Having a growth mindset can positively impact various facets of your life. It can help you parent your children, nurture them into becoming confident young adults, and managing people under your care. Also, it can change the way you see yourself and change the way you approach money and wealth.
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What is a Growth Mindset?
A growth mindset is a term used by Dr. Carol Dweck, an American psychologist and author of “Mindset: The New Psychology of Success” after twenty years of scientific research.
According to Dweck, a growth mindset is a belief a person has about themselves that their basic qualities, such as intelligence and skill, can be improved and developed over time.
This personal reflection affects how a person approaches challenges, obstacles, efforts, criticism, and the success of others. Instead of shying away when these moments occur, a person with a growth mindset embraces them!
For instance, in the 1997 NBA Western Conference Finals, the Utah Jazz defeated the Los Angeles Lakers and an 18-year old Kobe Bryant. Kobe shot four “air balls” and defined that as “gut-check time.”
Upon landing back into L.A. after the loss, Kobe immediately went to Palisades High and worked on his shot until morning and continued this daily routine throughout the offseason. The late Kobe Bryant retired with five NBA championships!
Whether you love him or hate him, there was no doubt he had the “mamba mentality!”
Fixed Mindset vs. Growth Mindset
A fixed mindset is a personal belief that their qualities, traits, life situation are set or “fixed.” People with a fixed mindset believe that there is no way to change or improve and that everything is “etched in stone.”
In contrast to a growth mindset, people with a fixed mindset resist challenges, dislike criticism, and are envious of other people’s success. They also thrive on being praised for their ability rather than their efforts.
The Case Study
For example, Dr. Dweck and other researchers gave high school students and young adults a non-verbal IQ test. Researchers praised half of the students and called them “smart.“ On the other hand, the researchers praised the other students and acknowledged that they worked hard.
The students that were called smart focused on this kind of praise. In their mind, if they were not called “smart,” then the students believe they were the opposite. For this reason, they avoided challenges that could jeopardize their intelligence.
Furthermore, the students would hide deficiencies instead of accepting mistakes. They even went as far as to lie in the pursuit of a “pat on the back.” They cared more about looking smart!
On the other hand, the growth mindset students embraced more challenges and were not easily discouraged.
However, it’s essential to understand that a person is not one or the other. Instead, everyone is a mixture of the two mindsets. Dr. Dweck writes that no one is a “purely” growth mindset.
The difference between individuals is the level of their perspective, one being more growth mindset than the other.
Why Having a Growth Mindset is Important to Building Wealth?
One of the pillars of a growth mindset is to embrace challenges. It may sound simple, but the path to success, especially when building wealth, starts with the right attitude!
So many times, I have shared my accomplishments to promote a growth mindset. Sadly, the first responses that I usually receive are “Of course you can do that” or “I can’t do that. I don’t have any money.“
These responses are examples of a classic fixed mindset person. They had already discounted themselves before they even tried. The main obstacle holding them back is themselves!
Instead of embracing the hard work associated with building wealth, a fixed mindset person prefers a “get rich quick” strategy. Furthermore, their motivation is not for self-improvement but rather to impress their peers.
A growth mindset will persist in the face of setbacks and see effort as the path to success!
My wife and I both grew up in single-parent homes and didn’t grow up much, financially. Yet, we don’t dwell or complain about our upbringing.
Once we unlocked our potential, we went from regular W-2 employees to small business owners. We’re now on track to become millionaires in a few years!
Five Growth Mindset Habits for Building Wealth
1. Set Realistic Goals
Setting big goals is possible, such as becoming a millionaire. However, you need to make your money goals achievable within a shorter time frame, such as a six-month or a twelve-month goal.
The idea behind this money mindset is not to get discouraged by large goals. Instead, make your starting point a small goal and increase the level of difficulty over time.
The goal doesn’t necessarily have to be adding a new asset, but can be as simple as “reducing one consuming goal“, such as dining out less. Or, you can set target net worth goals as you get older.
For us, our big goal is to own a vacation rental. However, we want to acquire at least three more rental properties within the next five years.
2. Analyze Setbacks
Setbacks are normal. How you respond and adjust to these events is the key. Will you become discouraged, or will you ask yourself, “What can I do differently?”
Finding out what didn’t work and trying new strategies will keep you on the path of building wealth. Every situation calls for something different. One thing leads to another, leading you to an entirely different road allowing you to learn something new!
In the face of a seller’s market, I visited twelve properties for sale and made over five offers. I kept getting get outbid by full-cash offers or offers made $30,000 over the list price!
Instead of quitting, I made adjustments to my offer’s contingencies to make it look more attractive. I finally got one offer accepted and added another property to my portfolio!
3. Track Your Progress
You should have a way to track your progress. This method will give you an idea of which milestones you have completed and identify what changes you may need to make.
When my wife and I moved to a new budgeting strategy, it helped us clearly understand where our money was going and allowed us to become more intentional.
After getting rid of over $250,000 of consumer and student loan debt, we refinanced the mortgage on our primary residence. Shortly after that, we purchased another investment property!
4. Embrace Constructive Criticism
A growth mindset is all about getting better. Therefore you need to have an open mind when you receive feedback.
There will be judgemental people, and there will be people who fake like they know what they’re talking about. Ignore those with a false growth mindset, and don’t waste time proving them wrong.
Instead, find yourself a mentor that is genuine and knowledgeable in their field. You can leverage their expertise and help you reach your goals faster!
I owe a lot of success to my mentor. Although he was skeptical of me at first, he recognized my efforts and helped me to become a mentally strong investor.
5. Join a Community of Like-Minded People
There is a saying, “Your peers make you poor.” Thus, join a group of people that also share your same mindset. That positive energy around you will encourage you to become more than you are!
You can find meetups in person and online. It is also a great way to network, which can lead to more opportunities to build wealth!
Having a growth mindset can help you improve various aspects of your life. If you want to start building wealth, find out what is your “Why?” This fundamental question will flip the switch in your mind and lead you to success.
Although people may differ from you, they won’t hold a fixed mindset entirely. Everyone can develop a growth mindset, but you don’t need a “growth mindset intervention” to convince them.
You can tap into a person’s true potential if you value an intelligence personality. When it comes to wealth, it’s not about how much money you have. Instead, it’s about how much time you have!