How to change your mindset when your financial status improves

Family relationships are typically an influential factor in your money habits, experts say

You may face mental hurdles around money when your finances improve. Getty Images

Growing up without money affects your daily life in childhood, and it can have long-term effects into adulthood, even when you begin to have enough money to make ends meet.

When you move from experiencing poverty to maintaining financial stability, there can be new opportunities to set yourself and your family up for long-term security.

But there can also be challenges around changing your mindset and managing your emotions about money.

Here are some things to expect when your financial circumstances change.

How the experience of poverty can shape your money habits

When money is tight on a continual basis, hard decisions often have to be made, such as: “Am I going to pay my electricity bill or am I going to buy groceries?”

“There’s no right answer, and either way there’s going to be a lack of safety,” says Saundra Davis, a money coach and director of Sage Financial Solutions.

Ms Davis says that lack of safety – in other words, not being able to fulfil all your needs and living in fear that you’ll lose your income, benefits or housing – “can create what is widely termed as ‘financial trauma’, which is when an experience with money, or a message passed down from a previous generation, causes us to behave in response to the trauma rather than with thoughtful consideration”.

Family relationships are typically an influential factor in your financial habits. Ms Davis says that thought patterns about money can come from lived experience, but they also come from information passed down through relatives.

Additional obstacles might affect you or might have affected your family in the past, such as gender discrimination, mental health issues, or disabilities that have hindered earning enough money to cover your household's expenses.

Assuming you’ve overcome these challenges, there can still be mental hurdles to get over once you’re in situation improves.

But there are steps you can take to move towards your financial goals.

How to change your money mindset and management

Veniecia Robinson, a therapist and life coach, has personal experience of shifting her money mindset.

She grew up in a household that faced financial challenges, and she also became a mother at a young age.

She recalls paying some service bills only once she had received notice that they would be shut off.

Once she started studying to become an accountant, she decided to change those habits and teach her children to understand credit, saving money and how to manage their spending.

An early step she took towards financial stability was to start keeping tabs on her spending, which she recommends to anyone working to improve their financial situation.

“It can be terrifying to start tracking your money because once you know, you have to do something about it,” says Ms Robinson.

When she had a handle on her income and expenses, she was able to prioritise her financial goals and come up with a spending plan.

That meant paying her bills first, then allocating the remaining money this way: setting aside some for discretionary spending; saving some for a rainy day fund; and investing a percentage towards her future.

If you aren’t sure where to start, in addition to tracking your spending contact a fiduciary financial planner.

Fiduciary financial planners have a legal duty to act in your best interest, which means they won’t push you to buy a financial product or service. These financial planners can be found with an online search, or through referrals in your community.

You can also reach out to a financial therapist when thoughts about money are getting in the way of decision-making or if you’re feeling stressed about money.

Ms Davis suggests that people increase their knowledge by reading financial resources and thinking about their emotions around money.

Financial education can be found in many sources, including books, classes and online.

If family is a concern, a meeting can be a helpful step to set expectations around money and to discuss how the whole family could benefit from a financial shift.

This might entail discussions around how money can be used to provide long-term security versus what it can do in the short term.

“You should give thought to the impact of financial decisions on your whole life,” says Ms Davis.

“Recognise that resources can change lives for the better. You should be thinking, ‘What do I want life to look like later?’”