"Bad with money" is a fixed mindset
After writing my post about why I don’t think there’s any such thing as being “bad with money” I was curious what other people thought.
I didn’t want to have to explain my whole blog post on social media, so I thought I’d just do a quick LinkedIn poll and see what came back.
Image shows a screenshot of a LinkedIn post and poll by Martha Lawton.
The post says:
“I'm getting increasingly annoyed with the phrase "bad with money". So many people say about themselves "I'm bad with money" and just shrug, as if that's all there is to it.
I don't blame individuals, because this is a common idea, but I think it's super unhelpful.
We can all grow and the label "bad with money" cuts people off from that growth.
What do you think?”
The poll question is “Are some people just “bad with money”?”
The answers are:
“Some people are bad with money” 23% of the votes
“Everyone can improve” 72% of the votes
“Other (please comment)” 5% of the votes
In my previous post I talked about how saying someone is “bad with money” or “good with money” is simplistic and disguises all the many different skills needed to manage money well.
This poll highlights another damaging part of the “bad with money” label. As with almost all labels, it promotes a fixed mindset. For those of you who aren’t familiar with fixed/growth mindsets, I’ll give a quick explanation.
A person with a fixed mindset believes that our skills and abilities have inherent limits beyond which no amount of practice, study and effort can take us. A person with a growth mindset believes we have infinite capacity to develop our skills and abilities as long as we practice, study and work.
A fixed mindset says that talent is everything, you’ve either got it or you haven’t. A growth mindset says that we all start from different places, but where we end up is a combination of our own efforts and the resources available to support us.
It’s worth noting that a growth mindset doesn’t say anything about the rate of progress, only that progress is always possible. Slow improvement still counts. It also makes it very clear that resourcing is important, this isn’t a viewpoint that says the world is a pure meritocracy and there are no structural advantages or disadvantages.
If you say that some people are just “good with money” and others are just “bad with money” and that’s all there is to it, you’re expressing a fixed mindset position about money. The trouble is that it’s a self-fulfilling prophesy. If someone is just “bad with money” why should they try to manage it? They are doomed to failure and might as well give up. Similarly there’s no point is trying to teach or coach anyone to get better with money if it’s just in their nature to be “bad with money”.
One of the people who commented on my post said something similar.
Image shows comment from Penny Delve
“The danger with labelling yourself is that you become that label. Our language is very powerful and our subconscious is always listening 👂.
We all create our own experience so there is a choice. So I voted ‘everyone can improve’ because we always have that choice to change Martha Lawton 🙌”
Not only that, but even people whose fixed mindset puts them in the “good with money” category, can end up very anxious about their money skills. This is because if your ability with money is fixed and you make a mistake or have a financial setback then a fixed mindset says that’s because you’ve reached the limits of your money ability. There’s no way to correct for the mistake in future. A fixed mindset may even tell you that you’re not as ”good with money” as you thought, perhaps even “bad with money” after all.
Worse yet, because in a fixed mindset every skill or behaviour is a fundamental unchanging characteristic of who you are, any time things go wrong that’s a sign you’re a lesser person than you thought. This means that a person with a fixed mindset who gets into debt will either see themselves as a helpless victim and expect someone else to fix the problem for them, or will be too ashamed to ask for help because it feels like exposing their fatal flaw.
It’s an insecure position to be in.
On the other hand, a person with a growth mindset around their financial skills will be actively seeking to improve and will perceive a setback or loss as a chance to learn. They can think clearly about whether they made a mistake or whether they just had bad luck. Neither answer is a threat to their sense of their own value as a person. If something goes wrong with their finances, even a serious debt issue, they will be ok asking for help and will hope that their adviser can help them understand how to fix things now and avoid similar problems in the future. People with a growth mindset tend to be open about their shortcomings because they see themselves as a perpetual work in progress. Today’s failing is tomorrow’s strength.
As you might guess from all of this, people who have a growth mindset about an activity, whether it’s money management, acrobatics or playing the bassoon, tend to achieve more in the long run, because they will usually be more persistent and creative in their approach to developing their skills.
The good news is a fixed mindset can grow into a growth mindset, it’s just a matter of talking about yourself and others slightly differently. Instead of saying “I’m bad with money” or “I’m good with money” (fixed permanent personal traits) you can say “I’m making a habit of tracking my spending, but I don’t do it every day yet” or “I’ve made a plan for my financial future and I’m happy with how well I’m sticking to the plan” (actions and outcomes).
You’ll find you feel more in control with a growth mindset and it will help you to a more secure financial and emotional future.
You can learn more about fixed and growth mindsets and Dr Carol Dweck who did the research around them in this episode of my podcast, Squanderlust.