centre of Expertise.

Not sure what kind of money mindset you have? Take our quiz to help you narrow it down.

Let’s take a closer look at some of the ins and outs of money mindsets, so you can put yours to work for you.

How are money mindsets formed?

Money mindsets are often shaped, not surprisingly, by our experiences growing up and how our families handled money. Whether your parents were extra-frugal, often worried about debt, refused to discuss finances or spent money without a lot of thought, that’s going to affect how you think about money, too. In turn, you may make deliberate or subconscious choices to follow their path or specifically take a very different approach.

The experiences you have as an adult – perhaps starting your career in an economic downturn, or even the social media you follow – can also play a role in establishing money mindsets.

No matter your money mindset, or where it comes from, you can harness its power to make it work for you. Here’s how.

Pay attention

Recognizing your behaviour is a key step. “Once you have acknowledged your personal money mindset, you can plan and adapt your behaviour to improve your financial circumstances,” says Gray. “For a spender, this may be setting some medium- and longer-term goals and ‘forcing’ savings to achieve them.” One way to do this is to set up pre-determined amounts to go directly from every paycheque into investment accounts. On the other hand, he says, for a saver, it may be giving yourself permission to indulge in shorter-term spending on non-essentials to make your lifestyle more comfortable, convenient or fun. Crave expert advice? Feel motivated by a step-by-step series of goals? Fine-tune your financial life to make those approaches part of your overall plan.

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Choose a mantra

If you realize that your money mindset is making you uncomfortable about financial issues – maybe you’re feeling anxious, envious or insecure – take a step back and try using a mantra, a positive personal motto that starts with “I” (such as, “I trust my judgement to make good financial decisions”) that you can repeat to yourself again and again. This can help break a negative cycle in your mind and create a new dialogue, which in turn can help you make healthier decisions.

Be honest and realistic

What do you do if your money mindset is different from your partner’s? “This can be a very volatile situation,” says Gray. “Align on some key goals that you work towards together. Do not co-mingle your accounts. And simply recognize and acknowledge the differences so you keep communicating.”

Make some tweaks

Want to make your money mindset more positive? Consciously choose an “abundance” approach. Ask yourself what abundance means to you and areas in your life for which you are grateful. This goes beyond your bank account and considers your health, energy and relationships, as well as food and shelter. Reflecting on and nurturing your idea of abundance can help you take steps to make the right decisions.

Recognize and reward

No matter if you’re a spender, a saver or somewhere in between, it’s important to recognize and reward yourself for changing your behaviour so it lines up with your money mindset in a healthy way, says Gray. (Remember, it doesn’t have a reward related to money. Instead of a movie, you could meet a friend for a walk or to watch the game.)

Taking the time to understand your money mindset is a valuable exercise. It means you’re not fighting your natural inclinations, but are using them as tools to meet your goals. “Once you have acknowledged your personal money mindset, you can plan and adapt your behaviour to help you reach your goals,” says Gray.

RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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