I was recently asked to share my thoughts on how to apply a growth mindset to get healthy finances. With many of us our dealing with stress, I thought I’d share them here. I hope I can help remove at least a little piece of the stress.

What is a Growth Mindset?

Having a growth mindset means being open to changing oneself and working on personal development. Someone with a growth mindset is curious and will embrace challenges as learning opportunities. They believe that they can achieve anything they put their mind to.

In psychology we refer to positive self-belief and how this helps people approach the world. Overall, they will accept feedback with interest and consider how how to apply it. They will be curious about what this means for them in terms of changing unhealthy habits or blind spots. Essentially, people with a growth mindset do not believe that intelligence or success is fixed. On the contrary, they believe they have the power to change themselves and therefore the outcome of their lives. 

Carol Dweck, American psychologist, was the pioneer in developing this theory around the mid-80s. A more recent interview with her in 2016, shows that her work is still very relevant today with her stating “talents and abilities (can) be developed and that challenges were the way to do it. Learning something new, something hard, sticking to things—that’s how you get smarter. Setbacks and feedback weren’t about your abilities, they were information you could use to help yourself learn”.

How does this apply for Healthy Finances? 

Someone with a growth mindset tends to be realistic about their current financial situation and how it compares to their desired outcome. Rather than blaming others and external forces, they will establish a plan that allows them to change their habits.

For example, a fixed mindset person in debt will often wallow in how bad their situation is and ‘wish’ their debt away. However, a growth mindset person accepts the debt and that the past is the past in terms of how it got there. That person will look for possible solutions, ranging from taking out a loan to working extra hours, depending on the size of the debt. They will analyse what bad habits they currently have, such as excessive use of store credit, and will look to understand how to change them and what they mean.

And your bad habits? 

Our bad habits are often created from unmet needs rather than lack of motivation. Are we critical on ourselves and therefore binge shop or binge eat for instant gratification? Have we embraced a victim identity that keeps us stuck with no views on possible solutions whilst blaming everything and everyone around us? Someone with a growth mindset will understand this and start looking for healthier habits and coping strategies. Of course seeking out instant gratification is easier and often fear or our anxieties stop us from changing that. However, a growth mindset helps us develop courage and self-awareness. Through positive self-talk and by reframing our distorted thinking, we are all capable of strong self-belief, even if there are a few hiccups on the way. 

Try out some of these Growth Mindset Strategies for getting your healthy finances:

1- Goal setting 

A growth mindset person will be realistic about their current state and will be able to put a plan in place to make changes to their habits and get help where applicable. Help could include getting a loan however, it could also be to work with a coach. Through self-discovery, a growth mindset person will be curious about the habits, needs and blindspots and will have the wisdom to put a plan in place to work on these. This is in contrast to a fixed mindset person who will allow themselves to be helpless without the capacity to even look forwards or create plan.

2- Be Curious and Ask for Feedback 

A large part of personal growth is understanding how we impact others and the world around us and in turn how this impacts us, including our finances. Being open and curious about our thought distortions, self-beliefs, needs and automatic thoughts and how they impact our habits, including how we spend and save money, are all part of the process in learning and growing. Doing this personal work helps us tackle financial issues and plan in a more future-focused and solutions-driven way. 

3- Risk Management and Dealing with Failure 

People with a growth mindset stand out because they see challenges and so-called failures as opportunities for learning. They almost relish the painful experiences because they know they will come out stronger on the other side. This also helps with risk management in terms of being able to appreciate that things do go wrong. Growth mindset people accept this and plan for it where possible. For example, some people put all their money into new ventures whilst mortgaging their house a second time. The ‘smarter’ growth mindset person will at least make sure they keep the roof over their heads.

Final Thoughts 

Dealing with failure is about accepting consequences of what your financial planning or saving habits will create. It’s about understanding what is the minimum level of comfort you will accept or  are willing to risk. Perhaps you only save for the minimum for the future because you know that you’re quite happy with basics. A growth mindset person knows their values and needs and is happy with themselves without having to prove anything to anyone else. Their most important quest is their own personal development and journey and through this, making plans and following up on dreams that meet their values. And part of this is of course, achieving healthy finances. So, what’s your plan?

“Self-discovery is like opening a Russian doll of surprises with each one more exciting and surprising than the next – you become hooked to the possibilities of life”