All business owners have stories they tell themselves about money. Some of these stories are super healthy and helpful to the business’s success, and others hinder success and growth in the business. I have met many women business owners struggling to move their business to the next level and can’t figure out the problem. A lot of the time, there is either a money mindset issue or past financial trauma. Today we want to outline what each thing is and how you can remedy either in your business.
Your money mindset is the set of beliefs that you have developed throughout your life about money, wealth, and success. Many women business owners have a ton of money mindset issues that affect their business success and that they might not even be aware of! Your money mindset is developed through your experiences with money and success. Growing up in a home where money was always tight, and stress was high when dealing with finances would lead to money mindset issues centered around scarcity.
How your parents, caregivers, and loved ones spoke and acted about money contributes to the beliefs you carry as an adult. While it can be hard to change your money mindset, it is worth the work. I know this sounds “woo-woo” but a healthy perspective helps attract money and success, while other mindsets can repel them. Two of the most common types of money mindset are:
Scarcity Mindset: A belief that money is limited and will run out, or there will never be enough. A scarcity mindset can also apply to clients in your business or how you view other companies in your niche. For example, there are not enough clients to go around. So, if a competitor books a client, that means you are failing.
Abundance Mindset: A belief that there is unlimited wealth and opportunities. You believe that there is enough for everyone, and you can and will bring enough money into your business to reach your personal and professional goals.
Signs of Negative Money Mindset
- Fear or anxiety around money
- Feeling that you have a lack of control around your finances
- Negative thoughts about money
- Negative thoughts about how you deal with money
- Procrastinating or ignoring money issues
Signs of Positive Money Mindset
- You recognize that money is abundant, and what you need can be achieved.
- You have an optimistic attitude when facing uncertainty
- You are in control of your behaviors and the decisions you make.
- You have a solutions-oriented attitude
- You are willing to tackle money problems head-on
How to Change Your Money Mindset
First, take an honest assessment of your current money mindset. Think about the examples you had growing up and decide what you want to replicate and what you want to change. Understand that everyone has stories they tell themselves about money and success.
Next, find and consume content that will influence a positive money mindset; this could be books, podcasts, or speakers that focus on living abundantly. I recently finished “We Should All Be Millionaires” by Rachel Rodgers and highly recommend it.
Last but not least, remind yourself that you are in control of your mindset. No matter the circumstances of your past, you can choose to make changes. I have watched plenty of women entrepreneurs move from scarcity thinking to an abundance mentality. You can too!
Financial trauma can be confused with money mindset issues, but it is more severe and takes more work to remedy. Financial trauma is caused when expenses outweigh income for an extended period. While not being able to pay bills is undoubtedly stressful, the events that happen after you cannot pay cause the trauma. When you get behind on bills, it quickly snowballs. One month turns into three, and then the basic necessities of life are threatened. You may have to borrow from friends and family, leading to shame.
I have listed some signs of financial trauma below. Keep in mind, you may experience some of these at a lower level without actually having a traumatic experience. Those with financial trauma often experience a heightened existence of more than one of these activities.
Overspending or compulsive spending is a typical response to financial trauma. Even though overspending contributes to the stress of lack of money, it is often used as a coping mechanism to handle stress. Overspending might come from the thought that you should treat yourself or that if you buy a specific tool or program that will help your business.
Underspending can be another sign of financial trauma. Even when money is available, an aversion to spending when you need to is a trauma response. Some people may think of themselves as frugal, but it is a fear response of not having enough money in the future. This can be correlated to mindsets of fear and scarcity around money. It could also stem from someone having experiences in life where money was tight, causing them to move forward in fear and trepidation.
Lack of Boundaries
Another example of financial trauma is having a lack of boundaries or discomfort with setting boundaries around finances. This could manifest in undercharging your clients and not setting clear payment terms on your contracts.
Financial avoidance could be avoiding opening your bills or not allowing your bookkeeper to keep you up to date on the business finances. If your feelings around money are paired with fear, scarcity, or insecurity, it is a natural response to avoid the situation entirely. The problem with avoidance is that it can have long-term consequences, such as a lower credit score or more financial debt.
How to Recover from Financial Trauma
- Reduce debt: If you are looking at a mountain of debt, it can feel insurmountable, which feeds into the traumatic response you have around money. Work to reduce debt to the point that it feels manageable.
- Have a plan for the future: A traumatic response is usually a survival response. If you live paycheck to paycheck, you might have trouble envisioning the future. Put a little money away every month into a business emergency fund. Having a plan is reassuring that you will make it through tough times and that you are creating a safety net.
- Pay attention to your feelings: If you feel tense or anxious about your finances, recognize the feelings and where they originate. Try to reframe those feelings into a healthier reaction. Journaling is an excellent tool for getting thoughts out of your head and reframed.
- Stop avoiding: Get very familiar with all of your financial obligations instead of avoiding your balances and accounts. Fear flourishes when you are speculating, so make a habit of knowing your balances.
- Get professional help: Financial trauma may need the help of a mental health professional. There is no shame in getting help to work through all types of trauma.
Do you recognize yourself as having money mindset issues or past financial trauma? If so, you are completely normal and don’t need to worry! You can work through these things and rewire your brain for a healthier relationship with money.
If you would like to chat more about how money mindset or financial trauma might be working against your business success, set up a complimentary call today. We would love to talk about your business goals and how a mindset change can help you clear those roadblocks and take your business to the next level.