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by Sarah Eadie

Adopt These 4 Money Mindsets and Save More

Woman shopping for knives.

The savings tips you find online can get a little weird. What starts out innocently enough – “Pack your own lunches!”– spirals out of control as people concoct more and more ways to stretch their dollar.

While the tips may end up saving you more money, they don’t always value your time and energy. Making your own dish soap will save you a couple dollars at the store, but at what cost?

A lot of savings tips follow a general theme: hoard your resources to the point of being uncomfortable. We’re trained to think that there are a limited amount of resources. That’s called a scarcity mindset. It relies on guilt and fear to help you reach your goals.

I don’t think that’s healthy for your psyche, or useful for your wallet. We’re going to talk about 4 money mindsets that will help you stay on track with your financial goals without feeling bad about yourself.

If this sounds a little harder than reading lists of tips, that’s because it is. But I’m here to help you out. After each mindset, I’ve listed ways you can work towards applying these mindsets to your life. If you’re willing to really engage the Action Items, over time you’ll see the results. Having a healthy relationship with your money will feel more normal, and less scary.

Ready to get started?


The Money Saving Mindsets

1. Growth Mindset

“Believe that you can become rich and you will” sounds pretty hokey, doesn’t it? It makes becoming rich sound like the process of meditating in a cave, willing money into your bank account. Then, boom! Millions of dollars!

Nope. You’re right, that’s not how it works. But our thoughts do play a crucial role in our financial lives. Our thoughts – how we think about ourselves, what we need, and what we’re worth –impact how well we manage our money.

I interpret that phrase– “Believe you can become rich and you will” –like this:

Get into the habit of thinking that you can learn to grow wealthier.

This is what’s called a growth mindset. It’s the idea that intelligence and skills can be developed. This means that we’re not limited by the situations we’re born into and qualities we possess. We can become smarter and more skilled if we commit to learning.

Many of us aren’t taught about personal finance as young adults. It’s on us to develop our own money management skills. That’s a lot of pressure. Why?

  • Money is an emotional topic—it’s easy to tie your self-worth to your net worth. Thinking about money triggers nasty emotional reactions in some of us, like guilt, anger, shame, and regret.
  • You’re forced to think ahead. When you’re doing your best to manage your money well today, thinking about how to best care for yourself many years is extremely stressful.
  • Even if we’ve mustered up the courage to approach this topic, we get this nagging voice in the back of our heads. It says things to us like, “If you fail, your life will be ruined.” This type of thinking leads to inaction, and ultimately keeps us from saving (and making!) more money.

Adapting a growth mindset helps you focus on learning and improving rather than being smart or getting rich the first time. Everybody fails. Try to get into the habit of examining and learning from your failure, and know when to move on. You may find that it helps you save more, with the added benefit of helping you stress less about money.

Action Items: Developing a Growth Mindset

  • Monitor your thoughts and habits. Notice when you slip into limiting thoughts and habits. This includes avoiding seemingly-difficult tasks, blaming others for failure, or stressing over your progress in comparison to others. Here are some thoughts that should be red flags to you:
    • “I’m going to find a way to mess this up. I can’t do this.”
    • “It’s so easy for him because he had more resources growing up.”
    • “This economy is terrible! Interest rates are low, there aren’t any job openings… It’s no wonder I can’t save any money!”
  • Adjust your thoughts and habits. Once you get good at noticing your negative thoughts and habits, it’s time to replace them with growth-minded ones.

When You Notice Yourself… Try…
Avoiding challenging activities Embracing these challenges as learning experiences and opportunities to grow
Blaming others in difficult situations Focusing on what you do have control over and how you might use it to improve the situation
Comparing yourself to other people Looking for ways you can replicate that person’s success in your own life
Thinking “I can’t” Thinking “I’m going to try this and see what happens. If I fail, I’ve learned something that will help me be better next time. If I succeed, it will be a pleasant surprise”

Systems-Based Mindset

n the 2011 report, Stress in America: Our Health at Risk, the American Psychological Association found that participants cited “lack of willpower” as the number one reason for failing to follow through with healthy lifestyle choices.

Health and finances are similar in a lot of ways: we all know ways we could be healthier or better at managing our money. Many of us think that this is a matter of “fighting temptation” and “strengthening our resolve”.

While it is possible to strengthen your willpower, sometimes the best thing to do is to get out of your own way: rather than taking your chances with self-discipline, use goal-setting and automation to limit your dependence on willpower. I call this a systems-based mindset.

The first thing to do is define the results you want. Set SMART goals. SMART stands for Specific, Measurable, Achievable, Result-focused, and Time-bound. The SMART goals Wikipedia page has more information on what that means, exactly.

