Money Mindset: Your Subconscious Is Sabotaging Your Success

The Big Picture On Improving Your Money Mindset:

• • Success requires not just setting goals but creating detailed plans and routines to achieve them. Systematizing behaviors leads to consistent progress and tangible results.
  • Actively practicing gratitude and maintaining a positive outlook can boost self-confidence, helping to recognize and seize financial opportunities.
  • Adopting the mindset that every dollar can be a worker earning more money encourages investment and long-term wealth growth over immediate gratification.

It’s been well-documented that the wealthy think differently – and not just about money – than the poor and middle classes.

These differences are not found only in the occasional opinion or political leaning. Rich people genuinely have different thought patterns, assumptions, and subconscious attitudes. They interpret the world differently than the rest of us.

Ways To Improve Finances And Money Mindset

To broach the subject of the “poor money mindset,” we can first discuss what actionable steps you can take to start your journey to financial independence.

Reasons Why You Can’t Improve Your Money Mindset

Want to stop thinking like a middle-class worker bee and start thinking like a wealthy businessperson and investor? Here are ten ways your subconscious mind keeps you poor… and how to change your attitudes and behaviors to shift your life into a higher gear.

1. You haven’t systematized your progress.

Have you written out a detailed description of your goals? Not a vague “I’d like to buy a rental investment over the next couple years,” but exact specifics of your short-term goals (within a year), medium-range goals (12-36 months), and long-term goals?

Most people have not.

If you haven’t even written out the details of your goals, how will you ever achieve them? The most successful people write detailed plans and goals and actively build progress into their routines and schedules.

James Clear makes a strong case that even more important than setting goals is systematizing behavior to reach them. Anyone can say “I want to lose weight,” but how many people schedule in an hour of exercise every morning as part of their day? It’s great to set a goal of learning more about rental investing, but it’s another thing to set aside 5:00-6:00 every afternoon for building expertise in local markets and networking with local realtors, contractors and property managers.

Wishes are intangible, and goals are often overwhelming and too broad. But routines and systems? If you systematize behaviors that create success day in and day out, your routine will inevitably lead to real results based on actions, not vague aspirations.

2. You think you know “the important stuff” about money.

The poor and middle classes quickly say, “Yeah, yeah, I got it.” They accept common money myths recited by common people as truths. The rich, in contrast, know that financial systems continually evolve, and strategies for financial success change just as quickly. They can never learn enough because their success depends on their ability to adapt.

To lift a line from every B movie, forget everything you think you know. Follow personal finance and rental investing magazines on Flipboard and read them before bed at night. Start reading financial news. Becoming obsessed with the idea of your money going out into the world and working as your minion to earn more money brings us to the next mistake.

3. You work for money rather than believing your money should work for you.

Robert Kiyosaki made this line of argument famous, and rightfully so. Every dollar of yours is a potential worker who can dress up and go off to work every day to earn you more money.

Every dollar you spend, by contrast, is a worker you’ve fired.

Most people choose to drive the nicest car they can afford. What if they spent $5,000 less on their car, and instead made a down payment on a rental investment property? They’d drive a slightly less fancy car and have an extra few hundred dollars/month in their bank account.

Middle-class people think success is about finding a good job, showing their friends their success, and working up the corporate ladder. The wealthy understand that success is about building ladders that others can climb.

It starts with a mindset that your money works for you. As you send more money out in the world earning returns for you, you can start finding ways to add other people’s money and other people’s efforts to earn even more money.

(article continues below)

Real estate investments? Awesome. Being a landlord? Less fun.

Learn how to earn 15-30% on passive real estate investments in one free class.

4. You dismiss successful people as “crooks” and “greedy.”

Do you think it’s selfish to put other people’s money and efforts to work toward your goals?

In a recent survey by the Pew Research Center, a full 55% of Americans said wealthy people were greedy, and only 12% said they believed successful people to be more honest than average. But consider for a moment: how is it selfish to create jobs and investment returns for others?

It’s an understandable impulse when you work hard all day only to come home and stress about money. You turn on the TV and are bombarded with stories about the rich and famous, and it’s easy to feel a stab of resentment and think, “Rich people have more than their fair share.” But that mindset is not useful. On the contrary, it’s counterproductive.

Because what’s useful is always claiming responsibility to retake control over your outcomes.

5. You aren’t 100% accountable.

People love making excuses. Almost all of us are guilty of it – you get into a car accident, and it’s “that maniac’s fault for cutting me off!”

The most successful people take responsibility for everything that happens in their life. They look at what happened, try to understand what they did wrong or right, and then apply that lesson. Self-flagellation is not required.

Try an experiment: take responsibility for every outcome in your life for one week. No exceptions, no excuses. When something goes wrong, it isn’t bad luck; it is poor preparation for all contingencies. When something goes right, reflect briefly on how your actions helped it succeed and what you could have done to improve the outcome.

