For a great many of the clients I work with, financial planning and wealth management is about living a life with little to no financial stress. They want to avoid confusion and frustration about which financial strategies to use and overcome anxiety about whether or not they’ll have enough money in retirement. It’s gratifying for my team and me to use our experience and expertise to craft personalized financial plans that help our clients achieve their financial goals and the personal aspirations that are often tied to them. However, I have found that it also benefits my clients to work on cultivating a wealthy mindset.
What, exactly, does mindset have to do with building wealth and achieving financial security? As it turns out, quite a bit. Read on to find out more.
As in many things in life, perspective is paramount. What you think about money is usually tied to how you were brought up, and you can check out this episode of my Flourish Financially podcast for more on the power of your money story. It’s common for your perspective on finances to include an emotional component – often fear, shame, or embarrassment. Each of these emotions will act as a roadblock to a wealthy mindset, and the first step is to recognize your current mindset and make an intentional shift.
Wealthy Mindset Step 1: See Money as Empowering
Money is a tool that lets you live the life you want. It creates more choices and liberates you from a powerful source of stress related to scarcity. In essence, money is an “enabler” in terms of both literal expenses and peace of mind. So, as you’re working to cultivate a wealthy mindset, try not to view wealth as a source of happiness or as a status symbol. Having a truly wealthy mindset means viewing money as an empowering, enabling tool toward freedom of choice in how you live your life. It recognizes that, regardless of how much you earn, what’s important is how much you use to fund the things you value – including your financial future.
SEE ALSO: Does More Money Make You Happier?
Wealthy Mindset Step 2: Overcome Unhealthy Perspectives
As human beings, we are all susceptible to unhealthy biases that can work against cultivating a wealthy mindset. Here are three of the most common:
According to the NeuroLeadership Institute, most of us fear losing more than we enjoy winning. It’s an ingrained human tendency to avoid loss, and it impacts our decision-making in all areas of life, including personal finance. In many ways, it’s smart to avoid taking too many risks – it’s probably what allowed our ancestors to survive against predators, lack of resources, and more. The trouble is that the safety bias can act as a roadblock in cultivating a wealthy mindset because it holds us back from healthy forms of risk-taking. As you might imagine, this comes into play when it comes to investing. To be a truly successful investor and make the most of your hard-earned dollars, it’s important to invest with your unique risk tolerance and risk capacity in mind – not just to stick to the safest investments all the time.
I am a huge proponent of gaining more financial confidence, particularly for women, so don’t misunderstand me when I warn you against falling prey to an overconfidence bias. The truth is, we all have a tendency to overestimate our own abilities, especially in areas we feel more familiar with. This can be counter to the wealthy mindset you’re working toward if it leads you to take more risks with your money than you can afford to. Remember that money mistakes can take years to repair and seriously jeopardize your financial security, which is why it’s important to remember that, unless you’re an expert, it’s usually best to work with a financial advisor on your investment portfolio and your larger financial strategy.
This roadblock in perspective can be especially damaging to a wealthy mindset, particularly if your early experiences with money caused you emotional turmoil. That’s because anchoring is the human tendency to assign too much importance on the first piece of information that we receive about a given topic. We interpret everything else we learn about it with the anchor information as our reference point. This can impact your wealthy mindset in many ways. If you are anchored to early experiences with money that made you feel fear, shame, or any other negative emotion, you may have difficulty overcoming this deep-seated perspective and viewing money as a positive, enabling tool.
Where Are You in Your Journey to a Wealthy Mindset?
Money is a complex, complicated topic. Changing your mindset around it can take time, but it’s worth the effort. Viewing your wealth as a tool of empowerment and a creator of choice is an important step toward maximizing your financial potential in the ways that are most meaningful to your life.
At Flourish, we work with clients in all phases of life to develop comprehensive wealth management strategies, build a healthier relationship with money, and clarify the values they hold most dear. If you’d like to discuss cultivating a wealthy mindset or any other topic related to your financial future, schedule an introductory conversation with us today. We look forward to hearing from you!