By Finbar Garcia LUTCF, FSS, MFA
Happy New Year to all. Money mindset operates with a positive mind and approach and has the greatest impact on your ability to build wealth. This mindset is the beliefs that you hold about money that can affect your financial decisions and behaviours, from how you earn, spend, save and manage it. Every generation has a different mindset about money. You would learn some of these as you read along.
So, where is your mindset after spending for Christmas 2024? Did you stick with your budget, if any, or do you have regrets? The past is just that…the past. Let’s focus on moving forward.
There is a connection between your mindset and how you build financial success or even achieve your goals. A positive mindset rooted in abundance helps you see challenges as opportunities for growth rather than obstacles to your goals. Let’s look at some of the ways to build a positive money mindset.
Identify and re-frame limiting beliefs: We all carry financial baggage and when you challenge any negative thoughts you may have about money or your ability to build wealth, pause and take time to re-frame those thoughts into positive ones. If you believe you will never be financially comfortable, take time to turn that into: ‘I have a plan to build my wealth and I am on track.’
Set clear goals: Divide these into short-, medium- and long-term goals that you would like to work on to give your money direction and purpose. Check your progress by using the SMART acronym: Specific, Measurable, Achievable, Realistic, Time-bound. Hold yourself accountable to achieving those goals.
Build your financial literacy skills: Invest some time in learning these skills and how the markets operate. This will put you in a better position and will deepen your saving, investing and money management. More wealth is built through excellent money management than high incomes, that’s how powerful knowledge can be. It will even boost your confidence and reduce fear.
Practise gratitude and abundant thinking: Always focus on what you currently have, rather than what you may be lacking. Be grateful for what you have and focus on the positive. Cultivate gratitude for the financial opportunities available to you. This will help you focus on abundance rather than scarcity and will open opportunities for financial growth.
Surround yourself with successful mindset people: By doing this, you will build relationships with people who have the same mindset. These positive influences will help you sustain your money mindset, especially when being challenged. The bottom line is that a money mindset is a powerful tool that can make or break your financial future.
So, how do these affect the different generations that we are all living among? There is really no significant difference, except the attitudes and behaviours towards a financially sound future. At a quick glance, I will highlight some of these.
Baby Boomers Generation (1946-1964): They are hardworking and work-centric, enjoy long weekends, and driven by prestige and professional accomplishments. They stay with companies longer than any other generation, and spend the most out of all generations, mainly on housing, travel and healthcare. They at times adopt a ‘buy now, pay later’ mentality. Their main concern is fraud, as they are more vulnerable than other generations.
Generation X (Gen X 1965-1980): This generation likes working towards clear goals and objectives. They value autonomy and education and often seek job-related training. They want a clear divide between work and family life. They spend mostly on consumer goods and major monetary choices, like children’s education. They typically earn more money than other generations. They also juggle more debt due to big ticket purchases, such as cars and homes. They carry the heaviest debt between age 44–48.
Millennial (1981-1996): This group is hardworking, independent and ambitious. They also want work-life balance and to continue learning. They are always looking for new ways to be efficient. They love collaboration and praise for their work. They are price-conscious, but they will pay more for ease and quality. They have different life circumstances that inform what they choose to spend money on, like apparel, travel, personal care and online retail. They tend to carry plenty late fees and credit card debts due to naive and expensive credit card spending behaviour. Their savings are at times on track, but not enough focus is placed on this, due to spending habits. They will be behind on their retirement savings and emergency funds.
Generation Z (Gen Z 1997-2009): This generation is highly entrepreneurial and enjoys freelance work. They care the most about work-life balance. They are driven by personal beliefs and values. They value economic security, transparency and communication from employers. They spend on eating out, housing, mobile devices, social media recommendations and brand loyalty. They are now learning to build credit and many are good at paying credit cards. They have a pragmatic approach to saving money and are saving more from early. They lack education in retirement planning, investments and home buying, even though they are saving now. They prefer digital, personalised online banking and automatic savings, like standing orders towards savings accounts. They tend to use online apps to conduct any money matter.
As you plan for 2025, this should give you an insight into how to navigate any obstacles or challenges you may face, even if it’s not for you, but for another generation.
“Saving $20 per day is $7300 per year. Small habits are underestimated. To achieve greatness, you must let go of old habits that could hold back your progress.”
Call me for more information on planning your financial future. Send your questions to myfinancialadvisor2020@gmail.com or call 620-1185.