Mindset and Money

“With my mind on my money, and my money on my mind”

-Snoop Doggy Dogg

Snoop Dogg may have been laid back when he was thinking about his money, but for most Americans that’s not the case…

According to a studying conducted by the American Psychological Association in 2015, money continues to be the number one stressor for Americans. Although I’m not a licensed psychologist, I do spend my days talking with clients about their finances, and I can concur money, along with everything that goes along with financial planning, tends to be an emotional and stressful topic for most.

Why is this?

Here are a few of my observations:

Money provides security, and without enough security, we feel vulnerable.
Money provides freedom, and without enough freedom, we feel constrained.
Too often, expenses = take home income, which reduces security and freedom.
Most are not in control of income, meaning they do not have the ability to go out and immediately increase their income.
We are a society of consumption, and more is better…to have more, you need more money.
In addition to wanting more, we want it now.
Life never goes as expected, and we end up with unexpected expenses.
Most are not prepared for these unexpected events–adding to financial burden.

Because of these reasons, and an endless number of others, many have a negative mindset when it comes to money, their financial situation, and the outlook for their future.

The Mind is a Powerful Thing

I’m believer in the power of the mind– a person’s mindset sets the tone for their outcomes. I’m not sure how my parents instilled positive thinking in me, but I am an eternal optimist, a trait I hope to instill in my children. I’m not so naive to suggest that the only thing you need to do to reach success (whatever that may be) is to think positively. However, I do believe it is impossible to reach success without positive thinking…a negative mindset won’t allow for success.

I don’t have any scientific data to support my belief. All I have is personal experience and the observations of other individuals, but that is all I need to keep my conviction in the power of a positive mindset. So, if most people are stressed by money, and the stress in turn brings a negative mindset toward their current and future financial picture, how can we change this? How can improve America’s mindset about money?

Before we get to some suggestions, we need to take a slight detour…

The subject of money and the mind has been something I’ve wanted to write about for a long time, but was lacking the inspiration. Well, inspiration finally came this week, and it came in the form of a podcast and a newspaper column.

A Former NFL Punter, a Marketing/Entrepreneurial Expert and The New York Times

Monday morning I decided to give Kendrick Lamar (such a great album!) a rest and listen to an episode of the Pat McAffee Show on my commute to my office. If you are not a Hoosier, you may not know who Pat McAfee is–he was the Indianapolis Colts’ All-Pro kicker who recently retired at the age of 29 to follow his passion in the world of comedy. The particular episode I decided to listen to, which I’ve linked to below, featured Gary Vaynerchuk. I assume everyone knows GaryVee, but in case you don’t you can check him out here.

As I listened to the podcast, I really appreciated GaryVee’s comments about his personal mindset and how important it is to be confident with a positive mindset to become successful. Around the 9:00 minute mark, Gary discusses his lack of tolerance for people dwelling and complaining, which I would define as having a negative mindset. He explains, rather than dwelling and complaining about shortcomings, people should find ways to improve the areas of life making them unhappy. Gary offers a powerful example of an area to examine for change–the people you surround yourself with, your inner circle; fast forward to about the 17:30 mark to find this part of the conversation. It’s great!

When I got to my office, I started reading the New York Times, and I’ll be damned if the topic of mindset didn’t show up again. After reading the business section, I stumbled across an article about turning negative thinkers into positive ones (link below). This article was actually the second of a series about positive emotions, so I found the first once to read as well. It was at this point I knew this week would be the week I tackled money and the mind.

While I don’t have scientific data to support my thesis on the power of positivity, the New York Times articles did. Both provided evidence of the connection between a positive mindset and good health. If participating in sessions focused on positive emotions could help patients recently diagnosed with H.I.V. fair better than patients receiving general support, then surely switching from a negative mindset to a positive mindset can help lead to an improvement in relationships with money. The patients with the positive emotions training were more likely to take their medication, carried a lesser load of the disease and were less likely to require anti-depressants than the other patients. A positive mindset led to positive behaviors, which led to positive outcomes….hmmm.

If a positive mindset could have health benefits, I have no doubt it can help with the relationship with money and finance. What are some positive thoughts and behaviors we can implement to help change the mindset Americans have towards money and finance?

Developing a Positive Mindset with Money

I. Make A List Of What You Are Thankful For–Unrelated To Money

If wanting more, or feeling like you don’t have enough is having a negative impact on your mindset, take a moment and make a list of the things you are most grateful for that have nothing to do with money. Write them down so you can see them. Hopefully, your list is filled with people and feelings, not possessions. Allow this to remind you while money is important, the items on your list are the key to your happiness.

