Money matters. I wish that I knew tall when I was an investor, a business owner and a money educator, understand it better compound international budget investment to recover from debt. No one explained to me that your money to align us at work is about normalizing the conversation. I Welcome to the Money Mechanics Podcast, episode number five. I think five. Episode Number five, exciting stuff. So in this episode, we are going to be talking about money mindset and money mindset types. Now, for those of you that haven't got a copy of the book yet, this is what it looks like. So over on Amazon, those of you are listening on audio, I'm showing you a copy of my book right now. It's called Money Mechanics, and you can get it on Amazon, or if you DM me, I can send you a link to get it directly, and I'll sign it. If you DM me, one of the chapters at the beginning of the book, we talk a lot about money mindset, because your current financial situation is a compounded result of all of the financial decisions that you have made up to this point. If you're watching it on YouTube, hello, hello. If you're listening in on audio, hello to you. This is the Money Mechanics podcast, and I'm Sarah Poynton. I'm an investor, business owner and money educator. In this episode, we're going to dig into why your current situation with your money is how it is. I'm going to talk to you about some of the things you can do to fix that your current financial situation is a compounded result of the decisions you've made up to this point. Savage. I know, right. I get it. It feels uncomfortable when you hear that sentence, but it's true. We go through our life not really thinking about money enough, and like we've said in all the episodes up to this point, money matters to us all. It impacts every aspect of our lives. But we're not really thinking about why we behave with money the way that we do do we overspend? Do we Hoard? Do we not take risk? Do we take too much risk? All of those things are actually ingrained in us as a kid. So you will have heard sayings like, money's the root of all evil. Money doesn't grow on trees. Money won't make you happy. There's not enough money to go around money. You know, it should be saved for a rainy day. There's all this bullshit, actually, that's surrounded by money. And I don't know about you, but I grew up with that energy of money and the way that people around me felt about money. I was listening to it. I was hearing it. I didn't really realize that it was informing my financial literacy. I didn't understand that. It was carving out my mindset and my emotions and my feelings towards how I would treat money as an adult, what we are and what we learn and what we are witness to as a kid is what becomes the adult, right? Is how we show up in the world as an adult. Not many of you will have heard sayings like, if you want to be rich, you just need to serve more people. Robert Kiyosaki said that, or what Dave Ramsey said is that you must gain control of your finances, or the lack of your money will control you forever. Robert Kiyosaki and Dave Ramsey are people who have an abundant amount of money, first of all, but they also have abundant mindsets towards money, and, you know, they look at money in a very different way to what the most of us will do for most of you, and I know for me, certainly, before I started really learning about this, like I've spent a decade educating myself about this stuff, I didn't realize that there were different types of mindset. I didn't realize that the, you know, the way we see money actually comes from certain things that have happened in our lives. Now, I've written about this in chapter four of the book, and I'm actually going to use the book during this episode to just help me to explain this a bit more detail to you, because it's very detailed in here, and I just won't remember all of it. What we know for sure is that people with a lot of money, people that grow up in households where there is a lot of money. People who have got an abundant amount of cash think differently about money. People who have not had a lot of money growing up, people whose parents, grandparents, you know, historically, haven't had a lot of money, think a certain way, and people that have got loads of money think a different way when we know that to be sure, the way we approach it, the way we approach our decisions, our behaviors, our choices. Well, if we know why we're doing it, we have the ability to fix it right. So there's 10 different mindset types when it comes to money, and the first one is the scarcity money mindset. Have you ever felt like you are walking on eggshells when it comes to your money. That's what the scarcity money mindset does to us. It's going to constantly remind us that money doesn't grow on trees. Scarcity we the way we're approaching it is we feel like there's not enough what we know for sure, and again, I did a lot of research when I wrote the book over. 16 million people in the UK have less than 100 pound in savings. What we know is that if we constantly are going through life with less than 100 pounds in the bank, we're going to continue to feel like there's not enough, because in reality, there isn't. But what if we approached in a different way? What if we thought about money in a different way. When you approach money with a scarcity mindset, what it does is it leads to quite unhelpful financial behaviors. It could lead to hoarding, actually, when you've got money sitting in the bank and you're protecting it at all costs, well, it's reducing in value over time because of inflation. You know, putting money in a bank account and leaving it sitting there and doing nothing with it is you're guaranteed to lose value because of inflation. People with different mindsets