Henry Ford is often credited with the proverb, “Whether you think you can or think you can’t, you’re right.” But the principle behind the quote—that one’s mindset is perhaps the most important indicator of both success and failure—has been around for centuries.
This principle holds true in all important areas of life, and nowhere more so than where money and finance are concerned. As financial advisors, we see it all the time: your “money mindset” is the dominant factor in how you approach the financial aspects of your life. From saving to spending, from confident investing to fear-driven reactions to market movements, each person’s financial personality and approach to the psychological dimensions of finance is different. This means that understanding your money mindset is perhaps the most important key to building and maintaining a successful financial strategy.
The beginning of each new year is typically the time when many of us take stock: of our goals and aspirations, our relationships, our health, and all the other important dimensions of our lives. So, it makes sense, at this time of year, to examine our financial goals and how our money mindset is either helping us achieve or holding us back from the accomplishments we desire.
Looking in the Mirror
Understanding how your money mindset contributes or hinders your financial progress begins with gaining basic understanding of the dimensions of how your personality engages with your financial decisions. Let’s take a look at a few of the parameters that can define your “money personality.”
1. Saver vs. spender. Most of us tend toward one end or another of this spectrum. Savers get a real, discernible endorphin “boost” when they make a deposit to an account or make the final payment on a debt; spenders get that same jolt from acquiring a desired item or even providing such an item for someone else.
2. Scarcity vs. abundance. A great example of a scarcity mindset can be found by looking at many of those from the “greatest generation” who came of age during the Great Depression. Many of these folks were/are driven to stockpile food, savings, or even mundane items like rubber bands. Why? Because their lives were forever marked by a time when even the necessities of life were hard to come by. Those with an “abundance” mindset, however, are typically confident that “things will work out,” and that they will be able to find what they need to continue their desired lifestyles.
3. Goal-driven vs. passive. If you are a habitual list-maker, you may be a goal-oriented person. Similarly, those with a goal-seeking orientation tend to keep written or visual reminders of something they want to achieve or have. Their motto might be, “If you can believe it, you can achieve it.” Conversely, passive persons tend more toward a “live for today” or “see-what-happens” approach. Their motto might be, “Life is a journey, not a destination.”
There are other continuums that could be listed, but these may serve to make the point. Most of these attitudes are innate, shaped by our experiences and beliefs and differing according to our upbringing and learning. At the same time, we should remember that in each case, both “ends” of the scale are legitimate ways of being; there is no “right” or “wrong” money personality. The important thing is to achieve self-awareness so that you can adopt constructive approaches to creating the financial strategy that best fits your psychological orientation.
What Behaviors Contribute to a Positive Money Mindset?
As we set our goals and resolutions for the new year, it can be helpful to understand which behaviors we should cultivate to increase our chances of success. Here are some suggestions.
1. Spend less than you earn. Especially for those with a “spend” orientation, consciously setting a goal to maintain spending within the boundaries of monthly income is an important first step. As many Americans know all too well, spending that exceeds income typically leads to excessive dependence on credit cards and other forms of “bad” debt, which is the #1 symptom of poor financial health. Credit card debt in the US reached the unprecedented mark of $1.17 trillion in the first quarter of 2025.
2. Financial literacy. Next, it’s vital for those who want to acquire a more positive relationship with money and finance to educate themselves. One of the most common attributes that sets those who are financially secure apart from those who aren’t is a good working knowledge of financial basics such as budgeting, the mechanics of saving and investing, the importance of accounting for inflation, the time value of money, and the types of debt to avoid. This is where a relationship with a professional, fiduciary financial advisor can be very beneficial. By serving as your “money coach,” a qualified financial advisor can help you acquire the knowledge and behaviors that can help you get better control over your financial life.
3. Put compounding to work for you. The number-one financial advantage that younger persons have is time. With years ahead of them, they have the ability to position their savings and investments to grow and compound over time, leveraging the “magic” of compounding to create long-term wealth. When harnessed alongside saving and investing goals, compounding is perhaps the most powerful wealth creation tool available to most Americans. And for those with access to a workplace-sponsored retirement plan such as a 401(k) or 403(b), the added convenience of payroll-deducted savings and tax-advantaged growth can provide even more leverage.
Enter the New Year with More Confidence
The beginning of the year is a perfect time to re-examine your “money personality” and set some important goals. Do you need to make a stronger commitment to saving, perhaps building an emergency fund to insulate yourself from the need to use a credit card? Is it time for you to learn more about the financial markets and how to let them work for you (instead of being a source of fear)? Is this the year when you will finally get your debt under control? Is it time to take another look at your 401(k) to make sure your investments are doing all they can for your future?
Whatever your need may be, your JFS Wealth advisor is ready to provide the guidance, information, research, and knowledge you need. Let us help you chart a course for a more financially rewarding New Year.
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