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Are your finances at the mercy of a bad ‘money mindset’? Good news – it’s possible to change your thinking and set up a lifetime of rewarding habits. Our experts tell you how.
Ever wondered why you keep buying things you don’t need with money you don’t have? Why you can’t seem to save even though you’re earning a decent wage? Or why you’ve just never got around to investing, despite your rational brain saying it’s the sensible thing to do?
“It’s very simple how it comes into being,” says Stone, founder of Feel Good Financial Planning.
“Although it’s multi-layered, it’s the family you’re born into [who] give you your ‘normal’ of what money is.”
“And the potential for that is that you either agree and conform with it – or you disagree with it if it’s painful. In that case, you may seek to do the opposite.”
“If your parents were constantly worried about money,” Stone adds, “the chances are they will instil that fear in you. The alternative is you become the exact reverse – that is, a spendthrift, as you rebel against what you found to be a stifling approach.”
In Slade’s view, when it comes to money mindsets there are three main world views: groupies, authoritarians and purists.
“From a money perspective, looking at these world views is really interesting,” the founder of decision-making firm Decida says.
As the names suggest, groupies like getting on with the group and believe they are stronger together. Authoritarians like to take the lead and don’t see control as an issue, and purists are about ideals and what they believe is the right thing to do.
Slade explains how that looks in practice. A groupie will want to spend on something that will make them look good to the group, an authoritarian will look at the data and find the best bang for their buck, while a puritan will spend money on, or invest in, something that matches their ideals.
This ‘world view’ approach is more likely to predict how someone will act in the future when it comes to financial decisions, and looks at an individual’s motivations for the particular decisions they make.
This document has been prepared by IOOF Investment Management Limited (IIML) ABN 53 006 695 021, AFS Licence No. 230524 as Trustee of the IOOF Portfolio Service Superannuation Fund ABN 70 815 369 818 (Fund). IOOF Employer Super is a Division of the Fund. IIML is part of the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Please obtain and consider the PDS before making any decision about whether to acquire a financial product. Information is current at the date of issue and may change.