Money Mindset: Strategies to Build Wealth

Money Mindset

What is Money Mindset?

Money Mindset is what your mind believe or think about money.

Do you realize that I said “your mind” instead of “you”?  The reason I said that because your mind is a separate entity from you.  Your mind is a part of you, but it is not you.  You have the power to change your mind.

People frequently use the term “you’re out of your mind” to imply that you are doing something illogical or crazy… like flying to the moon.  Well, it only sounds crazy until someone did it.

How did the Mind Learn about Money?

You mind learned about money from previous experience.  Just like how your mind learned about the alphabets, numbers, shapes, relationship, or money.

Surprisingly, most people learn about money when they were around 2 or 3 years old, and by age 7, you’ve formed a belief around money based on your observation and what your parent taught you, directly or indirectly. So, most likely you are not even aware of your money story.

Money Story

During one summer break, a father told his son to get a summer job, with the intention that his son learned about hard-work. The boy didn’t know what kind of job he should apply to, and the father quickly suggested a fast-food restaurant. The boy made $100 after one week of hard-work a the burger joint. The father was proud of his son, but the son didn’t enjoy working at a burger joint.

One week later, the boy quitted his job. He started printing out flyers to teach tennis lessons for younger kids. He rode his bike and posted those flyers around the neighborhood. Little that he knew, he got 5 clients that paid him $20/hour for a group tennis lesson. At that moment, the boy realized that he collected $100 in one hour instead of one week. And, his income did not depend on one source, his employer.

Unfortunately, I am not that boy.  I learned about the importance of multiple sources of income and thinking on a bigger level at later age.  But, that’s the story that changes my whole perspective on money and finding creative ways to earn more without sacrificing more time.

What is money story?

Money story is how you think, feel, and handle money.

  1. What do you think about money?
    • Do you think money is the root of all evil?
    • Are you always thinking about a college fund for your kids even though you don’t have any kids?
    • Do you believe that you must have a lavish wedding since it is a once in a lifetime moment?
  2. How does money make you feel?
    • Does money make you feel safe?
    • Do you feel money will ruin your relationship with family or friends?
  3. How do you handle money?
    • Do you spend more than what you make?
    • Do you budget?
    • Do you buy on impulse?

Why is it important to understand your money story?

As I mentioned before, most people learned about money when they were at a very young age, and not even aware of it.  Therefore, it is crucial for you to reflect on your feeling, thinking, and habits on money before you can make all the necessary adjustment to understand your money mindset and improve your wealth.

For example, as a parent, I won’t serve my little girl a bowl of broccoli and expect her to eat them all when she already holds grudges against broccoli. So, I try to understand why she doesn’t want to eat her broccoli? What is she thinking, how does the broccoli make her feel? She might not like the feeling of having too much gas after eating broccoli, or the taste of broccoli. By, understanding her situation, I might be able to come with incentive or a different game plan to help her eat vegetables.

Similarly, by knowing your money mindset and your money story, you can have a plan to overcome those limiting belief and grow your finance.

Five Questions to Figure Out Your Money Story

Here are five questions to help you understand and reflect on your money story.

  1. What did your parent teach/tell you about money?
    • Did you parent talk to you about money when you’re a kid?
    • Did you get an allowance from your parents?
    • Did you parent teach you to save your money?
  2. How does money make you feel?
    • Do you feel like it’s time to throw a party when you get a bonus or tax return?
    • Do you use your money to help a charity or other people?
    • Do you need some saving to feel safe?
  3. Do you believe in spending money on yourself?
    • When was the last time you invest in yourself? (such as education or vacation)
    • How do you prefer to treat yourself? Hang out with friends after work? Spend some me time in a spa? Eat out at nice restaurants on weekends?
  4. Are you able to control money?
    • Do you have any credit card debt?
    • Do you buy everything with cash?
    • Do you have a budget?
  5. What has been the money theme in your life?
    • Has it been mostly negative or positive experience?

