Three Mindsets That Will Stop You From Building Wealth

Change doesn’t happen overnight. Anyone who is trying to become more financially stable knows it will take effort and require consistent focus. Mistakes have the potential to derail progress, but there are always ways to get back on track. One mistake isn’t going to break you unless you choose to give up.

If you want to build financial strength, you need to be prepared for the long haul. At times you can be your own biggest saboteur, but you can also motivate yourself. This means breaking old habits and preparing for a long journey. Sometimes your biggest barrier can’t be measured with numbers and dollar signs. They are self-limiting thoughts that prevent us from building wealth.

If you want to become financially successful, you may need to do a self-audit. Many people adopt mentalities where money improves their lifestyle and allows them to buy more. While instant gratification can be rewarding, it doesn’t build the same security as you can with a long-term plan. Your own mindset can encourage behaviors that eat away at your progress. Without addressing these harmful behaviors, your financial growth will become seriously stunted.

More Money Means Buying More

Many people fantasize about a life where they’re earning more money. In this narrative, they dream of buying new clothes, technology, or material items. At first, this sounds nice, but it also detracts from the long-term goal of being wealthy. A dollar spent is a dollar you can’t save, so it’s important to think critically before you spend money on little luxuries.

The concept of lifestyle inflation is very common for people who are early in their careers. When they have more money, they have the ability to buy nicer things. Over time, these people establish a higher standard of living that cannot be sustained if they lose their job or suffer a financial setback. This supports the desire for instant gratification, but there’s no strategy behind these decisions.

People who want to become wealthier know that spending money isn’t a solution. So, they shift their mindset to one where they save more rather than spend more. This doesn’t mean they can’t enjoy any reward for their hard work, but it does mean each purchase is carefully considered. If these people experience a financial setback, they’ve built a safety net that can sustain their modest lifestyle. This might not be the most appealing in the present moment, but it sets the stage for a better future.

All Opportunities Should Be Explored

It’s common for people entering the workforce to struggle to establish themselves. This is can be really challenging, and many people have made compromises to gain experience and build a better future. These are hard decisions that should be applauded, especially because they can put people in the position to have more leverage in the future.

Often, young adults have a mindset of scarcity. They feel opportunities are limited and the ones they lose can never be replaced. Yet we live in a world where money is seemingly unlimited. There always seems to be more money out there, and opportunities aren’t created equally. If you’re presented with an opportunity that doesn’t serve your long-term goals, it’s OK to decline. There will be more chances to make money, but you only have a limited amount of time each day.

To become wealthy, you need to build skills and increase your value as a worker. You don’t need to stray from long-term goals simply because someone is offering a few dollars. As long as you’re not desperate for the money, it might be more beneficial to stay put until the right opportunity comes along. This allows you to sharpen your skillset and add more experience to your resume.

You Need to Save More

Young adults are often encouraged to build their savings if they want to be wealthy. There’s certainly merit to this advice, and it’s language I’ve used when talking to others. I’d still encourage people to have savings available in case of an emergency and to build an account if they’re trying to make a big purchase in the future. Beyond this, savings accounts aren’t as valuable as they once were. “High-yield” savings accounts have seen interest rates decline, and they’ve been further reduced thanks to the pandemic.

To plan for a brighter future, young adults ought to lose the mindset of saving and replace it with a mindset of investing. However, this should not be viewed as a game or get-rich-quick scheme. People often shift their focus to trending topics like cryptocurrency or sensational stories like GameStop’s short squeeze. These can make the investing process seem overly complicated and set unrealistic expectations.

It may seem boring, but investing in traditional stocks (especially when young) can be quite lucrative. Historically, index funds have been secure and provided strong returns over the years. Anyone who is planning for their future should consider investing some savings into stocks, but they need to do so wisely. They should also explore retirement plans with their companies, especially if they have a 401K match program. These things aren’t always the most exciting use of money, but they can be massively beneficial when planning for the future.

Building a Financial Growth Mindset

Often, people struggle to build financial strength because they don’t think far enough into the future. You can improve your finances overnight, but stability takes years of planning and plenty of foresight. When you’re always planning for the future, it might seem like you’re not receiving any reward from your income. In reality, your overall value is increasing. Having financial strength will give you many more opportunities and establish lifelong habits.

This mentality doesn’t come naturally. It takes a lot of research and discipline to think so far into the future. As a result, many people enter their financial journey with the wrong mindset. You can’t blame them too much; we’ve been exposed to a society that praises consumer behaviors. However, the rewards of these actions are fleeting. If you’re after permanent security, you can’t be your own enemy. This means shifting your mindset and throwing out your old beliefs.