Dollars & Sense: Developing the Inner Capacity to Create, Maintain and Grow Wealth
By Christine Washington
Did you know that true wealth building starts with a mindset? If you have the right mindset regarding wealth building, then you have already won half of the battle. What makes someone wealthy? Most people think of wealth as big houses, fancy cars, and flashy possessions; however, a mindset shift must occur to understand that just because you have those material items, that does not mean that you are wealthy. Where does this belief come from? Most of our ideas of wealth unfortunately comes from TV, movies, magazines, and celebrity culture. True wealth is built when we accumulate assets that appreciate in value and decrease our debt – that’s it! This is easier said than done in a culture that determines that “right now” is when we should have it all – at any cost.
A mindset for wealth building starts with understanding that wealth building is a slow and steady process that doesn’t happen overnight. Start developing savings and investing goals, and working toward those goals. What if you could retire and live financially free while you’re still healthy and active? Investing just a small amount each month can have great payoff if you start young enough.
Consider the illustration from The Automatic Millionaire by David Bach, in which Billy starts investing at just 15 years old. He invests a told of $15,000 which grew to $1.6 M by the time he was 65. Kim on the other hand, did not start investing until she was 27, and invested a total of $117,000 to amass $1.3 M. With this illustration, you can see how starting earlier is better, and that a small amount can really add up over time.
Someone with a wealth building mindset also recognizes there may be some delays. You may have to delay taking a vacation, purchasing that new car, or buying that dress, but the delay now is because you understand that there will be a payoff later. According to an online survey conducted in the U.S. by Harris Poll on behalf of NerdWallet, the average American household carries nearly $16,000 in credit card debt and $28,000 in car loans. Imagine if all of those debt payments were applied to our own wealth building accounts.
Do you have a healthy financial mindset? Answer “true” if you have thought any of the following phrases:
Healthy Financial Mindset Quiz
1. It doesn’t matter if I save for my future, the rich will only get richer anyway, and I’ll never have anything.
2. I don’t talk to my spouse about money. Our bills are always paid, so we must be doing OK.
3. Having credit card debt is OK as long as I just make the minimum monthly payments.
4. I’ll just wait to invest later. I have plenty of time.
5. I don’t need to save for emergencies, that’s what credit cards are for.
If you answered “true” to any of these phrases, then you could benefit from a mindset shift. Below are some practical steps to implement regarding shifting our mindset toward financial freedom.
1. Educate yourself.
If you don’t know better you won’t do better. You can start by reading books related to finance and money management. Frederick Douglass, notable for his birth into slavery and successful pursuit of freedom, revealed that once you learn to read, you will be forever free. Reading books will really change your thinking of what wealth looks like and how to attain it. The more you are exposed to a concept, the more it can become a reality for you. You could also educate yourself by taking a course, attending a workshop, or talking to individuals who have built wealth and ask for tips on how to do the same.
2. Train your thinking.
Train your thinking to focus on positive thoughts versus all the negativity that can bombard us from day to day. If you are constantly putting garbage into your mind, then that’s what will eventually come out of you. Train your thinking to understand that true wealth isn’t a fancy car or big house, but be confident enough in yourself to know that it is better to BE rich than look rich. Spending habits are formed based on what we believe.
3. Get rid of toxic relationships.
Toxic relationships can really cloud our thinking. If you constantly surround yourself with negative people who have a poor mindset, you may find yourself thinking the same way. Minimize these types of relationships and find people who have been where you want to go. Seek out a mentor, coach, or leader who can help give you a different perspective regarding your financial outlook.
4. Don’t forget the practical.
While building wealth starts with a mindset shift, we can’t avoid the practical aspect, which is to understand how to become a good steward of your finances and resources. Building wealth is about controlling our spending habits to learn how to live below our means. A practical step toward saving could include having savings automatically deducted from your paycheck. This would ensure that you learn to automatically pay yourself first and build savings behind the scenes of your daily life.
5. Just do it!
Stop saying you can’t and just go do it! Take action to win with money. If you can’t figure out where your money is going – do that budget! If your job offers a retirement plan – sign up! If you can’t stop using your credit card on frivolous items – cut them up! If you’re going to change your financial mindset, some course of action will be needed.
In conclusion, it’s your choice to change your mindset. We all have the power to change, but it starts with a decision to do better, think better, and live better.