How important is mindset? It turns out, mindset impacts almost every aspect of our lives, from finance to education to equality to corporate culture (and beyond). As a strong believer in the power of mindset, I’m a huge fan of Carol Dweck and her work. Dweck is a professor of psychology at Stanford and a leading researcher in the field of motivation. She’s also the best-selling author of Mindset: The New Psychology of Success.

In her book, Dweck identifies two core mindsets:

  • A fixed mindset, the belief that one’s abilities were carved in stone and predetermined at birth.
  • A growth mindset, the belief that one’s skills and qualities could be cultivated through effort and perseverance.

In her TedX talk, Dweck talks about an experiment that illuminates the difference between the two mindsets. In the study, she gave ten-year olds a problem that was slightly too hard for them. Those with a growth mindset said things like, “I love a challenge,” or “I was hoping this would be informative.” These individuals wanted to learn and grow. On the other hand, those with a fixed mindset felt it was tragic and catastrophic when they couldn’t solve the puzzle easily. They felt that they had failed, which they equated with not being smart.

Long story short: Dweck’s research shows that those with a fixed mindset run from difficulty, and those with a growth mindset engage with challenge and exhibit a willingness to learn and grow from problems or puzzles.

Think about your own mindset for a moment. How would you describe your behavior when it comes to difficulty and challenge? In what ways are your growth-minded, and in what ways are you fixed-minded? You might notice that you are predominantly of the growth mindset, but that you can get triggered into a fixed mindset by certain topics, people, or situations. We all have our own triggers, and taking the time to understand them is one of the most important steps we can take in fostering a growth mindset.

For many of us, our finances in particular can trigger a fixed mindset. Even if we are confident in other areas of our lives — at work, in our relationships — we don’t bring that same willingness to engage and learn to our personal finances. Our inabilities feel carved in stone, and it feels futile to even try to learn. So instead, we run away. This prevents us from facing what’s happening in our financial life and keeps us from achieving our goals, which feels like yet another failure. A fixed mindset creates this endless cycle.

A growth mindset, on the other hand, does the opposite: it brings us closer to our goals and helps us approach challenges with curiosity and a willingness to learn and engage. Shifting to a growth mindset in our money lives is one of the most effective strategies I’ve seen for long-term success in my clients. These clients are willing to experiment with different strategies and persevere through roadblocks and hiccups. They are more confident and believe that with effort and determination on their part, success lies ahead.

So how do we shift from a fixed mindset to a growth mindset? First, we adjust our self talk around setbacks and failure. For example, every person I work with keeps a money journal in which they write down everything they spend and earn. This process reconnects us to where our money is going and creates a consciousness around what we are spending. For most of us, this is a brand-new habit and inevitably, we forget to log a few things, or we miss a few days worth of spending. Those in a fixed mindset think, screw it, I failed, and stop keeping their money journal until they see me next. It’s very similar to how, when we “mess up” a diet, we end up eating an entire bag of chips or entire cake. It’s an all or nothing mentality. It’s either done perfectly, or a total failure.

Those who have a growth mindset, however, continue to keep their money journal even after forgetting a few entries or days. They try to remember what they missed and they pick up where they left off. The growth mindset enables them to get the most out of the process as possible. And in reality, the purpose of keeping the money journal isn’t to do it perfectly. It’s the experience of keeping it, including encountering the hiccups along the way. I always ask my clients to notice what they say to themselves in those moments when they mess up. What does their self talk sound like? Is it promoting action (or inaction) that propels them closer to their goals, or is it pushing their goals further away?

If your self talk is negative, I have a little trick. For those of us who have a tendency to chastise and punish ourselves for mistakes or “failure,” I recommend looking at the activity as if you were a detective. What about the process can be improved next time? How can we set ourselves up for success? What got in the way this time? When we approach things from a truly inquisitive place free of judgment, we’re actually able to learn more. We’re just gathering information about places where we encountered difficulty. These trouble areas are where the potential for real growth and improvement lies.

If you’re feeling stuck in your personal finances, start by looking to your mindset. Are you approaching your money from a fixed or growth perspective? Start with a small step in your financial wellness and apply the principles of Dweck’s mindset to that specific step. Notice any triggers that come up and focus on sticking with the process and persevering through roadblocks, rather than being adamant about it looking “perfect.” Failure is a great teacher, and curiosity about where we have room to improve is an important part of the growth mindset. We’re never striving for perfection; we’re just taking things step by step and learning as we go.

Originally published at