You may not realise it, but how you think about money affects every aspect of your financial life.
It also affects every part of your mental, physical and emotional life. Money is everywhere and impacts every facet of our life.
Whether we think we love money, hate money or somewhere in between, it is something we cannot escape. So knowing this little morsel of information means that when I say that your money mindset is key to your success, past, present and future. I want you sitting up and listening.
What you believe about money is true
Your money mindset is the set of beliefs and attitudes about money. It influences everything from how you save (or don't save) to how you spend (or don't spend).
For example, if you have a positive money mindset, you believe that money is a good thing and can use it to improve your life. On the other hand, if you have a negative money mindset, you may believe that money is working against you or that you will never have enough.
The first step to changing your money mindset is to become aware of your thoughts and beliefs about money. Awareness is crucial. One of the main reasons is that if you're not aware of something, how can you possibly change it? How can you pivot, flex or push forward with anything worthwhile if you don't know your starting point?
Awareness is key to money
One of the best ways to illustrate this type of awareness is through the concept of the four stages of competency developed by Noel Burch in the 1970s. Burch's theory ( Burch is an underrated genius, in my opinion), more commonly known as the four stages of competence or the competency ladder, puts forward that there are four stages of learning any new skill.
1. The first stage is Unconscious Incompetence, in which the individual is unaware of their own incompetence and is thus unable to improve.
2. The second stage is Conscious Incompetence, in which the individual becomes aware of their incompetence and seeks ways to improve.
3. The third stage is Conscious Competence, in which the individual has mastered the skill and can perform it proficiently.
4. The fourth and final stage is Unconscious Competence, in which the individual has mastered the skill to such a degree that it becomes second nature.
While Burch's theory is frequently attributed to Abraham Maslow, it does not appear in any of Maslow's works. When you think about it in practical terms, we all go through these stages to master any skill, we may not consciously tick off every box as we go along, but we must pass through them each time to level up our knowledge of anything.
Remember learning to drive?
When we're young, we don't know that we don't know how to drive a car. So you were in the blissful unconscious incompetence. Then there comes a day, maybe it was strapped safely in your child seat, or if you were from my generation, running free, landing your sibling a sly dig while playing 'yellow reg' before jumping into the front passenger seat for fear of retaliation. Which, let's be fair, was inevitable.
Sometime around then, you realise that you don't know how to drive, and you start to tick off the days until you can learn. This is conscious incompetence.
Finally, you start to get lessons, the car jerks and jolts, and you nearly take out a street light in the process. But you find that you improve over time, but it takes all your concentration. This is the hard work, conscious competence stage.
Eventually, you realise that you have driven from A to B and can't even remember the journey. This is because you know how to drive so well. The smooth gear changes, turn-offs, and roundabouts come naturally to you. You know the road like the back of your hand. This, my dear friend, is conscious competence.
And that is the place to be. Low energy, low stress, easy because you know your stuff.
Money is no different.
We begin life without any idea of what money is, let alone how ingrained it is in our world. We are oblivious to its powers. Then there comes that inevitable day. Usually, a day when we want a sweet or toy but don't have the means to get it. That is when we realise that this money thing is up to something, and we need to know more about it to get the stuff we want.
We've realised that money makes many things happen. But we have no idea how to use it.
But, we have to use it whether we like it or not. It's what oils the system. Money is how we are paid. It's how we get stuff. It's how we create status and security and gives us our stand of living.
Two stages down already. But this is where the stumbling blocks begin to raise their ugly heads.
Level up your money competence
Unlike driving a car, you have no choice in this world except to use money. You can choose not to drive but living in a modern society means money management skills are a must.
However, not everyone realises this. Just because you earn, inherit or are gifted money does not give you any automatic competence. Many (really most) people go through life without developing this skill.
They don't take the lessons. They don't practice. They don't sit down and get to know what their money is doing, where their money is going or what direction they want their life to take over the long term.
They simply flip-flop from one pay period to the next, hoping that someday it will work out.
As a result, many of us get stuck in the conscious incompetence stage and just accept this as the way life is.
But my dear friends, this is not true.
You're only scraping halfway there when it comes to money.
There are two levels above this, and that's where the fun begins.
Once you understand that money is a skill, the goalposts change.
The goal posts change because when money is reframed as a skill and not an emotional thing we have to put up with, you are in a different lane altogether.
Now the keys are in your hand to change things. The locus of control is in your favour.
You can learn how to manage money. You can practice and plan, flex, refine and pivot.
This part can be clunky and takes conscious energy, just like it did when we were learning to dive. But the difference now is that every time you try, every time you put energy into improving your money skills.
They get better!
You have levelled up ever so slightly each time.
And thanks to our powerful minds, we never lose what we've learned. On the contrary, we only get stronger and better faster.
Over time as we keep honing and practising. Then a magical thing happens.
One day we wake up and smile. There are no worries. We realise that money is fast creating the life we want. Wealth is building, and a new world has opened up to us—the beautiful world of unconscious competence.
The exciting money secret
I'm going to let you in on something else here too.
When you reach this glorious point and handle money easily, and your relationship with your finances is strong, the systems in place take no energy.
You have unlocked the next level. This next level is whatever you dream it to be: build true intergenerational wealth or create solid financial security for you and your loved ones.
Whatever it is, you have unshakeable foundations to build that dream life.
The freedom and choice are all yours to create the life you've always wanted with no fear.
Now, that's the beauty of changing your mindset and reframing your money life. It could be the very thing to change your life.
Understanding that money is a skill that anyone with the right guidance, mentoring, practice and effort can master. You can master it. You can master it just like you have mastered so many other amazing things in your life to date.
Think, what would your life be like if money was easy and you used money like a skilled craftsperson?
How great would that feel?
How much would your life transform for the better?
Author Kel Galavan
Kel Galavan, otherwise known as Mrs Smart Money, is a money mindset mentor, author and QFA. In 2018, Kel penned the sell-out book Mindful Money, developing a powerful coaching formula that has been designed to help others take the stress out of money and build the life they deserve. By harnessing her experience and financial background, Kel empowers her community of engaged followers with the skills they need to apply the power of mindset and establish simple systems, helping them on the path to financial security, and creating healthy money habits from the inside out rather than the outside in.