Money Mindset vs Money Mentality: Why Mindset Doesn't Really Guide Financial Decision-Making for Business Owners

Mike Tyson said, “Everyone has a plan until they get punched in the face.” Figuratively speaking, sometimes life punches you in the face. When that happens, you shift out of logic where your plan is stored in your brain and into fight or flight where survival tactics are stored in your brain. In the realm of self-help, coaching, and financial advisory, the notion of cultivating the right "money mindset" has echoed endlessly. Which is why I need to decode the difference between mindset and mentality.

Beneath the surface lies a profound truth: financial decisions are heavily influenced by emotions, not just conscious thinking. In this article, I’ll unpack the fundamental contrast between Money Mindset and Money Mentality. I’ll shine the light past the surface, into the distinct factors that shape and guide most financial decisions and behaviors.

The Emotional Foundation of Financial Choices 

While the concept of Money Mindset tends to dominate discussions, it's crucial to recognize that only a small fraction of financial choices are rooted in logical thinking. An astonishing 95% of money decisions are driven by emotions, residing in the subconscious and even unconscious parts of our brains. This is where the concept of Money Mentality steps in to offer a more comprehensive understanding of our financial behaviors.

Money Mindset: The Idealized Scenario 

Money Mindset revolves around conscious thinking patterns, often built on the information gleaned from books, articles, and similar external sources. Just because you know better, doesn’t mean you’ll do better. This approach assumes that proper execution will follow the positive thought, overlooking the influence of deep-seated subconscious beliefs and programs that steer our actual conduct.

Just as someone who is attempting to lose weight knows they need to eat properly and exercise, when given the choice of the apple or the chips, they may not choose the healthier choice. That’s because they aren’t choosing from conscious brain. They will choose the snack based on their emotional state at the time. Financial decisions are similar. 

Embracing Money Mentality: Uncovering the Core Factors 

Though the conscious brain is often able to identify the right choice, it’s not always able to choose it. Money Mentality gets in the way. It’s made up of an integration of three pivotal aspects: upbringing, interpretation, and personal experiences. These elements intricately interweave to forge a unique money personality.

Your client's money personality comes from how they interpret societal messages, their parents' acceptance, and what’s happened in their lives to prove or disprove the interpretations they’ve made. As they move through life with their money personality, they form habits that trigger emotions. Fear, overwhelm, greed, guilt, and loneliness are emotions rooted in one's learned, interpreted, and experienced relationship with money. All of this plays a central role in shaping financial behaviors.

Navigating the Diversity of Financial Behaviors 

Understanding the nuances of your clients' Money Mentality is vital. Clients with varying money personalities may exhibit diverse behaviors—some might overspend, while others lean toward excessive saving or risk aversion. Certain individuals might assume the role of a rescuer or those that play the victim, leading to distinct financial decisions that directly impact your advisory role.

I’ll explain the different Money Mentality Types in the next blog post, but understand that your clients have a money personality and it transcends what they think about money; it’s about how they want to feel. That means, their Money Mentality is their money reality, which makes it yours.

From Mindset to Mentality: A Shift in Approach 

The shift from Money Mindset to Money Mentality entails moving beyond superficial conscious thinking and engaging with the subconscious facets of financial behaviors. The first step in this journey involves a comprehensive assessment, which uncovers deeply ingrained beliefs clients may not even be aware of.

Most service-based business owners have an assessment or intake form. However, the majority of the questions deal with conscious thinking. There is a responsibility to go deeper than that, allowing the client to become aware of what’s really driving them. Acknowledging this responsibility, financial professionals have the opportunity to offer insights into clients' lives that can make a profound impact on the professional relationship.

The Power of Awareness and Acceptance 

As you become more aware of the 7-Money Mentality Types, you’ll also become more aware of which money traits your clients exhibit. You can begin accepting what they are capable of and design a plan based on their strengths.

Establishing awareness and fostering acceptance stand as foundational pillars that strengthen the bond between trusted advisors and their clients. This recognition of the contrast between Money Mindset and Money Mentality empowers advisors to effectively lead and support their clients. The planning process is dynamic, this heightened awareness permeates every facet of the financial plan and contributes to building a sense of trust, even when navigating through fluctuations.

Leveraging Strengths for Effective Planning 

Advisors may have magical powers when it comes to managing the numbers, but likely won’t have the skills to manage a client's emotional challenges. Grasping the tips and tools that I’m sharing can help harness clients' strengths to craft tailored plans that are easier to stick to. If making planning and execution easier is a high priority for you right now, we can go deeper inside the Health and Wealth Club. If you are not already an official member, I encourage you to join so you can learn more about the Money Mentality Types and take the quiz to find out your Money Mentality type.

Acknowledging and integrating behaviors driven by the need for love and acceptance may sound trivial, but they could be the deciding factor between a client seeing a plan through or abandoning it. When a plan resonates with a client and they are able to successfully execute, they feel more powerful. This not only aligns with clients' innate tendencies but also nurtures a sense of acceptance and understanding between client and advisor.

Although Money Mindset often takes the limelight, it's the complex interplay of emotions and experiences that define Money Mentality. Rather than attempting to reshape clients' deep-seated beliefs, advisors can offer a pragmatic approach through awareness, acceptance, and tailored planning.

Nurturing Prosperity Through Conscious Financial Guidance 

Acknowledging the fundamental distinction between Money Mindset and Money Mentality is pivotal. Shifting the focus from conscious beliefs to subconscious emotions and experiences empowers financial professionals to guide clients more effectively. By embracing this paradigm shift, advisors can build deeper connections, leverage strengths, and ultimately foster prosperity by aligning financial strategies with clients' intrinsic tendencies. 

Understanding that true financial decisions are rooted in the depths of the mind enables advisors to unlock the true potential of their clients' internal wealth. Remember, life is about more than money, it’s about meaning.

For further insights into understanding and applying the concepts of Money Emotions and Money Mentality, as well as access to a supportive community of like-minded professionals, consider joining the Health and Wealth Club. Join us in exploring the intricacies of financial behavior, refining advisory approaches, and nurturing a prosperous financial future.

What clients want most of all is for their advisor to guide them on how to enjoy life today, prepare for the future, and leave a legacy behind that they can be proud of. Their Money Mentality can get in the way of all three. They may not know they need this from you, and you may not be up for the challenge, but the responsibility lies in your hands. When your clients master their Money Mentality, they get to be themselves without getting in the way of you growing and preserving their wealth. 

That’s the kind of win that makes life feel abundant.