might invest some and keep some, which means that you're going to potentially open yourself up for opportunity. If you're hoarding your money, or you're overspending it, or you're not taking any sort of risk at all, that scarcity mindset approach to it, then the chances are your financial situation is going to just remain in that place. You know, there is good news when it comes to overcoming this. There is ways you can overcome it. And actually, all the episodes we've looked at up to this point, you've heard me mention to you that one of the most important things this is about looking at your money. If you're someone who's got a scarcity mindset, you probably aren't looking at your money very often you're just tapping your card until it stops. You have to start looking at it. When you start looking at it and you start to feel what's happening. You can track what's happening. You can see it, your approach to it, your attitude to it, your actual emotion, the way you feel about your money, is going to change. So you can fix it if you've got a scarcity mindset. But if you've got a scarcity mindset, because you've heard those things growing up, the likelihood is that you're making decisions in your finances and you're not even aware of it. Find out whether or not you're somebody who's got a scarcity mindset. Now the second mindset we're going to talk about is the abundance mindset, which is basically the opposite of a scarcity mindset. Usually people that have got an abundant mindset, these are people who've grown up where actually there is enough money, right? You know, you might think to yourself, Yeah, lucky ducks, yeah. They've got loads of money. They've had loads of cash all their life. Happy Days, silver spoon in their mouths. They've got security, they've got freedom, all these things. But when you've got an abundance mindset, because you've been told your whole life growing up, that there's plenty, well, then you become an adult and you continue to spend like, there's plenty, but maybe you're not earning like this plenty. That becomes a problem, because you can't out earn a spending problem. So if you've got an abundance mindset and you're just continually approaching your financial decisions in a place of like, Oh, it's just never ending. It'd be fine. It'll be fine, but you're not keeping an eye on anything. You're not tracking, anything you're not really paying attention. The risk is actually you overspend, and that becomes a problem that creates debt. And for a lot of you listening to this, that may be the reasons why you're where you are. Think back to how you grew up, the messages, the the environment that you were in, the way that people around you behaved around money, and you'll start to really realize which one of these mindsets that you are okay. The next mindset we're going to talk about is the entitled mindset. So an entitled mindset may come from somebody or maybe in somebody who has grown up in a world where money was used as a form of status, it was used as a form of power. You had the best cars and the best shoes and the best tennis club and the best equipment and the best this and the best that you grew up in an environment where you were taught that having the best was the only option. And you know, you grew up and it was possible that your parents, your grandparents, they had that to give to you the feeling of entitlement. It's the entitlement to experiences. It's the entitlement to things. It's the entitlement to power. It's the entire tournament to control. It's all these different parts, right? The problem with having an entitled mindset when you are an adult is that if you still perceive yourself as having a divine right to having exclusive experiences, exclusive opportunities, you know all the best things, all of the labels that you want, the cars that you want, all the stuff that you want, all the holidays, everything that you desire, then you will inherently link That to status, worth value. There's a couple of problems with this, because if you don't have the best things, you've got this entitlement mindset. But actually, as an adult, you can't afford those things. And you start, you know, instead of buying Prada, you're buying next genes. It has the ability to buckle us at a human level. Well, I'm not good enough, because I haven't got Prada, I haven't got the things that I'm entitled to, because that's how I grew up. I should have those things. It's a lot of pressure. Then it becomes a bigger problem, because you're entitled to Prada, because what you've always had, but you don't earn enough money to actually get it. So not only do you approach your decisions in a way that is Oh. It's fine for me, I'm entitled to it. Life will be great, but you start to maybe take bigger risks than somebody who's a bit more cautious, and when investment is concerned, taking big risks without doing due diligence, because you're entitled to win, is going to lead to you losing more money than most. So you know, an entitlement money mindset is not necessarily a bad thing. In fact, none of the mindset types are a good thing or a bad thing. It's just interesting to understand ourselves better so that we can be conscious and intentional in the way that we make financial decisions. So I'm actually a combination of a few of these different mindset types. I'm not just one, because there's been different influences throughout my life, and you may well be more than one of them. You might be a few of them, but when you understand which ones you are, you'll then understand which, how those impact your decision making, which will then help you to improve your financial circumstances. Okay, so now let's talk about the ignorance mindset. Now the ignorance mindset actually generally comes from a place of just