9 Jul 2020
10 Mindset Shifts to Improve Your Financial Well-Being
Estimated read time: 6 minutes, 16 seconds
The best investors know that the key to making good business decisions is having a strong, clear and balanced mind. Experiencing anxiety and emotional instability and lacking the clarity to think things through calmly will hinder business opportunities, ruin transactions, and put your financial future at risk.
Mental toughness is the personal foundation for financial well-being. Even in uncertain and difficult times, you can cultivate a mindset of balance and preparedness that will allow you to make better financial choices.
What is mental toughness?
Controlling your thoughts and impulses, appropriately managing emotions, and adopting mental routines to promote productivity-focused behaviors: this is how experts define mental toughness in finance, a complex world where anxiety and tension can lead us to make poor decisions.
Though mental toughness is important in all aspects of our lives, it is especially crucial in allowing us to effectively manage our money and guarantee the financial stability of our families, a company, or a country. Consequently, mental toughness implies having the ability to weather adverse situations thanks to psychological resources that allow us to face the challenges and adversities life continually throws at us.
Psychologists note that mental toughness depends on several skills that we can work on developing. These include commitment, or the determination to achieve a goal; self-control, or the ability to handle stressful situations and emotions; confidence, or having faith in our own abilities; concentration, or the ability to focus on the important elements of each situation; being realistic, or having the common sense not to create false expectations; and being prepared for failure, or knowing that you have and will continue to make mistakes, and that you must learn from them in order to improve.
These mental resources are especially important when managing our finances, as they help us to calmly analyze situations and opportunities. Without a strong and balanced mindset it is difficult to make good decisions, which can lead to serious problems down the road.
To achieve the mental strength that allows us to manage this important aspect of our lives in a calm and poised manner, there are a series of mechanisms and attitudes that are helpful to develop.
These are the skills employed by top financial experts to better manage the stressful, high-pressure, and demanding situations that are ever-present in the world of economics.
This is how financial experts control their minds
Developing the mental fortitude to face complex situations doesn’t happen overnight;it requires a positive attitude and specific skills. Here are the qualities, characteristics and skills experts say that individuals who are accustomed to negotiating complicated and stressful situations develop.
- Honesty and continual learning. The first step is to be honest with yourself and face different situations with modesty and a willingness to learn. Keeping your mind open to learning new things will help you better adapt to change.
- Emotional stability. Neither extreme happiness nor depression. Finances are inherently variable: sometimes you will succeed and other times you will fail. It’s not in your best interest to show euphoria over good news or defeat over bad ones. Regulating our emotions is fundamental to keeping your composure regardless of results.
- Accepting others’ success. Sometimes success will pass us by and arrive at others’ doors. Accepting this without being envious or resentful allows us to remain cool-headed and resilient. Rather than envying others’ good fortune, the best thing to do is to learn from them and work to improve our own actions and attitudes.
- Be prepared to win. It is vital to be mentally prepared for the moment when success arrives. Receiving a windfall or closing great deals can lead you to believe that it will always be that way, and that the rough patches are over. It’s important to know how to manage this illusion.
- Be prepared to lose. Just as you will sometimes succeed, you can be even more certain that you will also fail. You have to learn how to accept, analyze and learn from this. A resilient mind will take away lessons from defeat in order to improve and avoid making the same mistakes again.
- Think for yourself. A powerful mind will search for ways to think independently without being carried along by the current or allowing what others do or say to have undue influence on your decisions. Thinking outside of the box is a useful way to build this mental skill.
Armed with these tools, finance specialists are able to remain cool, level-headed, and strong. This will allow you to make more balanced, informed, and better decisions overall.
Mental keys to financial well-being
In addition to developing the same qualities and skills as top experts, you can also work on cultivating practices and routines that will allow you to strengthen your mind and prepare it for the stressful world of finance and investments. This is also important with savings, which are crucial to mental peace, even if it is sometimes hard to admit.
- Don’t be afraid of change. One of the most frequent barriers to developing a strong mind is a fear of new things. Many people live in the past and fear new circumstances and opportunities that come up in life. A strong mind will allow you to handle these with confidence and decisiveness.
- Have a budget. One way to create financial discipline is by making budgets and sticking to them. This allows you to make decisions according to your budget and ensures you don’t make impulse buys. It will also help you to manage the anxiety of spending more than you earn.
- Assess risks. People with strong minds are not impulsive. They carefully calculate the risk they choose to assume and do not take on excessive risks.
- Don’t spend money on things you don’t need. Avoiding unnecessary expenses is difficult. Sometimes it can be very tempting, but a powerful mindset will allow you to learn how to avoid them, and little by little, controlling this impulse will develop into a discipline and even a source of pride.
- Don’t waste energy on things you can’t control. Many people invest an inordinate amount of energy into complaining, denying, and regretting things they have no control over. People with a strong mind don’t waste their energy on these types of unproductive behaviors.
- Forget about what others think. Many times people hold themselves back when making a decision based on fear of what others will think. A well-trained mind will be able to overlook these criticisms and not be swayed. Only listen to the parts of what others say that are constructive and can be helpful.
- Act according to your values. This exercise consists of thinking about what is most important to you. Is it your family? Your friends? Being independent? People with a strong mind for business tend to invest their money in such a way that their greatest efforts are aimed at reinforcing these values.
- Set goals. Working towards a goal implies reaching it. Focusing on a concrete goal will allow you to have more fortitude than those who have not set clear objectives.
- If you have too many responsibilities, don’t hesitate to delegate some of them. This will help you clear out mental space and gain clarity.
- Our possessions don’t define us. Having more money doesn’t make you richer, but knowing how to value what you have does. Being content with what you already possess is a pillar in developing a strong financial mindset.
Over time, developing these key skills will allow you to strengthen your mind and make better and more well-thought-out decisions. Being able to think calmly and with perspective will ultimately make you freer and help you to better manage not only your finances, but your life as a whole.
Sources: Amy Morin, author of “What Mentally Strong People Dont’t Do, Greater Good Magazine, “How to Budget for More Happiness”, Psychology Today, “How to Build Confidence”