 

Six Strategies to Change Your Money Mindset

Change your words

Once upon a lovely night, I asked my 4-yr old daughter to brush her teeth. She refused to brush her teeth because she is not done playing.  I tried to reason with her by throwing random facts about cavities, bacterias, and the tooth fairy, but she still resisted to brush her teeth.  I got tired being a nice and logical dad, and I said, “Please brush your teeth or I will be mad.”  She suddenly looked down and tears came down her cheeks.  Of course, I had to comfort her first, cheered her up, and finally, she brushed her teeth.  

Change your words - change your mindsetLater on, after she felt a sleep, I reflected on that incident.  Am I really mad at her? Not really, I was just tired after a long day.  And, I asked myself, what other feeling do I have when she is not listening to me?  Frustrated, annoyed, sad, and tired.  So, I chose to use the word “sad” because that it is easy for a 4-yr old to understand and it describes my feeling better to her.  I will be sad if she has cavities, I will be sad if she becomes a daughter who does not listen to me.  

A few weeks later, I went through the same drill again with my daughter.  But, this time, I used the word “sad”.  I sat next to her, I looked at her eyes and told her that I would be sad to see her nice teeth damaged by cavities.  She hugged me and she let me helped her brush her teeth. Win!  And proud daddy moment.

I can tell you that simply by changing your habitual vocabulary – the words you consistently use to describe emotions – you can instantaneously change how you think, how you feel, and how you live. “  — Tony Robbins

I should’ve followed Tony’s advice before I had that incident with my daughter.  🙂  Unfortunately, I believe most of us don’t think too much about using the right words to describe our feeling. 

How do you feel?

How many of us say “I have to go to work” or “I need to go to work” instead of “I want to go to work”.  Do you feel the difference when you say “I want to go to work”?

All those 3 sentences are very similar, but when you think about the “have to” or “need to” statements, those imply an external force that make you go to work.  When you say “I want to go to work”, that expresses the free will and excitement to go to work.  

Can you confidently say “I want to go to work” every morning?   Can you?  

If you have some hesitation, I am here to help you.  That’s the main reason I started Side Hustling Parents.  I want to help others, especially parents, to build multiple streams of income that you enjoy and help you achieve financial freedom.  

A study by Rodney J. Korba, showed that our inner voice could go 10 times faster than our verbal speech.  So, if you tend to use negative words in your thinking and conversation, you are likely to delivery those words of despair ten times more to yourself.

Do you use negative words such as “debt”, “poor”, “I don’t have”, or other similar words that convey negativity in your mind?  If you do, follow some of the techniques below to change those negative words!

How to change your words?

1. Replace negative statement with questions

You can change a negative statement such as “I don’t have $100 to start my business” into questions that trigger your brain to follow-up with an answer.  For example, “how can I get $100 to start my business?”, “what can I do to make $100 to start my business?”, or “who can support me with $100 to start my business?”

When you start asking yourself those questions, you are training your brain to think about solutions instead of accepting the status quo and give up.  

2. Add “right now” to the end of your sentence

This technique helps to frame the negativity into the current situation.  Saying “I can’t pay rent right now” frame the limitation to a short period.  Who knows what might come in the next hour or day?  You might be able to find a job that gives you more than to pay rent.

Challenges

I want to challenge you to start paying attention to your words for the next 7 days.  Every time you catch yourself using negative words, try to write down that statement.  And, write down a new statement that will help you change your mindset.  You can use a journal or even a use a bulletin board if that helps.

Money is like sunshine

mobile phone storesI’m sure you have heard an expression “Money does not grow on a tree”.  Aren’t you glad that money doesn’t grow on trees?  Because if money grows on a tree then we are going to be in trouble during Fall and Winter seasons when nothing grows from a tree.  

Many years ago, I was looking for an unlocked mobile phone that I can use with any carrier in the US when I was visiting my family in Jakarta, Indonesia.  My mom and I went to a 4-story shopping center, and over 90% of the stores in that building are selling mobile phones.  Those stores are next to each other, so a customer can literally turn their head to the left and check the price from the competitor.  And, I believe those stores make enough money to pay for rent, employees, and make some profit too.  So, what’s the secret?  I think there is no secret to their business model.  They just show up and put themselves out there.

