Momentum: Growth mindset is another ingredient in the formula to shaping your future

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How would you respond if you knew that success or failure mostly depended on what you personally believed about the future?

There is much written on mindset and success. Mindset is revolutionary. Carol Dweck, renowned psychologist who is known for her work on mindset, referred to mindset as ‘the new psychology of success’. How would you respond if you knew that success or failure mostly depended on what you personally believed about the future?

Elmarie Coetzee, Human Capital executive at Momentum Corporate says that a fixed mindset or a growth mindset is another ingredient in the formula to shaping your future. A person with a growth mindset believes that they can learn, grow and develop. They are curious, open to learn new things and observing others to learn from. They believe that they can change and they approach challenges with passion and energy.

While the definition of success may vary from person to person, one thing remains true to all these varying definitions: that the cusp of these definitions is the ambition of achieving financial stability and security – financial success.

The Science of Financial Success evolved from the Theory of Change, which is the framework and methodology that proved successful in personal finance. The Theory of Change places households in a political, social and economic environment where they deal with factors that either within or beyond their control.ADVERTISING

During a major global crisis like the one caused by Covid-19, factors far beyond our control had devastating effects on personal finances on a large scale. It also enabled us to highlight the importance of having a closer grip and on the things that we have control over. And making this a part of our everyday lives.

As we know, financial success is not passive and can only be achieved while pursuing a financial goal and/or achieving the goal. For purposes of understanding their journeys to success, it is important for people to assess the goals they pursued and the activities they have implemented to manage the things that they can control and lessen the impact of things they can’t control.

While macro factors like price increases, inflation and unemployment rates are unavoidable, a change in behaviour is still the fundamental difference between those who can weather a financial storm and those who can’t. Even the smallest change in behaviour and regular habits can accelerate one’s journey to financial success.

Households map out their journey with measurable goals and a plan to achieve them. This is the first habit of success.

Don’t be vague about your financial success. Set specific and realistic financial goals. The more specific your goals, the more likely you are to achieve them. Both long-term and short-term goals are important, but even more important is having a blueprint for achieving such goals. And don’t forget to consider your dependents or loved ones when you are planning your finances – you don’t want them to have financial stresses and debt burdens when you are no longer around.

Secondly, households maintain their momentum by knowing where every cent goes.

Sticking to a monthly household budget is the best way to guarantee that all bills are paid and that your savings are on track. By keeping track of what you spend, you may be surprised when you see how much that daily cappuccino or toasted sandwich is costing you, or those data top ups, which are small but add up in the end. By tracking each cent, you reinforce your financial goals and limit the temptation to splurge on wants instead of saving for your needs.

The third habit relates to covering and protecting your household from rainy days.

While many find it challenging to save in case unexpected expenses arise, the reality is that life is full of uncertainties. This year has served as a harsh reminder of that fact.

Empower yourself by saving a predetermined amount each month for those unexpected financial emergencies. The general rule of thumb is to have enough emergency funds to support you for three to six months should something unexpected happen, such as retrenchment or illness. This may certainly not be in reach of every South African but the pandemic has elevated the importance of putting money away in case of emergency. It’s never too late to start. No matter how small, start with something. If, after an extended period of time, you end up in a fortunate position where you have not had to dip into these funds for emergencies, they could then be redirected to start contributing to or to top up a long-term investment in a tax-free savings account or retirement annuity.

This leads me to introduce the fourth habit of successful households – they make the bold but intelligent choice to invest.

Historically there has been no better way to grow your money than through investing. There’s no doubt that investing is risky – but in many ways, choosing not to invest is even riskier. The magic of compound interest will enable your investment to increase exponentially over time. Bear in mind that you need a lot of time to achieve meaningful growth. So, don’t delay. Instead of waiting for the ‘right time’ to invest, it is advisable to rather ensure that you have enough time in the market.

The fifth habit is not letting speedbumps deter from achieving your aspirations.

Whether it’s getting out of debt one small repayment at a time, or learning to right previous financial wrongs, you learn from your mistakes and move on if you strive for financial success. It’s all about small wins: each step brings positive change.

It’s also more important than ever – especially in today’s climate – to broaden your perspective by being financially savvy and streetwise. This is the sixth habit.

Knowledge is the best defence against those who prey on uninformed individuals to sell get-rich-quick-schemes. Keep up with financial news. Review all applicable tax legislation changes each year to ensure that you optimise any adjustments and deductions.

And finally, successful households realise there is more than one path to achieving success.

When investing, the general advice is to maintain a diversified portfolio as having all your eggs in one basket is inherently risky. The same is true for income. When you have multiple income streams, losing one is not the end of the world. Consider additional income sources, whether it be a small side ‘hustle’ to learn and master new skills that can be turned into a major source of income in the future or have passive income sources such as dividends, interest, or rental income.

The journey to financial success is one filled with humps and yields, but there are actions that you can take to protect yourself from significant financial strain should something that is outside of your control happen. With the right preparation you can turn a potential financial difficulty into a temporary setback. Lastly, one should never be afraid of seeking advice from a source more knowledgeable and more experienced than yourself. The aid of a financial adviser is unmatched as you embark on your journey.

Main Image; Dreamstime.com

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