Figure out what you want to save for, and create a prioritized list. If any of the goals seem overwhelming, try breaking them into smaller chunks. For example, “pay off debt” may sound like a big, scary goal. Resolving to pay off your smallest student loan, or a single credit card is more manageable. Put into a SMART goal format, you may decide you want to pay off $5,400 in credit card debt in 1 year by making monthly $450 payments.

Once you’ve made goals, do your best to automate your saving. When you can’t see the money you’re contributing to your goal, you won’t be tempted to spend it. Simple makes this easy by automatically sending small amounts of money daily into a Goal. Other banks allow you to make automatic transfers to savings accounts. Whatever your method, make sure the money moves as close to payday as possible. Don’t put the obstacle of manual transfers in your way. Make it happen automatically and your willpower won’t be tested.

One day you’ll wake up and be amazed at how much you’ve managed to save just by taking yourself out of the savings equation.

Action Items: Developing a Systems Based Mindset


Realist Mindset

I have found myself at cash registers thinking, “This purchase is going to change my life.”

The imported Japanese notebook I bought along with a set of expensive pens was going to make me a great writer. The black leather ankle boots were going to make me a more stylish individual.

Unfortunately, buying these things is just that: buying a thing. You don’t suddenly possess the qualities they represent. Save yourself a lot of money and disappointment: do your best to disentangle the result you want from what you want to buy.

Often the way to get what we’re really searching for is hard and tedious. That’s why so few people are fashionable, good writers. It takes time and work to get to that place.

Even worse, when we try to buy our way to fulfillment, we’ve not only spent a lot of money that we can’t get back, but the purchase that was supposed to make everything better actually made us feel worse.

So how do we critically analyze our impulse purchases and embrace what I call a realist mindset?

If you notice that your desire to buy the item is the result of wanting to be a certain way, you may want to reconsider the purchase. There are probably cheaper—albeit more difficult—ways of getting there that will lead to more sustainable long-term results.

Maybe you discover that what you want is the instant gratification of buying a thing. That’s ok. There’s nothing wrong with an occasional affordable luxury—as long as it’s actually affordable.

Action Items: Developing a Realist Mindset

  • Try five WHYs. When you’re faced with an impulse purchase you want to buy RIGHT THIS SECOND, pause. Take a deep breath, take a couple moments to think about WHY you want that thing. Asking yourself WHY five times is a good rule of thumb for digging up what really motivates you.
  • Keep a purchase journal. In a purchase journal, you mark down how you feel about the thing you bought immediately after you bought it, and then a few weeks later (as you remember it). This isn’t supposed to foster a sense of buyer’s remorse. Instead, it helps clarify which types of things make you happy over longer periods of time. Shopping can be a rush, but how does that thing you bought make you feel in a month? If you forgot about it, or if you’re not using it and feeling guilty, recording that in your purchase journal will help Future You make better choices.

Abundance Mindset

It’s easy to find areas where our lives are lacking. Sometimes, it’s because we legitimately don’t have enough resources. In that case, tracking our spending and budgeting become extremely important.

But other times, that feeling of not having enough comes from looking at other people’s lives to define our own wealth and well-being. Someone’s always smarter, richer, and more attractive than we are. People we know buy nicer clothes and nicer cars. It can understandably make us feel inadequate.

When this happens, your knee-jerk reaction may be to catch up, to buy your way to equal footing. Instead, a great way to save money is by gently destroying your jealousy. When you feel the desire to keep up with the Joneses, don’t. Easier said than done, right?

But practicing the action items listed below will help you develop an abundance mindset. Masters of this mindset appreciate what you have, while still leaving room to strive towards their goals.

If after all this, the green-eyed monster is still gnawing at you, you may want to revisit your financial goals and see how you could be using your money differently to make yourself happy.

Action Items: Developing an Abundance Mindset

  • Examine your jealousy. What are you jealous about, really? Are you really jealous of your frenemy’s awesome hair and beautiful car, or are you feeling insecure about your own place in the world? Decoupling the jealousy from its object stops “buy the thing, solve the problem” thinking in its tracks. You can find other ways to gain the satisfaction you’re looking for, and they’re probably less expensive than buying a new car.
  • You do you. When you find yourself wanting to play catch-up with the people around you, look inward instead. Know what you want, what you like, and be uncompromising. Think about why you’ve made the choices you made, and the positive outcomes of those choices. You may find your jealousy slipping away.

Your Brain Helps You Save

When you’re crystal clear about what matters to you and what doesn’t, what you’re willing to spend money on and what you’re not, it becomes really hard to separate you from your money. You become a smarter consumer who spends discerningly and saves more.

So, let’s recap. When you adopt these four mindsets, you know to make goals and build systems to manage your finances. You understand your impulse spending and develop techniques to avoid placing too much importance on having the best and most stuff. Your money is a tool. You work too hard not to get the most out of it that you can. Go you!