Each year, millions of people set New Year’s resolutions. There’s excitement around the promise of potential that a fresh start in January brings.
But according to a study conducted by the University of Scranton, only 8 percent of people are able to stick to their New Year’s resolutions. Put another way, 92 percent of people fail to achieve their goals for the New Year.
Whether it is sticking to a healthier diet, better workout routine, wiser financial habits, or even less time spent watching television, we all know people who have fallen off the resolution bandwagon.
So why does this happen? How is it that so many people from varied walks of life are unable to keep their own promise to themselves for a better year?
It all comes down to mindset. I know it might not sound like a major differentiator, but let’s take a look at the dictionary definitions:
Resolution: “A firm decision to do or not to do something.”
Mindset: “The established set of attitudes held by someone.”
The unfortunate truth is that “resolving” to do something entails some degree of emotional friction. If you are trying to lose weight, for example, resolving to eat less and exercise more can result in frustration, impatience, and discouragement every time there is a setback. On the other hand, a new mindset will change the way you approach the challenges before you. Instead of approaching goals with fear and the what-ifs of failure, you will enter into situations with a positive outlook, excited about the opportunity to learn, grow, and ultimately succeed!
So, let’s get specific: what mindset do you need to achieve your financial goals in the New Year?
Affirmations are the foundation of a healthy, effective mindset. Every journey has challenges that can create self-doubt and self-sabotage. Without self-affirmation, the “resolve” to achieve any goal, especially financial goals, can quickly crumble.
[article post=”1″]Chances are that you’ve already told yourself affirmations without realizing it. For example, thoughts like “I believe in my ability to succeed” or “I have what it takes” are both affirmations. These statements, though they may feel like simple thoughts, shift your focus away from perceived failures and challenges. Instead, your mind focuses on your strengths that will help you overcome the challenges at hand. This is the power of self-affirmation!
However, positive thinking and self-affirmation isn’t an end-all-be-all solution.
After all, if self-affirmation is all it takes for financial success, then wouldn’t we all be millionaires?
Rather, affirmation is the first building block of a healthy mindset that will help you stay focused on your financial goals.
Ready to take on this new mindset? Ronald Alexander, PhD. is a specialist in somatic psychotherapy and integrative mind-body therapy. He published an article in Psychology Today outlining the five steps to make affirmations work for you. These steps include:
While affirmations are not a definitive solution, Alexander says that this process will help you accept what is so that you can find the power to move towards what is possible. Try this and see if you are better prepared to meet your financial goals!
Just as there is a difference between a resolution and a mindset, there is also a distinction between being frugal and being cheap.
Individuals who are cheap are driven by saving money regardless of the quality of the item they are purchasing. In other words, the cheap mindset focuses on spending less at all costs. Frugality, on the other hand, maximizes total value and is willing to pay a little bit extra for better value.
[article post=”2″]Here’s a real-world example: a cheap person will only consider the price, but a frugal person will consider the price while also looking at reviews, durability, reliability, and overall quality of a product.
At the end of the day, there is no scientific way to truly quantify the difference between a cheap person and a frugal person. Perhaps, the best distinction comes from a mindset that understands the value and not just the cost. Remember, just because something is cheaper than an alternative, it doesn’t mean that it’s still cheaper when all long-term costs (maintenance repairs, replacements, or unforeseen issues) are included.
So, the next time you find yourself making a purchase, ask yourself: Am I only looking at the monetary cost of this purchase? Or am I also taking the value of this item/service into consideration?
A frugal mindset will help you save money in the long run so that you can achieve your financial goals!
A scarcity mindset is what keeps most people from achieving their goals.
The belief that there will never be enough results in feelings of fear, stress, and anxiety. How can anyone make objective financial decisions with those emotions clouding their judgment? Investing, for example, has an inherent amount of risk, but someone with a scarcity mindset is likely to be completely risk-averse.
Someone with a scarcity mindset only sees the problems, but someone with an abundance mindset recognizes the possibilities.
So… how do you get an abundance mindset? Train your mind to recognize areas of opportunity in every situation. The abundance mindset allows you to see more options, more choices, and more resources. Even if you “fail” at something, that is an opportunity to learn a lesson so that you don’t make the same mistake twice.
Here are a few examples differentiating the scarcity vs. abundance mindset:
An abundance mindset can help propel you forward just as much as a scarcity mindset holds you back.
If you find yourself struggling with the scarcity mindset, I encourage you to make sure you have a fully-funded emergency fund. An emergency fund should help alleviate worries of unexpected layoffs, economic downturn, or random expenses (i.e. car repair or new roof). Remember, the scarcity mindset is rooted in fear. By creating a safety net for yourself, you can create the foundation for a switch towards an abundance mindset.
Personally, I recommend using the CIT Savings Builder. Savers can earn up to 0.45% APY, which is much higher than most banks. Because CIT Bank is an FDIC insured online bank, this opportunity is available to everyone, including both high balance and monthly savers.
To reiterate, having a strong savings account will help you shift your mindset from scarcity to abundance, especially once you fully realize that you have a safety net for worst-case scenarios.
Like anything else, embracing an abundance mindset takes practice. The next time you feel fear, stress, and anxiety, ask yourself whether you are approaching the situation with a scarcity vs. abundance mindset. This is not to say that an abundance mindset will remove all fear and anxiety, but it will help you find the excitement in the potential opportunities!
How can you ever be thankful in the future if you are not thankful for what you have now?
The slippery slope of money is to want more and more and more… and more!
Don’t get me wrong: we all want to be financially stable and independent! But gratitude is what separates greed from security.
[article post=”3″]This isn’t to say that you shouldn’t want to improve your current situation. For so many people, this has been an incredibly difficult year, especially financially. This isn’t to diminish any of those struggles. Yet no matter where we are in life and matter where we are going, we can still practice gratitude. Here are just a few of the unexpected benefits of this mindset:
Patience – which results in wiser financial decisions.
Generosity – which promotes a healthier relationship with money.
Contentment – which separates the greedy from the frugal.
Of course, practicing gratitude is easier said than done, especially when things do not appear to be going your way. Here are a few ways to make gratitude a part of your 2021 mindset:
I hope these tips help you make the most of 2021. From my family to yours: Happy New Year!
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Thank you so much for the tips. If I implement as I REALLY NEED to.do I know I will bv e in much better shape financially. Though I pretty much know these things already you putting in specific details and in outline is so helpful to me. I appreciate you taking the time to do this and all the hard work you put in to it.
HAPPY NEW YEAR TO YOU AND YOUR FAMIL.
GRACIOUSLY YOURS
TINA MCELRATH
Thank you so much for the tips. I just started following you in October 2020 and has enjoyed every moment in my journey. You have brought a new excitement to budgeting which I want to share with all my friends. Thank you from my home to yours.
Very well written! Thanks for the great tips Miko!
Amen! And “Thank You” for a wonderful article that both my husband and I needed to here. Without you and you beautiful mind, we would not be on our financial journey and smelling the glowers along the way.
Wow, this one really spoke to me. Thank you for being so thought provoking yet speaking in a way that isn’t degrading or negative. I appreciate you and all that you are doing on your mission to help others.
This has absolutely helped me! I am currently on a journey to be intentional with how I live my life and my finances being one of those areas. I have been repeating affirmations daily to help me build confidence in there being more than enough good things for me as well as other ppl. As I am getting ready to map out my expenses and budget, this helped ground me. This was very motivating and I am saving this to share with friends. Thank you!