never, ever talking about money. Maybe your parents just didn't know about money. Maybe there was, you know, you had enough wasn't talked about it wasn't a thing. There was never really discussions about it. You never really knew that it was either a problem or a good thing. It was just not neutral? Well, what a neutral environment creates in us is that we just don't know anything about it. So you don't know about debt, you don't know about making money you leave school, and actually, you've got a lack of financial literacy, right? You've got this misunderstanding of something that is so inherently important to us and our lives, we float through life just not knowing what it means or what how it's impacting us, or how to make decisions, and actually, for a lot of people in our society right now, today, this is such a massive problem, because if you don't know how to open a bank account, how to get a mortgage, how to manage a credit card, how to manage overdrafts, even down to things like why you should or shouldn't buy something on Klarna, why you should or shouldn't split payments on Amazon. If you do not know the impact that those things have on you, then you are going to end up financially fucked, because all of those things cost money, and most people with an ignorance mindset just won't realize it. They get in trouble. They get penalties, they get fees. They you know, it can have the potential to spiral out of control. Actually, the quickest way to fix an ignorance mindset, well, learning about it is the way to fix this problem. And actually, you guys are here hanging out with me, and that means you are learning about it. You're already moving the needle in that capacity, which is amazing. And all I'd say to you is just carry on learning. Obviously, read the book because it's great, but do your research. When you're looking at applying for an overdraft or a credit card or buying something on Klarna, let's even just use that as an example. Read the small print, like, what does it actually mean? All right, you can pay it in three payments, or you can pay it over a period of time, but well, they're going to charge you if you miss a payment, How many of you know what clan are charged you when you miss a payment, it's a lot it's a lot of money. Ignorance isn't a good enough reason to end up in debt when we've got so much information available to us at our fingertips. You can click and read and listen and learn for free. It's easily fixed. You just gotta be intentional in the way that you approach it. Okay, so now we're gonna talk about a debt money mindset. Now in the UK, right now, they reckon that about 9% of UK adults are in severe problem debt. So that's debt that's out of control, probably not fixable. It's just like severe debt. 9% of you cattle, that's quite high proportion of people that are really seriously struggling. And that seriously struggling also creates other problems, mental health issues, relationship issues, you know, stress, anxiety, worry, lack of sleep. You know, severe debt is definitely impacting people choosing to commit suicide, like it's a horrendous place to be a debt money mindset is one of the things that contributes to that. Now, if you live in a house where everybody sky dives, the chances are at some point you're going to skydive. If you live in a house full of people who horse ride, chances are you're going to get on a horse at some point. If you live in a household, and you grew up in a household and in a family where debt is commonplace, everybody's on credit cards, everybody's living in their overdraft everybody's just chucking on the plastic if that is the environment that you grew up in, and your parents talked openly about that debt behavior. Well, then the chances are that you're going to end up in debt as well, because we become a product of what we are surrounded by, right? So with a debt money mindset, you're probably somebody who actually, if you think about your inner narrative, you. Probably someone that's just thinking, well, that's just life, that's just how it is. Being in debt is just how life works. That's just how it is. There'll never be enough money. So we'll just stick it on the plastic and we'll figure it out later. It doesn't actually have to be like that. I remember when I first cleared my debt. So 2017 is when I had cleared all of my debt, my 60,000 pounds. And you know, I took 23 months from the day I started my first business, my second business in 2015 it took me 23 months to clear that debt. And up until that point, I had 100% been one of those people that would just say, Oh, it's fine. Just stick on the card. You'll be fine. We'll figure it out. We'll figure it out when I started to pay off. And I was consciously being intentional in the way that I paid off my money and where I put my money, and how disciplined I was, I realized very quickly how much headspace debt was taken up. But I hadn't really realized it before. So when you get to a point when you've you get debt free, which inevitably you will, if you follow these rules, by the way, the result has to be that there is no other way of another exit. When your stress disappears and your worry about money disappears, and your embarrassment about not having enough, and you know, your general ickiness, it's the best way I can describe it when you're making any sort of decision about wanting to move house or buy a car or leave a relationship or get married or anything, when you can take money out as the problem, you can make decisions based on how you truly feel about a situation instead of, well, actually, I've got to choose that, because that's all I can afford. Well, I've got to choose that because that's how far my credit card will go a debt money mindset. If you can get rid of your debt and also, as