I have been reading a book titled Mindset by Dr. Carol Dweck. In the book, Dweck explains how our natural abilities can bring us initial success in certain areas, but our ability to reach new heights is determined by whether we approach them with a fixed or growth mindset.

For example, a child may be naturally gifted in a particular area of their life, such as academics or sports, but how do they react when faced with adversity? If the person has been praised his whole life about how gifted he is and any struggle makes him feel like he is a failure, he is likely to have more of a fixed mindset. However, if the person is reminded that life is full of struggles, and it is these struggles that provide the opportunity to learn and grow, he will likely have more of a growth mindset.

This got me thinking about how this same fixed mindset versus growth mindset can also apply to finances. When we have a fixed financial mindset, we often struggle to balance the budget and grow our wealth. So often, we believe our financial situation is set and cannot be changed. When we make a bad decision, we tell ourselves how stupid we are and how we obviously will never learn to handle money well. We feel forced to accept where we are at financially. We never seem to be able to get out of debt or save for retirement, let alone give properly to the church and other initiatives that God has placed on our heart.

When we have a growth mindset, we don’t let our poor financial decisions define us. Instead, when we make a bad financial decision, we recognize it and decide to grow from it by learning from our mistakes. We don’t lie awake at night, wallowing in our own self-pity. Rather, our growth mindset allows us to evaluate and correct. Plus, it further fosters a love for learning and personal growth.

Do you have a fixed mindset about your finances or a growth mindset? The truth is we all have both a fixed and growth mindset. The key is to understand we have both, differentiate between the two in various areas of our lives, and determine how to attain a healthy growth mindset.