When I first realized I had to start taking my finances more seriously, I started by creating a zero-based budget. A zero-based budget is one where, at the beginning of every month, I take my monthly income and allocate every single dollar to a budget category (groceries, cell phone bill, eating out, savings, debt payments, etc.) The first thing I noticed was that my salary was not enough to achieve my financial goals in the timeline I wanted to. At the time I was making $50K/yr, which after taxes and deductions amounted to a little over $3K/mo. So I decided to take on some side jobs (pet-sitting, dog walking, and cleaning) to boost my monthly income. However, most of my financial progress came from cutting down on my spending- rarely eating out, eating oatmeal twice a day (with free nuts from the office,) and not having a car for 8 months in rural NH.
I knew something was wrong. I knew I did not work my butt off in college to live like a pauper making $50K. I stepped my game up with the hopes of getting a raise at my job, but I was not confident enough in my skills to ask for what I wanted. I felt hopeless. I thought going to graduate school would be the only way to increase my income.
Then I heard an interview with Emily Williams on Farnoosh Torabi’s So Money podcast. Emily Williams had a quarter-life crisis and began a coaching business that grew from $400/month to grossing $1M in 18 months. She was the first person I heard talk about an Abundance Mindset towards money. That was when my whole outlook on money changed.
What is an Abundance Mindset?
To explain what an Abundance Mindset is, I have to talk about its opposite: a scarcity mindset. A scarcity mindset is the idea that money is scarce and limited in the world. Most of us begin with a scarcity mindset. For me, I was focused on cutting back on spending, because my scarcity mindset told me, “no one was going to pay me more money.” I knew I wanted to start a business, but my scarcity mindset told me, “no one will pay me for my services.”
An Abundance Mindset is the idea that money is flowing and abundant in the world. A (good) salesperson is a great example. They have to have the mindset that people and businesses 1) have money and 2) that they are happy to spend it on things that add value in their life. Another example is an employee who asks for a raise and gets it. They have to believe that 1) the company has money and 2) is willing to spend it on retaining top talent.
Once I adopted an Abundance Mindset, I was able to start a more lucrative side-hustle: marketing consulting. I was working as a marketing manager for a small tech company. Even though I was a recent college grad, my Abundance Mindset allowed me to believe that I had value to offer companies and entrepreneurs. I set my rate: $50/hr. Now working a typical 40 hour week at $50/hr equates to $96,000/yr. Just by changing my money mindset from scarcity to abundance, I doubled the amount of value that I believed I was offering the world.
Soon after I was warned that I was going to be laid off from my job, and I noticed that my scarcity mindset kicked back in. It questioned, “who was going to hire me that will pay as much as I making?” However, because of the tools that I explain below, I was able to reactivate my Abundance Mindest. I ended up in the position of choosing between two job offers and negotiated a 20% increase from the initial offer from the company I chose.
So how can I get an Abundance Mindset?
- Optimism: I had to be an optimist before I could have an Abundance Mindset. Stay away from negative people. The news and Facebook would like to tell you that we are in a bubble that is about to burst and the nation is doomed. That is why I do not watch or read the news and limit my Facebook use to visiting groups that I have created or am a part of.
- Self-esteem: While I could believe that money was flowing and abundant, I had to believe that I was worthy of receiving that money. What worked for me was listening to positive affirmations, socializing only with positive and supportive people, and taking an honest inventory of my character assets. If you don’t know what your assets are, ask a friend, sibling, or loved one.
- Being generous: Whenever I go out to eat, get my nails done, or see a tip jar, I always tip 20% or more. Of course, I budget for this, but the point is, whenever I give more than I have to, it reminds me that there is an abundance of money in this world. Giving exercises my abundance muscle.
- Training your inner voice: Even though I believe money is abundant, I am still on a budget and have financial goals I have yet to meet. However, instead of saying, “I can’t afford this,” I say, “I can’t afford this yet.” My car is a hoop-dee, but I keep reminding myself “this is temporary.” I don’t allow my present situation to close the door on my future abundance.
- Gratitude: I make an intentional effort to acknowledge the abundance I already have in my life, whether it be friends, family, or material things.
So there it is- how I switched my money mindset from scarcity to abundance. I would love to hear your thoughts on this. Do you have a scarcity or abundance mindset? How has your scarcity mindset been holding you back? What do you hope to achieve as a result of your money mindset? As always, you can always email me at firstname.lastname@example.org or tweet @maddymoneycash. I will always respond. Also, signup for my weekly newsletter, where once a week I will send you helpful tips, articles, and insights to help you live your best financial life. I also created a Facebook page, for the non-Twitter readers out there.