a result, improve your debt money mindset and turn it into a more positive mindset towards money, you'll find everything changes. It completely changes the way that you approach, your decisions, the people that you hang around with, the things that you buy, everything, it will become a much more positive experience, moving money around, having it, spending it, using it for things. But if you approach it, approach money from a debt money mindset, then you're always going to be chucking it on the plastic. And if you do that, it's never going to improve. So there's hope for people with debt money mindset. Obviously, if you've been surrounded by it your whole life, then that's what you're going to have. But you just have to take control of it. You have to be intentional in the things that you do. And actually, you can fix this pretty easily. The next money mindset type is the guilt money mindset. The guilt money mindset is a bit like being on a roller coaster is very emotional. You know, it's people with this mindset. They're going to have a lot of shame and regret and emotion linked to the way that they utilize their money, and they often feel very guilty spending money on themselves. It can create stress, it can create discomfort, but also it can get in the way of you actually doing things instead of it, instead of like an abundance mindset where you overspend and it's, you know, there's never enough a given money mindset. People with this mindset might underspend. They've got it, but they they don't spend it. They there's a lack of investment into themselves, into their businesses, into their households, into their homes, into their personal development, their personal health, could be anything a guilt money. Someone with a guilt money mindset is not going to spend money on, you know, the food that's the best for them, their, you know, clothing, their transportation. They're going to go with the cheapest possible option all of the time. Now, in the book, I talk in detail about the boots theory. And this is basically in summary, read the book for the full details. But in summary, people with money always buy the best they can possibly get. In the boots theory, someone with wealth would buy maybe a pair of boots that were 200 pounds and they would last 1015, 20 years, maybe, whereas people without money will always go for the cheaper option. People with a guilt money mindset would go for the lowest possible option. So they need a pair of boots to go to work in, but someone with a gilt money mindset might spend a tenner on a pair of boots, different to someone who spends 200 pound on a pair of boots. Now, the quality of the product you're going to get is different, but the wealthy person spends 200 pounds once 1015, years they last. Someone who spends 10 pounds needs to spend it again and again and again and again, probably every six months, because those boots aren't going to last. So some of the guilt money mindset, they're going to continue to go cheap. And when they go cheap, actually, they then tend to overspend, what somebody who has got more money would have ended up spending, and this is the cycle of poverty, right? Is why people with money stay wealthy and people without it tend to not get it, and it's because when you've not got money to spend on the best possible option for you, you'll need to spend more than once. And so. The people who are wealthy, they buy once, and they looked after and done. People who don't have money have to buy over and over and over again, and that drains your resources far quicker. So some of the guilt money mindset is likely to go for the cheapest possible option, because they feel bad about spending the money on themselves. So this can lead to financial difficulties, right? Because you're not going to invest, you're going to feel stuck, you're not going to buy the things that you could be buying. Instead, it's important for you to take proactive steps to controlling your money, if you've got if this is resonating with you, and you're starting to recognize how I feel, like I might have a bit of a guilt money mindset. I don't really like to spend on myself. I'd much rather do something else with it for somebody else, what I need you to do is to recognize that, because the second you can recognize it, the second you can change it, you have to be more proactive in the way that you look after yourself financially. Don't stress so much on looking after everybody else. Actually look after your own finances, because if you've got nothing, you can't really help anyone else. If you've got something, it allows you to be helpful to other people. So your money mindset. That gives you a bit of a summary. And I'm sure some of you listening and watching this, you'll be like, Oh yeah, I recognize this pattern. It's okay. It's actually one of the ones that's quite easy to fix just through real, clear, intentional behaviors, proactive steps, learning more about it and seeing how you can make different choices. Right now, we're going to talk about the success money mindset. Are you somebody who measures your worth based on how much money you've got? Maybe you are somebody who attaches your personal value as a human being to what is in your bank account. Now this is something that is actually quite difficult to handle. If you are somebody who's grown up in an environment where money was utilized to position value, so how much money you made actually equated to how valuable you were to your family, to your friends, to your communities, etc. Then you are going to have a success money mindset, and it's going to be impacting your life massively. What tends to happen somebody who's got a success money mindset is going to prioritize financial success over everything else, because that's what makes them