I’ll share my list:

Ang, Roman and Leo.
My Health.
Family and Friends.
RLWM, which affords me the opportunity to do what I love for a living.

II. Simplify

The more complicated life becomes, the more opportunity for stress.

Simple is often cheaper, easier to understand, improves the likelihood of sticking with it, and increases the probability of success. Simple is often plain and boring.

Complicated is often more expensive, harder to understand, easier to ditch when times are tough, and decreases the probability of success. Complicated is often sexy and exciting.

Avoid complicated and stick to simple.

III. Focus On What You Can Control

When it comes to money and finance, stress comes from focusing on the things we have no control over. This ends up being a double whammy…stressing over the perceived outcome and stressing over the lack of control. The sooner you realize there are events out of your control and focus on the things you can control, the sooner your mindset can transition to positive.

Politics. Stock Market. Inflation. All things you cannot control.

Behavior. Expenses. Spending. Savings. All things you can control–Focus on these.

IV. Learn From History

Take an audit of your past responses when things got tough financially. Was your response positive, or negative? If you responded negatively, what steps can you take now to prepare to be able to handle the next financial surprise in a positive way.

For example, if you are an investor, how did you handle the stock market’s decline in 2008 and early 2009?

Did you lose sleep?
Did you become anxious?
Did you give up and sell all of your investments and move to cash?

If you answered “yes” to any of those, then in preparation for the next market decline, and there will be another, review your portfolio allocation with your financial advisor. You may have been taking on more risk than you were comfortable, which lead to the emotions and actions above. Adjusting your allocation to a level of risk you are comfortable with may lead to a more positive response the next time–you still won’t enjoy a market decline, but you’ll stand a better chance to make it through to the recovery.

Look at how you’ve acted in the past–it’s a indicator of what to expect in the future. If you want a different response, adjust your preparations to improve the likelihood your response will be positive.

V. Remember: Doom & Gloom Sells Advertising

While we’re talking about investing, remember one thing: fear sells.

“Markets in Turmoil” draws higher viewership than regularly scheduled programing. As much as the financial media wants to convince us they care about what happens to us, they don’t. The TV stations, newspapers, and newsletters are interested in generating profits, not helping you make good decisions.

When the doom and gloom presents itself, call your financial advisor to have a conversation about your portfolio and financial plan, and then tune out the noise.

VI. Don’t Check Investment Accounts Too Frequently

The investment theme continues; investments are a common topic of concern with clients. Unless you are a day trader (which you shouldn’t be), the daily moves of the stock market should not concern you. If you are an investor with a diversified portfolio of low cost investments, there is no reason to check on your investment accounts daily, or weekly.

Maybe monthly.

Quarterly is ok.

The money you have invested should not be money you need in the short term, so the day-to-day movements of the market should not be worth your time and stress.

VII. Have a Plan

Preparation brings confidence, and confidence brings a positive mindset.

Having a plan, whether it be for paying down debt, for college savings, or for retirement provides piece of mind knowing progress is being made toward your goals. Even the plan is now where you would like it to be today, you have a plan and actions to get where you want to be.

Having a plan also allows you to absorb the unexpected challenges life presents by adjusting the plan for the change, and getting right back on track.

Finally, a plan addresses and removes uncertainty: Uncertainty=Negativity.

VIII. Expect Your Plan to Change

You’ve got your plan, and it will change over time…accept that

Some of those changes will be your own (your goals may change), and some will be out of your control (job loss, or an unexpected expense). If you know your plan will not stay the same forever, you won’t be surprised when a change occurs, and you’ll be able to handle the adjustment in a positive way.

You’re Not Alone

Remember, money is the number one stressor for Americans.

A negative mindset regarding money and finance is not reserved just for those with lower incomes, or fewer assets. Negativity doesn’t know incomes or asset levels–everyone is subject to it. I’ve met clients without much, but are positive people and live fulfilling lives. I’ve also met clients with more than enough, but are negative, never satisfied and live miserable lives.

I believe the key to success and happiness is maintaining a positive mindset–it is impossible to convince of anything different. I’ll leave you with this:

“Your mind is a powerful thing. When you fill it with positive thoughts, your life will start to change”

-Unknown

Additional Readings:

The New York Times: A Positive Outlook May Be Good for Your Health

The New York Times: Turning Negative Thinkers Into Positive Ones

American Psychological Association: Stress in America

Pete the Planner: Visualization

Podcast:

The Pat McAfee Show Presented by Barstool Sports

Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimers page.