Your relationship with money isn’t just about how much you earn or spend – it’s also about the beliefs and attitudes you’ve developed over time. These deep-rooted thoughts influence every financial decision you make, often without you even realising it.
We explored this fascinating topic in depth during our Money Gym masterclass with Dr. Sallyanne Decker, Associate Professor in Banking and Finance at the University of Greenwich and one of London Mutual’s volunteer board of directors. Dr. Decker, who has a research interest in the psychology of money management, shared her expertise on how our minds shape our financial behaviour.
As Dr. Decker explains: “Our money mindset affects how we think, feel and act with money, but we’re often not fully aware of these beliefs and attitudes that shape how we see ourselves and the world.”
Understanding your money mindset can be a game-changer for your financial wellbeing. Here are the key insights from our masterclass that can help you recognise the patterns in how you think about money and start making positive changes.
What shapes your money mindset?
Your money mindset is the collection of beliefs and attitudes you have about money. These aren’t just random thoughts – they’re shaped by your experiences, family background, culture, and the messages you’ve absorbed throughout your life.
Many of our strongest money beliefs form during childhood. Perhaps you grew up hearing “money doesn’t grow on trees” or “we can’t afford that.” Maybe your family argued about money, or perhaps they never talked about it at all.
“A lot of our beliefs and attitudes about money are formed quite early in our childhood and passed on from generation to generation,” notes Dr. Decker. “Sometimes we’re influenced by our cultures or religions, meaning some groups of people will have similar attitudes.”
These early experiences create scripts in our minds that continue to influence us as adults. It’s completely normal to have conflicting beliefs about money. You might simultaneously think that money is important for security but also feel guilty about wanting more of it.
The four money mindsets
Researchers have identified four main ways people relate to money:
Money worship
If you have this mindset, you believe that having more money would solve most of your problems and bring you happiness. You might find yourself thinking “if only I earned more, everything would be better.”
Money status
For people with this mindset, self-worth is closely tied to net worth. You might feel the need to display your wealth through expensive purchases or feel ashamed when you can’t afford certain things that others have.
Money vigilance
This mindset involves being careful and thoughtful about money. You value saving, believe people should work for their money, and generally have a healthy respect for financial responsibility.
Money avoidance
If you have this mindset, you might avoid dealing with your finances altogether. You could feel uncomfortable about wealth or find budgeting and financial planning stressful or overwhelming.
Most people have elements of different mindsets, and none of them are inherently good or bad – they just affect your financial decisions in different ways.
How biases affect your spending
Even when we think we’re making rational financial decisions, our brains have built-in shortcuts that can lead us astray. Dr. Decker explains that “financial biases are ways of thinking that affect our decision-making and increase the likelihood of poor financial outcomes like lower savings and credit scores.”
Importantly, she notes: “These biases aren’t determined by education, intelligence, skills or wealth – they show we are human, and some biases are emotional.”
Here are some common ones:
Present bias: You prioritise immediate rewards over long-term benefits. This might mean buying something you want now rather than saving for a goal that’s months away.
Projection bias: You assume your future preferences will match your current ones. This can lead to purchases you later regret, like gym memberships during a motivated moment or clothes that don’t suit your actual lifestyle.
Framing bias: The way information is presented affects your decisions. A product described as “90% fat-free” feels different from “contains 10% fat,” even though they’re identical.
Social influence: You’re swayed by what’s popular or what others are doing, rather than what’s right for your situation.
Loss aversion: You hate losing something more than you enjoy gaining something of equal value. This might keep you stuck with a bank account that has poor rates because switching feels risky.
Improving your relationship with money
The good news is that mindsets can change. Here are some practical strategies to develop healthier money habits:
Practice future thinking
Spend time imagining your future self and what you want your life to look like. Be specific: Where will you live? What will you do? How will you feel about your financial security?
“Practising ‘futuremindedness’ simply means imagining your future situations,” explains Dr. Decker. “By doing this, you’ll have the ability to be guided by imagining your future aspirations and goals. How much control you feel you have is a key factor that determines financial success.”
When you’re tempted to make an impulse purchase, ask yourself: “Will my future self thank me for this decision?”
Slow down your decisions
Before making any non-essential purchase, wait 24 hours. This simple pause often reveals whether you really need or want something, or whether it was just a momentary impulse.
Pay yourself first
As soon as you get paid, put money into savings before paying bills or spending on anything else. This ensures you’re prioritising your future financial security.
One effective way to do this is through salary deduction – having money automatically taken from your pay and put straight into savings before it even reaches your current account. This removes the temptation to spend it and makes saving feel effortless.
Make spending harder
After paying bills and saving, consider moving your remaining money into a separate account. This creates a small barrier that makes you think twice before spending and gives you more control over impulse purchases.
One helpful tool is setting up commitment mechanisms like Christmas Savings Accounts, which reduce stress and keep you on track with your goals.
Keep a money diary
For a week or two, write down not just what you spend, but how you feel before, during, and after financial decisions. You might notice patterns – like spending more when you’re stressed or avoiding financial tasks when you’re anxious.
Building awareness
Changing your money mindset takes time and patience with yourself. Start by simply noticing your thoughts and feelings about money without judging them. When you catch yourself thinking “I can’t afford that” or “I’m terrible with money,” pause and ask whether that thought is helping or hindering you.
Remember, there’s no perfect relationship with money. The goal is to develop awareness of your patterns and make gradual changes that align with your values and goals.
Getting support
Understanding your money mindset is just the beginning. The insights from Dr. Decker’s masterclass show us that financial wellbeing isn’t just about having the right products – it’s about understanding yourself and making decisions that feel right for your situation and your future.
At London Mutual, we’re here to support you in turning these insights into action, whether that’s opening a savings account to automate your “pay yourself first” approach or finding a loan structure that works with your financial personality. As a credit union with expertise from board members like Dr. Decker, we’re committed to supporting not just your financial needs, but your overall financial wellbeing.
Want to learn more? You can watch the full Money Gym masterclass recording where Dr. Decker goes into detail about the link between your mind and your money.
