Your mindset is what sets the tone for everything in your life. Changing your mindset is what will change your life. What you think and believe is what you act upon.
“As a man thinketh, so he is.” James Allen
A person cannot achieve financial freedom — save for the future by paying themselves first, invest for the long-term, accumulate wealth and live purposeful lives — until they believe that they can be financially free and successful.
Growth Mindset — When You Change Your Mindset, You’ll Change Your Life. It’s the Prerequisite to Financial Freedom
“All personal achievements start in your mind. The first step is to know exactly what your problem, goal or desire is.” W. Clement Stone
Your financial mindset matters! Your mindset determines your reality. If you see the world as a horrible, unfair, painful place, that affects the reality you experience.
On the other hand, if you embrace an awesome mindset, you’ll quickly realize that everything is awesome. Your job? Awesome. Your community? Awesome. Even that previously painful commute through rush hour traffic can be an awesome time to soak up learning. It all depends on how you look at it…your mindset.
One of the easiest ways to change your world is by changing how you think about it. Choosing to think about your world as amazing, giving and supportive gives you the power to succeed.
Stephen Covey labeled it “paradigm” and discussed how your paradigm affect the way you behave and the results you achieve. He stated that “once you see things as they really are, you’ll think, feel and act differently; and you’ll do it automatically, spontaneously.”
A paradigm is the map that you have in your mind. This map is usually based on your assumptions, assumptions of the way things are. Assumptions of the way things are represent just that’s what reality is, you don’t question that.
“All of us think that we see the world as it is,” Covey conveys. “In fact, we see the world as we are. We project onto the outside world, our environment, the people we associate with, including how we see ourselves. We project out of our own conditioning experiences, our own background, a certain representation, a certain model, a certain set of expectations, a certain assumption on that reality out there. We think that’s the way it is.”
Paradigms are deeper than attitude or behavior. Behavior and attitude are both very important, but far more fundamental in achieving financial success than either behavior or attitude, is a paradigm
https://youtu.be/w5XpMg53K4c
And of course, as the late Earl Nightingale said repeatedly, “we become what we think about most of the time.”
“It’s not enough to be in the right place at the right time. You have to be the right person, in the right place, at the right time.” T Harv Ekers
What’s challenging regarding personal finance is mastering your mindset — your psychology, emotions, behaviors and habits around earning, spending, saving, debt, investing and building wealth.
The major challenge most people have is not believing that your situation can change. You don’t think anything can assist you out of your current rut. That thought process keeps a lot of people stuck.
“We think we see the world as it is, when in fact we see the world as we are.” Stephen R. Covey
There are two types of mindsets that greatly determine how you view the world. These two types of mindsets can have a huge influence on a person’s purpose, emotional well-being, physical health and financial success.
The two types of mindsets were first identified by Carol S. Dweck, Ph.D., a Stanford University Professor of Psychology, who wrote the book, ‘Mindset: The New Psychology of Success’: a growth mindset and a fixed mindset.
“In the fixed mindset, everything is about the outcome. If you fail—or if you’re not the best—it’s all been wasted. The growth mindset allows people to value what they’re doing regardless of the outcome . They’re tackling problems, charting new courses, working on important issues. Maybe they haven’t found the cure for cancer, but the search was deeply meaningful.” ― Carol S. Dweck, Mindset: The New Psychology of Success
Carol S. Dweck, Ph.D., is one of the world’s leading researchers in the field of motivation, mindset and human behaviors, and is the Lewis and Virginia Eaton Professor of Psychology at Stanford University. Her research has focused on why people succeed and how to foster success.
The Two Types of Mindsets
“Your world will change when you change.” Tom Corley
The biggest differences between the wealthy and the average person have very little to do with their backgrounds, education, nationality, investment vehicles or starting capital, according to Tom Corley , author of Rich Habits. Instead financial success and success in life has a lot to do with how the wealthy think — in fact, 80 per cent of the reason for a wealthy person success was their mindset. The faster you work on transforming yourself and changing your mindset, the faster you’ll be able to start creating the things you want.
1. Fixed Mindset
According to Dweck, “In a fixed mindset, people believe their basic qualities, like their intelligence or talent, are simply fixed traits. They spend their time documenting their intelligence or talent instead of developing them. They also believe that talent alone creates success—without effort.”
Fixed Mindset Examples
- Easily threatened when others around them are successful
- Shying away from challenges and projects that require more work
- Give up very easily when things go wrong
- Avoid failing at all costs because if they fail there is no way to succeed in the future. These individuals think their destiny is determined.
As Dweck argues, a fixed mindset is what stops many of us from trying to improve in certain areas where we think we’ve hit our ceiling. In truth, of course, we’re all capable of reaching new heights. It’s just a matter of shifting from a fixed mindset to what Dweck calls a “growth mindset,” a belief that we actually are in control of what we achieve.
