What’s Your Money Mindset?

Ever wondered why some of us are savers and some are spenders? It’s all to do with your money mindset as The Beauty Accountant and part of BABTAC Beauty Collective , Ria-Jaine Lincoln explains

When Ria-Jaine posted on her Instagram feed about how our money mindset develops and can shape our entire spending habits, both personally and when running a business we knew we wanted to know more. Here she talks about how it happens, whether you can shift the dial and whether money mentors and budgets are worth the time and effort.

What does ‘money mindset’ actually mean?
This relates to the behaviours, thoughts and feelings that can impact decision making or the way in which people approach money, speak about money or spend their money.

Are men naturally wired differently to women when it comes to money mindset or is that a myth?
There are so many layers to this question as I believe that men and women can prioritise money in different ways due to the societal conditioning and historical discrimination. Money mindset is affected by beliefs from childhood, as well as thoughts and feelings that are passed down through generations.

We have gender pay gaps to contend with, the unpaid labour of working mums, stay at home mums, women caring for other family members and the emotional pressures that come with this and the pay gaps that are further widened by this.

I am interested in the neuroscience literature too, with studies quoting differences in brain sizes between males and females, particularly the hippocampus (used for learning and memorising) and the amygdala (associated with emotion). One particular source I came across looks at the idea that women retain stronger, vivid emotions which is interesting as emotion can impact money mindset. This is an area that I am currently studying further as it is a great interest of mine since I started working more on money mindset.

The financial times also recently reported that women control an increasing amount of the world’s wealth but are not investing at the same rate as men. With a prediction that by 2025 60% of UK wealth will be in women’s hands I feel that this is a great opportunity for the financial market to now start talking to females with suitable products for wealth and asset management.

How can our beliefs about money and wealth impact our behaviours and in turn how people run their business?
Money mindset is important, but this is in addition to financial literacy and core business skills. If a business owner does not value themselves or the work they do due to limiting beliefs or poor financial literacy they could end up either going out of business or struggling to manage business finances and boundaries. Also, if a business owner does not see wealth as an option, they may not reach the potential that is available by playing small or worse completely avoiding all conversations about wealth management or money.

You talk about people challenging their beliefs so they can improve their money problems but how?
People are already starting to get curious about money mindset and that is a start but they could go further by asking themselves why they feel the way that they do around money. What type of spender are they, how is this showing up in their business or their lives? It is great to have a plan to save a set amount each month for tax but if you are an over spender, acting on impulse or emotion often you may find that when it comes to tax time the tax pot is empty.

By understanding these behaviours business owners can set strategic goals to overcome this, for example instead of saving in a tax pot one may make a deposit straight into the tax account. Not only will this reduce the risk of overspending or acting on impulse but another benefit to doing this would be to receive interest from HMRC whilst you explore the reasons why it is difficult to stick to the cash flow plan.

Before getting too consumed by money mindset blogs or mentors it is also important to seek support if there are any priority debt problems from a professional, financial advisor or charity such as step change. A common belief in business is that many small business owners do not make enough money to speak to an accountant but this is something that I invite people to challenge because there is nothing lost by speaking with a professional when it comes to cash flow planning or seeking support to manage your own wealth and future.

Where can people look for a ‘money mentor’ and are there certain qualifications/certification they need similar to a qualified/verified therapist?
Money mentors are all around us and it is vital that you look at the full history and credibility of the individual. Not all mentors are fee paying arrangements - they may be a close friend, business partner or family member that you can go to for mentorship but this is not a regulated area and mentorship is not ‘therapy’ so due diligence is needed.

Financial Guidance is different to Financial Advice. Financial guidance provides you information, without recommendation. This is not regulated by the Financial Conduct Authority (FCA).

Financial advice informs you of financial products that suit your needs and is regulated by the FCA.

Accountants may be a great source of help if this is an area they cover as part of an advisory offering, but most may focus on tax law or compliance so always check what specialist area, if any, your accountant serves.

Accountancy is not a regulated sector but there are organisations such as AAT, ACCA, ICAEW and ATT that require members to have a licence to practice. As an accountant myself I offer tax compliance, bookkeeping, payroll, advisory and cash flow services. I operate under an accounting licence which means I must follow a code of ethics and stay up to date with my own CPD to maintain an accounting licence each year. I also offer group mentoring around money mindset, and have completed the first part of training towards full Certified Financial Coach status in the next few weeks.