feel safe. The problem with that is that they don't prioritize their health, their mental health, their relationships, their time. So somebody who's got a success money mindset will work long hours, and they'll put in all of the drive to be able to be successful in their career and get pay rises and more money and profit and all the things, but to the detriment of their real life, because maybe they're not paying attention to their marriage, maybe they're not paying attention to their children, maybe they're not paying attention to their own health. Maybe they're driving themselves so hard to earn money and meet that expectation of their financial value, they forget that actually eating, well, being, kind, loving people is also very important. Someone with a success money mindset on the surface can look and feel very successful. They put on a very successful representation to the outside world. But often, if you're somebody with this money mindset internally, they're feeling fucked, the best way to put it right, they're feeling lonely, they're feeling stressed, they're feeling anxious. Because actually, when is it enough? You keep striving for the next pay rise, and you get it, and then you strive for the next pay rise, and you get it, and I get it, and again and again. Well, when will it be enough? When can you stop? Well, with this mindset? Actually you can't. So whilst it's great to give you motivation and to inspire you to move forwards in your career and to you know, to want to be successful, if that's what's driving you, fantastic. But if you're somebody that recognizes these patterns of a success money mindset, don't forget about you. It's important that your financial requirement, your need to earn money, doesn't come at the cost of your real life. Because there's no point being in the richest man in the graveyard, right? What's the point of having lots of money, lots of success if you've got nobody to share it with because your marriage is broken down, or your kids don't speak to you, or you've got no friends. A success money mindset, whilst on the surface of it feels like it's a great mindset to have, you have to balance you have to make sure that you're looking after your mental health. You have to make sure that you're looking after your physical health. You're making sure that you're making time for yourself. It's important that you balance it out, otherwise you'll forget that life is more than just about money, and your value and your worth is not connected to how much money you've actually got in the bank. Okay, so let's talk about the generosity money mindset. And listen, I know this episode's long, bear with me. We're getting there. We've got a couple more to do. So the generosity mindset is somebody who grew. Grew up in a family where giving money, volunteering, donating to charity, that was the standard. That's what we always did, right? If you're somebody who grew up in that sort of environment, giving your money away was what created your generosity mindset. You've been bought up to understand that giving away is the best thing, and that's great while you're a kid and someone else is earning the money to give away. But the problem with that as an adult is that if you continue to give away money that you don't have because as an adult, your resources aren't quite where your parents were or your carers or grandparents or whoever, then you'll be giving away more than you've got, and that creates debt. So a generosity mindset, again, whilst it feels like we should all want to give away more, we absolutely should. We should contribute to communities. We absolutely should volunteer. We should give to charity. We should donate our time and our money to supporting good causes, but not again, to the detriment of it financially crippling us. So what often happens people have a generosity money mindset is they're giving away more than they've got. And again, you might recognize this pattern and be like, Well, my value and my worth is about how much I can help others, but it's important that you look after yourself first, because if you've got nothing, you can't help other people, if you've got something, then you can come from a place of positivity and actually then contribute. So a generosity mindset, in its simplest way, it means you're giving away more than you've got. It's important to address that we absolutely should be giving away, but not to the detriment of our real life. Okay, so let's talk about the control money mindset. Now, a control money mindset is you will feel this or you will have this mindset if money has been weaponized against you when you were younger, or if you've grown up an environment where money was weaponized against someone in your household. So you know, financial abuse is a big topic, and it's not one for today. It's way more complex than that, but it exists. So if you, from a young age, saw financial abuse or money being weaponized against people that you're surrounded with, then you are going to have a control money mindset. A control money mindset is is super complex, actually, is layered and layered with emotions and trauma and all sorts of things, which I'm not going to get into. If you can acknowledge that you've got a control money mindset, because you can recognize these patterns, then you actually can take steps to fix it. And that's the exciting thing, because if you can improve that relationship with money, and you can stop weaponizing against yourself, or maybe you're weaponizing against other people, who knows we you know we're product of our surroundings, right? And it's possible that's just naturally come into your world because it's what you grew up with. If you can start to take steps to overcome this negative relationship with money, ultimately, your