Money is like sunshine, there is always enough money for everyone if you are willing to go out and be visible.

Stop thinking like an employee

The corporate culture has trained us to believe money is a limited resource.

You can work as hard as your co-worker, but eventually, only one of you can get the promotion. The company excuse is they only have a “budget” to promote one person.  Performance review in the company is also designed to stretch your limit, where it is impossible for most people to get the big fat 5% bonus at the end of the year.  (Yes, I know 5% is not that big after all).

If you want to improve your financial health, stop thinking like an employee, and start seeing the possibilities of putting yourself out there.  Many people need your help from your unique experience and knowledge.

fashion pose

You are the light

When I was listening to a podcast, this one guest speaker shocked me because she made a 6-figure income by teaching people (I think mostly women) to pick their clothes.  She helped them to pick what wardrobe that makes them feel comfortable and boost their confidence.  

On the other hand, I was the person who has not think about what to wear in years.  I’m not an extremist like Mark Zuckerberg who only wears a grey shirt every day, but I have about 8 to 10 shirts that I wear on a daily basis and I just pick one up from the stack.  

That’s the proof that your unique experience and knowledge is a treasure to other people.  Be the light.  People will pay you to solve their problem.  If you had a problem in the past that you have solved… chances are other people are having the same problem.  So be creative and put yourself out there because money is everywhere, just like sunshine.

Be a producer, not a consumer

We live in the greatest time of all.  We receive news from all over the world in a matter of seconds.  We’ve got Google that provides a variety of information.  You want cats videos.. google it.  You want a get rich quick instructions… google it.  Everything is out there for grab.  It is up to us to choose what information do we want to consume every day.  

We can spend one hour to watch cat videos or learn something new.  I’m not saying watching cat videos is a waste of time. If you are a cat groomer then watching cat videos is your things, right? I get it.

Spending one hour learning a new skill or watching a cat video can be equally bad if you stay at being a consumer.  A person who takes in all that information to yourself and never put those ideas into action.

You’ve got to figure a way to apply that knowledge to actions to enrich other people’s live.  Knowing is only half the battle.  Using and applying that knowledge is the other half.  Are you a producer?  

Techniques to be a producers

I used to wonder why would people want to put videos on youtube, but I realized that those YouTubers are producers.  They apply their knowledge, skills, and perspective to build something that has the potential to improve other people’s lives in their special way.

Take control of money

Based on GoBankingRates’ survey in September 2017, approximately 58% of adult (age 18 and above) in the US have less than $1,000 saving.  A thousand dollar might seem like a lot of money when we are trying so hard to make ends meet, and sacrificing every desire to save every penny from our hard earned cash.

Unfortunately, according to an AAA, the travel-service giant, the average cost of a car repair is between $500 to $600.  So, unexpected car repair can certainly wipe out all of your savings.

BabyCenter.com estimates the average cost for baby diapers and wipes is $1,200 per year.  For expecting parents, the additional $100 expense per month can put a lot of stress on your finances.  

Having some “emergency cash” is important because life happens. So, the first thing we need to do to take control of our money is to watch our incomes and expenses.  Then, try to put a spending limit on some categories to start saving money.  If you are married, it would be wise to include your spouse during this process so both of you can work toward the same goal together.  

Five steps to take control of your money

  1. List your incomes and expenses
  2. See where you can cut back your expenses
  3. Set priorities on your spending
  4. Make saving a habit or automate savings
  5. Create a budget

I would recommend using Mint for personal money management. Honeydue is a good alternative if you want to share some information with your partner. 

Don’t spend the money that you don’t have

One of the biggest challenges in managing money is protecting our money from the person who has unlimited access to our money… not from thieves or government.  I’m talking about protecting our money from ourselves.  How many of you have spent money just because of impulse buying this past week?  Either you picked up a $2 bottle of soda from the gas station because you remember the refreshing sound of bubbly soda from a commercial, you picked up some extra chips or snacks while doing groceries, or you purchased a $500 airline ticket because it was on sale even though you are on a tight budget.