The open university also offers a free course that may be helpful covering personal finance -
https://www.open.edu/openlearn/money-business/mses-academy-money/content-section-overview?active-tab=description-tab

What’s the best way to create a budget?
Budgets can be created in many ways from a simple note pad, calendar, note in your phone and of course a spreadsheet is an accountant’s favourite! In business I use spreadsheets mostly although there is software available such as Float app.

If you work better with tangible cash then only take out what you need and what has been planned for in the cash flow but do consider getting comfortable with tech as it won’t be going anywhere anytime soon.

How should people plan – both personally and from a business perspective – do you need a five year plan or is 12 months enough?
When I work with people with cash flow planning, I start with 3-6 months short term planning as there is usually an immediate cashflow issue to address by the time somebody seeks out my support. After this we then have space and clarity to plan 12 months and beyond.

With the events over the last few years 12-month planning is most popular and short term cash flow planning but I expect to see more longer term plans now that things appear to be settling down.

What’s the most common money problem people come to you with?
As my main role is The Beauty Accountant ® the most common money is struggling with tax savings, in particular VAT. On the other side of the scale people also fear losing the goodwill or cash that the business is generating when things are going well. This is something that ties in with money mindset and the events over the last few years but usually after a review of the cash flow plan it helps to ease some of the anxiety and give a little direction.

What piece of advice would you give everyone to improve their ‘financial wellness’?
The first step to improving money mindset and financial wellness is to get to know your cash flows. Sit and look at the bank statement, highlight the items that are non-negotiables and explore the reasons why they are non-negotiable. Consider the transactions that show up again and again, is there a pattern? Start to think about how you feel and what you are thinking when you make a money decision, over saving can be as much of a burden as overspending and that is evident both professionally and personally. At The Beauty Accountant this is something that I explore with all clients through our client resources and accountability hour

Ask yourself these three questions and then see which money mindset correlates most with your answers the most says Ria-Jaine. It’s also a good idea to have a look at your bank account and spending to spot certain trends. Once you’ve identified your money mindset you can start to go deeper and explore why you have those responses and assess how you want to respond when new money issues or opportunities arise:

1. How are you feeling and behaving when it comes to tax time or time to pay wages or an unexpected cost?
2. Does this behaviour align with the person that you want to be or are you self-sabotaging your own money plan?
3. What emotional issues are at play here, what do you remember about money from your childhood and how can you change how this is showing up?

Which Money Mindset Are You?

Scarcity mindset: This is a fearful mindset and a feeling that there is not enough money. It often shows up in how people price their services.

Abundancy mindset: The opposite of scarcity, there is a deep belief that there is enough money to go around. This can serve business owners well when it comes to organising pricing policies and executing business plans or it can be a hindrance if the spender starts feeling nonchalant.

Spender mindset: Feels high or excited when spending but can be linked to emotional issues, low self-esteem, trying to keep up appearances, lack of or low financial literacy or stress. Impulse can also be at play here. This can result in cash flow issues that can have a huge impact on business and personal life.

Saver mindset: Wants to plan ahead and takes care of where money is going and why. Won’t spend impulsively but may be hesitant to invest in business which can result in missed opportunity/unnecessary stress/fear around money. This type can be linked to anxiety around money, previous trauma or an unhealthy obsession with saving every penny.

Nonchalant mindset: Individuals that don't sweat it or have any interest in tracking money. Money comes and money goes and there is no set plan on future savings or current spending. Business owners in this category may be just scraping by each month, but they don't feel worried about the financial situation.

Lender mindset: This is when spending is financed by debt such as loans and credit cards. Tends to have a higher appetite for risk or may be slightly nonchalant with it. May take on too much money and could end up in serious cash flow traps without careful planning and control. Also unlikely to track or monitor their spending and distinguish between high and low priority purchases.

To hear more about Ria-Jaine’s journey and thoughts around money mindset follow her on Instagram @riajaine or join her closed Facebook community to explore the topic further.

Edited by Becci Vallis

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