2. Growth Mindset
“Everybody in the world is seeking happiness—and there is one sure way to find it. That is by controlling your thoughts. Happiness doesn’t depend on outward conditions. It depends on inner conditions.” Dale Carnegie, How to Win Friends and Influence People
Whatever you’re trying to achieve, you must always fight self-doubt and negative self-talk that tries to convince you that you lack the skills and talent to succeed and that you’re destined to failure. Remember that whatever your mindset is, it tends to end up coming true. Staying positive and maintaining a positive growth mindset of self-confidence, determination, belief, faith and hope can help you overcome life’s many challenges.
Carol Dweck defined a growth mindset:as: “In a growth mindset, people believe that their most basic abilities can be developed through dedication and hard work—brains and talent are just the starting point. This view creates a love of learning and a resilience that is essential for great accomplishment.”
Yes, we all have inherent limitations; no matter how hard you try, you may never play tennis like Serena Williams. But, there’s a giant territory between being better than you are now and being the best in the world.
If you have a growth mindset, you think: If I stretch 10 minutes every day, I will become more flexible or If I take a class and practice every day, I will become a better writer.
A few examples:
- Seek out challenges to grow and become a better version of themselves.
- Use others achievements and successes as motivation to also succeed.
- Persevere and not quit when things get difficult.
- Use feedback to their advantage. The sooner they can take feedback the sooner they can learn from it and make progress.
“There are no limitations to the mind except those we acknowledge. Both poverty and riches are the offspring of thought.” Napoleon Hill, Think and Grow Rich
People that choose a growth mindset tend to believe they can learn to grow their talents and develop abilities if they work hard and are dedicated to changing. These individuals think of tough situations as challenges, not threats. They see each obstacle as an opportunity to grow and develop.
While people with fixed mindsets tend to be negative and scared of failing, people with a growth mindset are the exact opposite.
“It isn’t what you have or who you are or where you are or what you are doing that makes you happy or unhappy. It is what you think about it.” Dale Carnegie, How to Win Friends and Influence People
11 Growth Mindsets that are embraced by merely 2 percent of the population:
- Going for your dreams
- Confidence
- Exploring new things
- Choosing happiness
- Fulfillment
- Embracing the unknown
- Excitement
- Liking change
- Living without limits
- Abundance
- Act in spite of fear
Success comes to the people who fail the most...to those who act in spite of fear
In other words, if we want to succeed, we have to get over the fear of failure. It means getting up close and personal with failure. Look it in the eyes. Literally, intend to fail.
Focusing on positive thinking is simple, but it does take time and practice since you’re creating a new habit, according to the Mayo Clinic. Here are several ways the Mayo Clinic recommends for people to think and behave in a more positive and optimistic way:
- Identify areas to change. If you want to become more optimistic and engage in more positive thinking, first identify areas of your life that you usually think negatively about, whether it’s work, your daily commute or a relationship. You can start small by focusing on one area to approach in a more positive way.
- Check yourself. Periodically during the day, stop and evaluate what you’re thinking. If you find that your thoughts are mainly negative, try to find a way to put a positive spin on them.
- Be open to humor. Give yourself permission to smile or laugh, especially during difficult times. Seek humor in everyday happenings. When you can laugh at life, you feel less stressed.
- Follow a healthy lifestyle. Aim to exercise for about 30 minutes on most days of the week. You can also break it up into 10-minute chunks of time during the day. Exercise can positively affect mood and reduce stress. Follow a healthy diet to fuel your mind and body. And learn techniques to manage stress.
- Surround yourself with positive people. Make sure those in your life are positive, supportive people you can depend on to give helpful advice and feedback. Negative people may increase your stress level and make you doubt your ability to manage stress in healthy ways.
- Practice positive self-talk. Start by following one simple rule: Don’t say anything to yourself that you wouldn’t say to anyone else. Be gentle and encouraging with yourself. If a negative thought enters your mind, evaluate it rationally and respond with affirmations of what is good about you. Think about things you’re thankful for in your life.
- https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/positive-thinking/art-20043950
- https://resources.franklincovey.com/blog/paradigms
- https://www.lifehack.org/357234/5-ways-cultivate-growth-mindset-for-self-improvement
- https://www.berkeleywellbeing.com/15-ways-to-build-a-growth-mindset.html
- https://www.inc.com/tom-popomaronis/only-2-percent-of-world-embraces-these-11-risky-mindsets-heres-why-everyone-else-doesnt-but-should.html
- https://www.brainpickings.org/2014/01/29/carol-dweck-mindset/
- https://www.getrichslowly.org/wealthy-habits/
- http://accreditedinvestorjournal.com/2021/03/11/the-7-steps-to-financial-independence-with-jd-roth-afford-anything-podcast-audio-only/
- https://www.harveker.com/blog/11-principles-infographic-financial-freedom/
About Carol S. Dweck
Carol S. Dweck, Ph.D., is widely regarded as one of the world’s leading researchers in the fields of personality, social psychology, and developmental psychology. She has been the William B. Ransford Professor of Psychology at Columbia University and is now the Lewis and Virginia Eaton Professor of Psychology at Stanford University and a member of the American Academy of Arts and Sciences. For a book summary.