LearnVest money habit released a survey that showed 74% of people admitted they’ve gone into debt, on average of $1,108, to pay for a vacation.

What?!  Seriously?!

At first, I didn’t believe that people will actually borrow money for a vacation because I personally would not do such thing.  So, I went into my LendingClub account (a peer-to-peer loan), and it astounded me to see a “Dream Vacation” category as one of the reasons to borrow money.  As you can see below, the amount of money they are borrowing start from $4,000 to $8,000 with an interest rate as high as 20%.

LendingClub - Loans for Vacations

When you borrow $5,000 with 20% fixed interest rate per year for 3 years, the total cost of your vacation balloon up to $8,000.  This means your monthly expenses go up by $222.22 for the next 36 months.  Is it worth to pay an extra $3,000 for maybe 1 week of fun?

Of course, I can’t judge anybody for making that decision without knowing the full story.  However, I want to make you aware of the risk of making a bad decision.

You might be able to avoid borrowing money with high interest if you plan ahead.  You can read my step-by-step process to save money before I purchase a new TV, and apply for your big purchases.

If you have borrowed money for your vacation in the past, I would love to hear your story.  Please feel free to email me (donny at sidehustlingparents.com) to share your story privately.  In exchange for your story, I’ll be happy to give you some free coaching tips to improve your financial health.

Embrace your stepping stones

For parents, starting a new business can mean a life-changing event that impacts the whole family.  The sacrifice that you have to make to squeeze another 15 minutes out of your busy schedule to finish the last paperwork,  paragraph in your blog, or last phone call with a prospect. 

We have seen many internet marketing gurus that claim that they can show you all their secret to build a 7-figure income in less than 6 months or sooner to lure you into purchasing their programs or courses.  

In reality, the internet is a very competitive world.  Yes, you can certainly make money blogging.  But, if you are a first-time blogger, you most likely need to put in at least 10 hours a day building content and networking with other bloggers for at least 6 months before you can make your first few hundred dollars.  

Most successful bloggers that shared their stories said they started blogging because they enjoy doing it.  They didn’t think or know how to monetize their blog until at least 1 year later.  The idea to monetize the blog comes when they have a good number of visitors or readers coming to their blog and start engaging.

However, I’ve seen and heard many entrepreneurs are frustrated or embarrassed for picking a side-job or staying in their full-time job to support their family while building their business.  Those “get rich quick scheme” messages has demoralized new entrepreneurs who have been working hard for a full year without seeing the result.

“Most people overestimate what they can accomplish in 1 year and underestimate what they can accomplish in 10 years.” — Tony Robbins

I can totally relate to Tony’s message after I’ve gone through 20 years of development.  In 1998,  when I graduated from college with a computer science degree.  I could not land a high paying job with big tech companies like my other friends.  My paycheck was below the average of entry-level programmers in the US.  I lived in a small and affordable studio.  I strived to save as much money to buy a house eventually.  Because of the economic downturn, I had to take 3 pay cuts in 2 years period.  I didn’t have much freedom to hop around jobs.  My option was limited to companies who can provide a work visa.  Furthermore, I didn’t want to cause any complication that might delay my opportunity to be a US resident.   Fast forward 20 years later, I have tripled my base salary from my first job, I own some rental properties, and I have a fun and beautiful family.

So, no matter where you are right now, don’t be embarrassed by your past or current situation.  Embrace your stepping stones, and your action today will determine your future.

Let’s keep in touch

Congratulations!  You’ve come this far, and I hope you are not skipping all the six strategies to change your money mindset.

What have you learned from those strategies?  

What are you going to do with all the knowledge and unique experience that you have?

Can you confidently say “I want to go to work from 9 to 5 every day until retirement”?  

I would love to keep in touch with you and tell me which challenges you’re going to do first.

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