In communities of color, we often talk about the need to shift our “money mindset” from scarcity to abundance. But what does money mindset mean, and why should we care?
As a licensed mental health counselor focused on financial therapy, I specialize in helping clients navigate the intersection between money and emotions. I specifically work with clients to help them identify the roots of their money woes, many of which stem from their youth.
I am also a Black woman who understands the many challenges my community faces in trying to accumulate wealth in a system that is not designed for us, emotionally, psychologically, or structurally.
Many of us grew up with a scarcity mindset, and therefore accept scarcity and lack of resources as fact, which, in turn, keeps us from shifting to an abundance mindset and begin accumulating wealth. But it is possible to do. I will explain how below.
A money mindset is the beliefs and state of mind that govern your understanding of your finances and the way you interact with them. In other words, it’s shorthand for describing your relationship with money.
Your money mindset begins forming when you are a child—even before you can earn money. How you think and feel about money is directly related to what you learned and experienced growing up. How people around you talked about money (or didn’t), what they spent it on, even body language all influenced your money mindset.
A fundamental way to shift your money mindset is to think about the difference between richness and wealth. Which would you rather be? Do you even know the difference?
From a literal standpoint, being rich and being wealthy mean the same thing—that you have a lot of money. But context and aspirations matter. Do you care more about looking rich, spending money on whatever you want, and keeping up a certain lifestyle than saving and investing money? If so, then the pursuit of being rich can ultimately hinder you from becoming wealthy and passing it on to the next generation.
Wealth, on the other hand, means you’re able to enjoy your money without spending the majority of it. You reinvest your extra money into assets that will then make even more money, further increasing your wealth.
A problem for our community is that the scarcity mindset implicitly encourages us to pursue feeling rich at the expense of accumulating wealth for the long term. We say things like: If the system is rigged against us, why should we invest our hard-earned money into corrupt stock markets as opposed to having a good time? If our wealth can be confiscated and undermined anyway, why not display it by accumulating homes, cars, jewelry, and clothes that can signal to others that we’ve made it?
If you grew up poor, it is completely rational to want so desperately for others to know that you are worthy of respect—and you are. But at the same time, we as a community must all work to empower ourselves and one another to shift our money mindset to a wealth and growth mindset, not only for ourselves, but for our children and grandchildren.
Truly embracing a wealth mindset and building generational wealth requires sacrifices. It will mean putting off buying the latest and greatest to ensure that you first save and invest. It will mean getting honest about your goals and less tied to how you look while accomplishing those goals. And it will mean measuring your success, not by the perception of others, but by the value you provide.
"If we’re not helping all employees of color earn more, invest more and develop genuine autonomy, we’re not uplifting disenfranchised communities. The financial health of marginalized workers is critical to achieving equity and creating a productive and engaged workforce."
Founder of OfColor