financial security will improve your relationships with people, and money will improve the example you're setting to your children and those around you, your friends, will improve. Actually, this money mindset, whilst it is complex, really, the first step is to acknowledge that it's a thing, and then you can seek to take different steps to improve it. It happens a lot, and a lot of the clients that I speak to, they've grown up in an environment money's been weaponized against them or against somebody that they love or have seen it be weaponized against family members that control doesn't have to continue. That weaponization of money doesn't have to continue, and that negative pattern doesn't have to continue. You know, imagine a world where we're all financially independent, and we can all make decisions to move forward with our lives because we can afford to. It's that choice. But if you've got that control money mindset, you're going to struggle to break out of that pattern. So the first step is to acknowledge it, recognize it, and seek out those proactive steps to improve it. Okay, so we're at the last money mindset type, and you guys might be thinking, huh, I'm a little bit of all of these, but I'm mainly this, or I'm mainly that, whichever one of these you're thinking it is, it's really important that you explore it and go and discover what you can do to improve I definitely recommend reading the chapter on this that's in the book, because it will help you to just layer in your knowledge the last money mindset is the risk averse money mindset, and when we're talking a lot about investment and improving our financial futures, making sure that we're not completely risk averse is really important part of this. If you're someone who's risk averse, then the chances are you've said or you've heard say to yourself or other people, I prefer to see my money in the bank where I can see it. You're somebody that doesn't trust investment. You're somebody that doesn't trust the markets, the stocks and shares, the crypto, like you're you just don't trust any of it. You want to see your money in the bank safely. Maybe it's even in your mattress or in your Safe at Home, right? You're risk averse. You want to see it. You trust you and your. Own eyes, this money mindset comes from an environment where you've seen, maybe people lose money, where people have invested money, and it's, you know, not been a great choice, or they've sold stocks at a loss, and like crystallized losses, this is the typical narrative that we see in most people that don't invest yet, they've had a bad experience, or they've seen bad experiences. Well, the problem with that is that if you want to be a money mechanic and you want to improve your financial position, you've got to change it. You have to learn how to take good, educated, controlled financial risk. We will talk in this series. I talk about it all through the book and in anything you ever hear me talk to you about I will always say to you, start small, spread your risk, diversify. Make sure that you're not jumping all in on one thing that you don't know anything about. Don't invest what would destroy you to lose. Don't invest in things you don't understand. If you are risk averse, you're not going to invest in anything. So the trick to overcoming this as a mindset is to start small. Just stick with that rule that I've given you more than once. Start small. See it working. Learn do a little bit more. Then again, a little bit more. Start with a tenner, 50 quid, 100 pound. We're not talking about you coming in with 1000s, if you should start small, and you can start to take calculated, well educated risks, you'll be able to train that mindset to not apply emotions when it comes to investment decisions. The problem with applying emotions with investment decisions is that you will panic. If you're risk averse, and you start to see the market coming down, you'll panic and you'll sell. But what if it's just about to go back up? We don't panic sell, right? We don't crystallize losses. We approach with strategy. We approach in a calculated way. And we think about what we do before we do it. If you're risk averse, you'll panic. So we've got to train that emotion to disappear. When it comes to investment decisions. It's actually just a process of starting small and taking a few steps at a time to be able to move things forwards. So we've got to the end. I know it's a long, a long podcast episode, right? And what I want you to understand is that you are, you might be a sprinkling of all of these. You might be one. Might be one that's stronger for you or less, when you understand what's subconsciously leading your money decisions, you will agree with me that your current financial situation is a compounded position of all of the financial decisions you've made up to this point. And I know that's hard to hear, because when I heard it the first time, I was like, fuck off. There's no way that's it's not my fault. I'm in debt. When you take responsibility for it and you understand why you're in debt and the way you approach your money all the time, you can fix it, and it's an empowering place to be. You understand why you can change it. So go ahead and think about these types. If you've got a copy of the book page, 6566 67 there's a set of questions you can go and ask yourself that will help you to decipher which one of these you are, and when you know which one of them you are, you can activate change. Thanks for listening. I know it's been a long one, but if you're on YouTube, make sure you hit subscribe, give us a like, drop us a comment if you're listening on the audio, only make sure you add us to your playlist. Share with friends. Share the love. I'm Sarah Poynton, helping you to become a money mechanic. You.