The first step toward creating a better financial future is to change your mindset.  When you think about money, what comes to mind first?

Do you think about the student loans you still have or the bills you can barely afford to pay?

Most of us have many negative thoughts and feelings about money. We might feel like we never have “enough” and that we’ll always be broke.

We might be stressed, anxious, or depressed about our financial situation. Continuing these unhealthy beliefs and thought patterns will not help you to improve your finances.

Here are some of the most common money mindset problems – and how you can fix them!

Scarcity Mindset

Many of us have a “scarcity mindset” when it comes to money. We feel like we’re always running out of money and we worry that we’ll never have “enough”. Money feels scarce.

You associate money with security, and you want to have more money so you can either hoard it (to feel safe) or spend it (before it’s taken away by bills and debts).  This type of mindset is rooted in fear.

You may think things like:

  • Money doesn’t grow on trees.
  • I can’t afford it.
  • I’ll always have debt.
  • I’m a victim of society.
  • There’s never going to be enough money.

The solution to the scarcity mindset is an abundance mindset.

An “abundance mindset” means that you believe there will always be enough. You think things like:

  • I’ll always have enough money.
  • I can always earn more money.
  • I have the power to pay off my debt and achieve financial freedom.
  • I like to give money.

With an abundance mindset, you’ll be much more motivated to pay off debt, save money, invest, and make smart financial choices because you believe you have the power to change your situation.

You know that making good choices now will pay off later.

You aren’t afraid that you’ll always be broke or in debt. You know that isn’t true.

If you’re struggling with how to change from a scarcity mindset to an abundance mindset (I know it’s tough!), here are a few things you can try:

  • Separate facts from feelings. “I have $75,000 of student loan debt” is a fact; “I’ll always be in debt” is a feeling.  Feelings are not facts. Someone else in your situation believes they can get out of debt – and they will.
  • Take responsibility for your money. You have the power to change your situation.
  • Change your thoughts. Instead of thinking “why am I always so broke?” (scarcity mindset), think “what can I do to make more money or save more money?” (abundance mindset)

Confusing Frugality with Deprivation

Many people have the misconception that frugality is the same thing as deprivation. We don’t want to be frugal because we don’t want to deprive ourselves.

We want to get out debt, but we also want to live a “normal” life.

We “need” our 3,000 square foot homes, shiny new minivans, daily trip to Starbucks, and endless amounts of clutter. If we have to use debt to achieve the American dream, that’s fine.

That’s what everyone does, right?

In a society where excessive consumerism is the norm, this doesn’t sound crazy. But consider this: 1 billion people in the world live on less than $1 per day.

1 billion people.  

These people worry about things like starving and not having access to clean drinking water.

Meanwhile, we complain about how we don’t have enough stuff. We say we “need” a new 58″ flat screen TV and if we don’t have cash, we just swipe a credit card and pay for it later.

The solution to the “viewing frugality as deprivation” mindset is gratitude.

I’ve felt “broke” for the past five years while I’ve been paying off six figure student loan debt, but I’ve still always had “enough”.

I’ve always had a roof over my head, plenty of food to eat, and the opportunity to get out of debt and change my financial situation. I’m lucky.

Living frugally has not “deprived” me. It has opened up a whole new world of possibilities that I never knew existed.

Things like living 100% debt-free, paying cash for everything, and retiring early no longer seem crazy to me.

If you’re struggling with the “viewing frugality as deprivation” mindset, try to:

  • Write down three things that you’re thankful for every day.
  • Remember that frugality doesn’t mean that you can’t spend ANY money. It’s okay to set aside a certain amount of cash each month as “fun” money. Just make a plan and stick to it.
  • Focus on the long-term gains you’ll receive. Whether it’s paying off debt, building savings, or retiring early, your end goal will make everything worth it.

YOLO Mindset

Many people live by the “you only live once” mentality to some extent. I’ve always disliked the quote “Live every day as if you’ll die tomorrow.”

I get the point, but if I were going to die tomorrow, I’d do a lot of really dumb things. I’d eat a ton of junk food, I definitely wouldn’t work out, and I’d probably spend a bunch of money. If I lived every day like that, I’d end up broke and obese.

I see the “YOLO” mentality more with young people. Many millennials use “YOLO” as an excuse to avoid investing and to spend money they don’t have. This behavior is often rooted in an attitude of entitlement.

People say things like:

  • I work hard, so I “deserve” it.
  • Everyone deserves to splurge a little.
  • This is “normal”.  This is what everyone does.
  • I’m too young to worry about saving.
  • Everyone has debt.

Here’s what I think… if you work hard, what you “deserve” is to keep your money.

You don’t “deserve” to give all of your hard-earned money to creditors. You don’t “deserve” to stay in debt for the rest of your life.

If you want to “treat” yourself, save more money.

You’ll thank yourself later.

Fixing Your Money Mindsets

We often get stuck in unhealthy thought patterns. Breaking free of habits can be a challenge, but it gets easier with practice.

If you’re struggling with any of these three money mindset problems, you CAN change your mindset.

Once you’ve changed your mindset, that will make it so much easier to start developing better financial habits. You can reach your money goals, whatever they may be.

Ready to achieve financial peace?

Download our Budgeting Bundle today!  This bundle includes six printable worksheets that will help you tell your money where to go instead of wondering where it went.

With this tool, you’ll have everything you need to get started on the path toward financial freedom.

Let’s do this!