Skip to Content
Tally logo

How Your Money Mindset Can Make or Break Your Financial Success

With the right money mindset, financial success may become easier.

Justin Cupler

Contributing Writer at Tally

September 9, 2021

Managing your finances is part execution and part mindset. Without the right money mindset, you may find yourself heading down a path of frustration and negativity. However, with a positive money mindset, many of the challenges you encounter become opportunities to improve yourself and your money management skills. 

Below, we'll cover the two main money mindsets, what they mean, where they come from and how to get in the right money mindset for financial success

What is a money mindset?

A money mindset is your overarching feeling about money and finances. It's usually rooted in your subconscious, and you often have no idea you're living your life guided by this ingrained idea of money. 

A money mindset can take two key forms: 

  • Positive money mindset: This is generally a healthy overall outlook on finances. You feel satisfied and as if you have enough money, whether it's a few dollars to rub together or a few hundred thousand dollars in investments. This is also sometimes called an “abundance mindset.” 

  • Negative money mindset: Also referred to as a “scarcity mindset,” this money mindset means you often feel like you’re scrounging for coins to make ends meet and rarely feel satisfied with the money you earn, resulting in more financial anxiety than you should feel.

Where does your money mindset come from?

Your money mindset can come from a wide range of places, but it often stems from how you saw money as a child. 

If you were raised in a home that was constantly and openly struggling financially, you likely gained a scarcity mindset. On the flip side, if you were raised in a home where finances were seen positively (not necessarily that the household was wealthy) and not the key driver in your family’s life, you likely have an abundance mindset. 

However, life experience can also play a role. For example, if your early adult years were riddled with financial hardship, you may take on a scarcity mindset, even if your finances have since improved. On the other hand, if you never struggled financially early on, you may carry an abundance mindset, even when things get tight. You simply adjust and move forward.

How can a negative money mindset hamper you financially?

While some people may look at a negative money mindset and see a frugal person who's not wasting cash, this isn't always the case. Having a scarcity mindset can lead to some debilitating traits when it comes to managing your finances. 

Financial fear

It’s important to respect your finances, but fearing them is a whole different issue. When you fear your finances, you likely have no desire to budget, as you fear you'll discover something bad about them. For example, you could find out you spend significantly more than you earn, leaving you with massive shortages. 

This head-in-the-sand approach can lead you toward a poor financial situation.

Financial defeat

Feeling defeated by personal finances is another key trait to a person with a negative money mindset. Even when you try to save money or give budgeting and setting financial goals a crack, you feel overwhelmed and give up. 

This can cause a cycle of not following through with financial planning, like retirement savings, becoming debt-free or building an emergency fund

Financial procrastination

The two above traits lead to the final trait of a person with a negative money mindset: procrastination. Because you fear finances and feel defeated when attempting to reach financial stability or make a firm financial decision, you tend to put it off. 

You may tell yourself, "I'll work on these money goals when I get my promotion or raise," instead of working on them now so they're in good shape when you get promoted. 


How can a positive money mindset improve your financial success?

When you have a positive money mindset — an abundance mindset — it can breed success. Are you a complete financial success? Not necessarily, but you move forward with a positive outlook. 

Here are some key traits of a healthy money mindset and how they help you with money management. 

You use challenges as growth opportunities

Even people with positive money beliefs have times where they struggle with finances or hit a roadblock. A person with a positive money mindset will use that roadblock as an opportunity to grow and better their financial understanding. 

You see a solution to all financial issues

When a tough financial situation strikes, a person with a positive money mindset doesn't panic. Instead, they proactively seek the solution to the problem. Even if the solution isn't obvious at first, it's their mission to fix it. 

If they can't find the solution on their own, people with a positive belief system in money will seek outside help. Whether it's from a friend, family member, financial advisor or financial therapist, they don't fear bringing in an outsider's opinion and guidance. 

You're satisfied with small victories

A person with a positive money mindset also realizes working toward a secure financial future is a long term thing, and even the smallest victory is a positive step. 

Maybe they have a goal of saving $1 million for retirement within 20 years, but they only managed to tuck away $100 in their savings account this month. A person with a positive money mindset realizes that $100 will still help them build wealth and gets them a step closer to financial freedom — instead of getting upset for missing their monthly deposit goal. 

How can you develop a positive money mindset?

While a negative money mindset may be ingrained from a young age, you can break the cycle of negativity and develop a positive mindset. Changing your money mindset will improve your financial life, breed healthy money habits and reduce stress. 

Here's how to shift your scarcity mindset to an abundance mindset. 

Focus on what you have

The first step toward developing a positive money mindset is focusing on what you have instead of what you lack. Go through your day and write down all the wonderful things you have in your life that some people may be without, including a beautiful home, great children, the ability to cook, plenty of friends and more. 

These are just a few of the things you may have that others lack, and noticing these things are there can help you realize wealth goes beyond just money. Having these key items in life can make you emotionally wealthy and leave you feeling satisfied, even when the monetary wealth isn’t where you want it to be. 

Turn comparison into inspiration

A common thread for scarcity-mindset individuals is to look at what everyone else has and compare it to what they have. This is the fast track to feeling down about your finances and wondering how that person can afford this item, but you can't. 

Instead of comparing yourself to others, again, focus on what you have instead of what everyone else has, and you'll find far more satisfaction in life. 

No one is perfect, though, and comparison is sometimes unavoidable. Remain mindful of this and shift your focus if you find yourself making a comparison. Instead of wondering how your friend paid off their student loans, use this as inspiration to do the same. If they can do it, you can do it too. 

Give yourself positive reinforcement

Even with a positive money mindset, you're still going to run into personal money issues — it's just a part of life. It's important to reinforce your new positive money mindset with positive affirmations through these tough situations.  

Positive money affirmations like "I can make this work," "My life is filled with wealth," "I can overcome this" or "Money is not a problem" can help you get through the tough times. 

You can also create a money mantra, print it out and hang it near where you do your monthly budgeting. Anytime you're feeling a struggle coming on or a shift in your money mindset, you can read that mantra aloud. 

Positive money mindset: Your guiding light to financial success

With a positive money mindset — also known as an abundance mindset — you see the positive in every financial situation. Whether it's a new lesson learned from a financial mishap or a windfall from a wise financial move, it's helpful. 

While this won't directly result in financial success, a positive money mindset is a guiding light to success.

If you're struggling with a negative money mindset, your negativity toward money could be holding you back without you even knowing it. Fortunately, there are quick ways to flip that negative mindset into a positive one and get on the right path.  

If credit card debt is impacting your money mindset, Tally’s† credit card repayment app can help. Our app rolls all your credit cards into one monthly payment, streamlining your monthly bills. Plus, it includes a lower-interest line of credit you can use to pay off your higher-interest credit cards quicker.

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.