One of the greatest hurdles to financial independence is a consumer mindset. While most people work hard to earn money, they could struggle throughout their lives even with an increase in income. With so much marketing surrounding us in our daily lives, it’s no wonder consumerism is now one of the biggest threats to financial well-being. The urge to buy material goods and services is so strong that millions of people sink into debt to fulfill instant gratification.
If you want to empower yourself financially, you have to choose between a consumer mentality and an investor mentality. People with an investor mentality are likely to thrive, while consumers can eventually go broke due to accumulating debt.
Read on to discover the distinction between a consumer and an investor, and how to change your mindset to prosper financially.
The Consumer Mentality
The consumer mentality focus on spending whenever you have money and even when you don’t. With billions of dollars spent on marketing today, many people are under pressure to spend and keep up with their peers. The consumer mindset is about consumption, not production. A consumer mentality pushes you to keep up with the trends rather than making your money work for you.
Some signs that you have a consumer mindset include:
- You have the urge to reward yourself with expensive things after a hard day at work.
- You use your credit card for unexpected expenses instead of setting up an emergency fund.
- You are always looking for discounts and clearance sales, even when you don’t need the items.
- You are keen on social trends and convince yourself that you need to keep up.
- You put off investing because you don’t have enough money for it.
- When it comes to investing, you’re skeptical and always asking if there’s a guarantee of returns.
The Investor Mentality
The investor mentality differs sharply from the consumer mentality in that you put your money to work and utilize trends to your advantage. For an investor, it’s all aboutfinding future opportunities and learning how to leverage them.
With an investor mindset, you set your mind on the future instead of the present or the past. You appreciate that you have to sacrifice something in the present to enjoy a brighter future. Here are some characteristics of an investor mindset:
- You put any excess money into investments.
- You value skills and invest heavily in learning new things and utilizing them to make money.
- You’ve built an emergency fund and avoid using your credit card to cover unexpected costs.
- You are averse to fads, and instead analyze long-term trends and look for ways to invest in them.
- You base decisions on return on investment (ROI), not instant gratification.
- You are aware of your finances at all times.
- You worry about not affording to invest.
- You let your money work for you.
While it may seem like fun living with a consumer mindset, your lifestyle can soon catch up with you. People with a consumer mentality tend to sink into debt and eventually go broke. They struggle to achieve their financial goals because they’ve never laid the foundation for the same.
Here are ideas to help you flip the switch from a consumer to an investor mentality:
- Set your financial goals.
- Start consuming knowledge, not products/services.
- Become a better financial planner by tracking all your expenses/using a budget.
- Identify your spending weaknesses and work on them.
- Work on eliminating bad debt.
- Invest any extra income/automate your savings to make it easier.
- Avoid the peer pressure to keep up with the trends. (Look for purchases that contribute to your life.)
Want to live a financially independent life? It’s time to flip from a consumer mentality to an investor mindset. This is the only way to realize your financial dreams.