Far from feeling bad about yourself, you’ll probably feel empowered and more positive.

6. You don’t actively practice gratitude and positivity.

Note the word “actively.” Some of us are naturally more sunny or more surly, but none of that makes a lick of difference.

All of us can take steps to improve our attitude. One easy step is to review three things you’re grateful for each night before falling asleep. Want some more easy ways to boost your positivity and confidence? Here are several more from CNN, and you don’t even have to buy a tie-dye shirt or patchouli.

How do gratitude and positivity affect wealth?

Successful people recognize opportunity and believe in their hearts that their lives (and their finances) will get better if they put enough work and expertise toward it. It also boosts self-confidence and self-esteem, crucial to success in any format.

Want a convincingly non-touchy-feely example? Athletes who practice gratitude and meditation experience better self-confidence and better performance on the field.

But it quickly becomes true when people complain that life has passed them by.

7. You dismiss the importance of money.

Stubborn, defiant clichés like “I don’t need money to be happy” and “Money doesn’t buy happiness” are not very true. Up to a certain income (around $200,000), there is quite a strong correlation between money and happiness.

These clichés are what many people tell themselves to try and feel better about their lack of success. Read: defense mechanisms.

Start by acknowledging that money matters and that you want more of it. The right thought process is “What actions and systems do I need to implement to reach my (written) goal?” rather than “Whatever, I don’t need that anyway.”

Want to compare investment property loans?

What do lenders charge for a rental property mortgage? What credit scores and down payments do they require?

How about fix-and-flip loans?

We compare the best purchase-rehab lenders and long-term landlord loans on LTV, interest rates, closing costs, income requirements and more.

8. You don’t have a written, enforced budget with savings as the first priority.

Like goals, having a budget in writing matters. But just as important is your willingness to strictly enforce your budget.

Try this exercise: put your after-tax biweekly income at the top of a spreadsheet, then multiply it by two for a monthly figure. (That’s important – not your annual income divided by twelve, but rather four weeks’ worth of income because that’s what you can count on in any given month.)

Start your list of expenses with “savings,” and make it 25% of your net income. Then, go ahead and list all of your monthly payments in order of size. Rent/mortgage, car (if you have one), utilities, groceries, gasoline for the car, clothing, entertainment, etc.

Next, list your annual and semi-annual expenses: insurance premiums, property tax bills, doctor checkups, dentist appointments, etc. Add estimated expenses as well: home and car repairs, gifts for others, home supplies, and any other irregular but real costs we all face every year. Add these up and divide them by twelve for the monthly figure.

You are probably way, way over your income. Your first impulse will be to slash your savings but don’t do it. Cut from entertainment, from gifts, from groceries, from utilities.

Set up automatic transfers from your operating account to your savings account on the same day you get paid. You can also split money into a separate account for annual and irregular expenses. Until you’ve developed the discipline to never go over your budget, only use cash or debit card for your monthly expenses, to enforce it on yourself.

9. You don’t have an emergency fund.

Emergencies happen. Maybe it’s the loss of a job; maybe it’s a medical crisis, maybe it’s your trusty car suddenly dying, or maybe your spouse runs off to the Caribbean with the local pool lifeguard. But they do happen, and more often than we’d like to think.

Nearly two-thirds of Americans don’t have the money to cover an unexpected $500 bill, much less a real emergency. Before investing, put aside at least $1,000 to handle the next nasty curveball life throws you.

10. You have an immediate-gratification mindset instead of an investment-return mindset.

A study asked people if they could have a theoretical $100 now or a larger amount a year from now, how much would it take for them to wait a year?

It turns out there was a right answer. The lower the amount people quoted, the more likely they were to be wealthier and healthier. Less patient people, who required an outlandish return on investment to delay getting their hands on the cash, tended to be much poorer.

Successful people take the long view and understand the value of investment. They don’t bother with delayed gratification; they’re happy to have their little dollar bills in the world working for them.

Do you think rental properties provide immediate returns? Earning back the up-front costs of buying, repairing, maintaining, and managing rental properties takes years. But does that mean you shouldn’t invest in rental income properties?

Other Psychological Factors That Can Affect Your Positive Money Mindset

Here are other cases and scenarios that can stop you from improving your money mindset and hinder your financial growth.

Final Thoughts On Improving Your Money Mindset

Wealth comes from patience, positivity, discipline, and knowledge. Start your journey toward financial independence by changing your mindset; it’s free and will pay off in more ways than you can imagine.♦

What mental habits have helped you achieve better real estate investing success? What’s dragging you down every month? Talk to us, we love stories!

More Where that Came From:

Want to Retire Early? Understand the 25X Rule (and How to Bend It with Rental Investments)