Well yes, and no.
Money mindset is a term that gets bandied around a lot. Not always in a good way.
Sometimes it’s a bit fluffy, with no real action required. Just manifest it from the universe and the money will follow, or something.
But what money mindset is really about, is our beliefs and thoughts about money. And those beliefs and thoughts cause our actions.
This is really important when starting a business. Here’s an example:
You’ve worked out you need £1000 to start your business (made up number).
Negative money mindset: “I’m terrible with money, I’ve never saved that much and can’t afford it”
Positive money mindset: “I’ve not always been great with money, but I’m going to start learning about it so I can save that £1k.”
I found an awesome quote by Mahatma Gandhi which really shows the correlation between thoughts and actions.
“Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions,
Your actions become your habits,
Your habits become your values,
Your values become your destiny.” – Gandhi
So it all starts with what we believe.
But what we believe is just what we have been told by parents, learned at school or picked up from the world around us.
You can actually change your beliefs, you just have to become aware of what you believe about money.
You can challenge those beliefs and set about developing new habits. These new habits will change the results you get (your destiny in Gandhi’s quote). The new results will change your beliefs.
Current money belief: I’m terrible with money
Current actions: Shut eyes when looking at bank account, spend on credit cards and pray for lottery win
New habit: Start tracking everything you spend each month and make a plan for cutting up credit cards and paying off debt
Positive Results: You are in control of your money and become debt free
New belief: I’m good with money
Obviously, that is a very simplistic example. The months when you first starting tracking your money and paying off debt would be quite daunting and confusing.
You would be learning new skills and challenging old beliefs which could be quite scary at first.
But once you were in the regular habit of managing your money, it would start to become second nature.
I’ve always been pretty money savvy but hadn’t really connected that with money mindset’ before.
I just thought what I thought and didn’t realise it was any different from what other people thought.
In fairness, not all of my money beliefs were positive. I also believed that when I hit a certain salary level I would consider myself successful and therefore be happy.
My negative money belief was attaching my self-worth to the salary that I earned. That fell flat on its face however as I was miserable in my senior management role!
So I quit my job and started doing part-time consultancy projects, managing my properties and setting up I Want My Life Back Project to be another income stream (at some point, it’s early days at the moment).
I’ve had to challenge my own money beliefs to leave a corporate job and do something else that made me a lot happier.
The best way to find out what you believe about money is to ask yourself questions related to money.
Look at your answers to the questions, and then ask yourself whether what you believe is fact or a thought that can be changed.
Starting a business feels like a huge leap into the unknown. That makes it feel risky and very scary.
In fact, one of the biggest reasons people give for not starting a business is not having money.
They believe that aren’t good with money, or they don’t have the money to fund their business at the beginning. So, they can’t start.
But what if you believed you could learn to manage your money and could find a way to make whatever you needed to start.
If you don’t know exactly what shape your finances in before you start a business, you could be setting yourself up for a fall.
Worrying about finances is going to distract you from your business.
Your debt will continue to get worse if you ignore it while you start a business.
Running a successful business is about managing the flow of cash in and out of the business.
To set yourself up for success you need to get used to managing the flow of cash in and out of your own personal bank accounts!
Previous money belief: I’m no good with money. It’s too daunting and I am terrible at maths
Positive result: You start to reduce debt and feel in financial control
New money belief: I am good with money and could manage business expenses now I know how to manage my own.
Ignore Gary Vaynerchuk screaming in your face about ‘the hustle‘.
You don’t have to work until 3am and then get up at 6am to make more money. If you do this when you start a business you will burn out pretty quickly.
Of course, if you are starting a business while working full-time, you will need to find time to work on your business.
You don’t need to subject yourself to extreme sleep deprivation though.
You could change what you currently do to make more time. Like doing 20-minute intense workouts at home rather than spending an hour at the gym.
Or meal plan and order groceries online to reduce time spent trawling round the supermarket throwing random stuff in the trolley.
Previous money belief: You can’t earn more money unless you work like a crazy person and never sleep.
Positive action: Record everything you do for a week and how long it takes. Change, eliminate or reduce certain activities to make more time.
Positive result: You find time to work on your business and still get your beauty sleep.
New money belief: I can use the time I have more effectively and still achieve everything I want.
I’ve definitely been guilty of this but you need to let go of it before you start a business.
Of course, you want your business to make money, that goes without saying. But it could take a long time to get there, depending what your business model is.
In interviews I have done with women who quit their jobs and started a business, it took anywhere from 7 months to 2 years to take a decent salary (you can find the links to their stories on my All Posts page).
If you have your self-worth attached to the money you make, you are going to feel pretty rubbish while you are building your business.
If however, you detach yourself worth from money, you will have the resilience to keep going, even when you aren’t making money and hit obstacles.
Previous money belief: The amount of money I make in my business reflects on me as a person
Positive action: Build up your self-esteem in ways by looking after yourself properly. Treat yourself the way you treat others and all the other things we know to do to look after ourselves but don’t do!
Eat well, take breaks, do things that make you happy, spend time with people you love.
Positive result: You feel good about yourself!
New money belief: I have confidence in myself regardless of how much my business makes.
If you are in debt, or feel like you can’t afford to start a business, it’s time to get creative.
I love the book Rich Dad, Poor Dad by Robert Kiyosaki. It really does make you think about money in a different way.
Here is a quote from the book.
“…One dad had a habit of saying, ‘I can’t afford it.’ The other dad forbade those words to be used. He insisted I ask, ‘How can I afford it?’ One is a statement, and the other is a question. One lets you off the hook, and the other forces you to think.”
If you want to make more money, how could you get it? Sell clutter on eBay, not revolutionary, I know, but you would be surprised what people will buy.
Get your old stuff listed and within a number of weeks, you could have a few hundred pounds.
If you want some more fast cash ideas you can read this article from entrepreneur.com.
(Just whatever you do, don’t start a blog to make quick cash. It takes a long time to make money and is a hell of a lot of work.)
Previous money belief: I don’t earn enough/don’t have enough money to start a business
Positive action: List old clothes and electricals on eBay. Open a bank account for a cash bonus. Rent your spare room in Airbnb* (referral link).
Positive result: You generate money quickly to help start your business or pay down debt
New money belief: I can make more money, I just need to think about it creatively
Starting a business involves a really steep learning curve. You have to learn all things you don’t know how to do, like set up a website, or design graphics, or source products or whatever your business is.
Thing is, everything you know, is something that you started off not knowing. (Trying understanding that after a couple of wines!)
Like driving a car, or reading, or swimming. All of those things started off with you making a mess of it but then starting again until it was second nature.
Same with starting a business, same with managing your money.
You just need to start and learn as you go.
Previous money belief: People who are good with money are smarter than me or are really good at maths
Positive result: You learn loads about money and start to feel more comfortable with it.
New money belief: Anything anyone else knows about money, I can learn too.
“If you avoid failure, you also avoid success.” – Robert Kiyosaki
Changing your money mindset is going to take time. And you will probably get confused, make mistakes or feel like don’t know what you are doing.
But just keep learning and taking action and eventually you will have changed your old money beliefs and gained control of your financial situation.
This is so important to before you start a business so you can start on the right foot.
If you feel in control of your finances, can get creative with making or saving money, and understand how to manage the flow of money in and out of your accounts, you will have a much better chance of success in your business.