Money Mindset Makeover: Transforming Your Finances in the New Year 2024

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Your mindset towards various aspects of life determines how you perceive and tackle the challenges you’re faced with, the energy you put in to achieve your dreams, and ultimately, the path you carve toward success. One such aspect is money. Your money mindset is how you think about money – your beliefs, behaviour, and attitude, and it determines how successfully you manage your finances.

Let’s take a small day-to-day life example here – Imagine you’re walking through a market and see a trendy smartwatch. It’s new, very popular and the best part is it’s on sale. Now you already bought a pretty cool smartwatch 3 months ago so you don’t need the new one, but all your friends have it and the deal is pretty good. You’ve got plenty in your bank. Do you buy it? This decision depends on your money mindset.

Winston Churchill once said, “Attitude is a little thing that makes a big difference.” How successful you will be financially depends on your attitude towards money. So if you need a money mindset makeover, the New Year brings you the perfect opportunity.

The New Year is all about that – change. We all make resolutions with the hope of changing our attitudes and lifestyles for the better. So let’s take a look at how you can make positive changes in your attitude towards money and transform your financial planning in the New Year.

Understanding Your Current Money Mindset

The Greek philosopher Aristotle said, “Knowing yourself is the beginning of all wisdom.” Before you start anything, you have to understand your current money mindset.

What are your habits and behaviours with money? Are you a natural saver or an impulsive spender?  Do you ever budget or just spend as you like? Do you get stressed easily about your finances? This mindset is shaped by your beliefs and experiences, such as how you were brought up, how your parents were with finances, and how you have fared with your own money decisions so far. Were your parents always on a strict budget? Did they ever prioritise savings? Did you live paycheck to paycheck or was there more than plenty to go around? Did you ever lose money in an investment and decided investing just isn’t for you? Do you think only the rich can meaningfully invest money? You have to ask yourself a lot of questions to introspect, so ask one more – “Why am I the way I am when it comes to money?” This is the big question that will give you some big answers so you should be honest with yourself. Reflecting on this will give you some valuable insights – both negative and positive, so you can start to focus on taking the bad out while keeping the good and enhancing it.

The Power of Positive Thinking

Cultivating a positive mindset can do wonders for your finances. Let’s take another example – You want to save money, say Rs 1 lakh this year. Even if this is not possible for you to do, don’t say “I can’t save Rs. 1 lakh this year.” Say “I can save some money this year and eventually I’ll hit my goal.” The idea is to replace negative thoughts with positive ones. This is very easy to say but quite hard to do. This change won’t happen overnight so take small steps towards positivity. Don’t think about what you don’t have but rather how you can make use of what you do have. Appreciate and be grateful for it. Revel in the smallest financial wins. That dress that cost Rs. 1200 but you bargained and snagged at Rs. 900? Look at you go! Surround yourself with positive people, ones you see having a healthy money mindset. 

Let go of your old failures

Sometimes negativity about the future comes from the mistakes we made in the past. Mistakes are a part of life so forgive yourself for any financial mistakes you made. Do not dwell on them but don’t forget them either. Learn from them, see what went wrong, how it can be avoided in the future, and how you can fare better next time. If you ever invested in equity and incurred a loss, would you let that discourage you from investing in equity altogether? No. Educate yourself about what went wrong last time and build on your failures. If you are ever struck with hard times, remember:

In the middle of every difficulty lies opportunity. – Albert Einstein.

The power of positive thinking lies not just in replacing your negative beliefs but also in building a mindset that tackles challenges as opportunities for growth.

Setting Financial Goals for the New Year

Another important thing you need to do for the New Year is goal setting. Start setting your financial goals clearly and make sure that they are realistic. Don’t just say “My goal is to save money for a vacation.” Rather, say “My goal is to save Rs. 50,000 this year for a trip I’ll take in 14 months.” By saying so you’re being more specific and setting a time horizon, which will help you keep track of your progress better, which will ultimately keep you motivated to work towards that goal.

Sometimes when you realise that you’re not going to achieve a goal you set, you can feel discouraged and ultimately abandon the plan you made to get it. That’s why goals should be realistic and attainable. As you get closer to achieving a realistic goal, not only will your motivation grow, but you will also gain a lot of confidence in your financial planning and money management skills.

“A goal without a plan is just a wish.” – Antoine de Saint-Exupéry 

So let’s make a plan to fulfill those wishes.

Creating a Budget That Aligns With Your Goals

A budget is how you achieve your goals. Here’s how you do it:

  1. Start by knowing how much total income you are bringing in. This includes primary income like salary, and secondary like part-time, freelance, monthly investment returns, and rental income.
  2. Now you have to see where your money is going. Classify your expenses into three categories – essential expenses, non-essential expenses, and savings. Essential expenses are necessary, like rent, groceries, electricity bills, or transportation costs. Non-essential expenses are expenses you spend on recreation, entertainment, or hobbies.
  3. The general guideline is to allocate 50% of your income to essential expenses, 30% to non-essential expenses, and 20% to savings. This is flexible because everyone has different goals. For example, if your goal is to set up an emergency fund of Rs. 1 lakh over the next year, then your budget should reflect that with a bigger savings portion.
  4. Here’s a little bit of wisdom from Warren Buffett – “Do not save what is left after spending, but spend what is left after saving.” Try to prioritise your savings.
  5. The budget is now outlined. Now you can look into the non-essential expenses category to figure out what cuts you can make to save more, or pay off your debt.
  6. Keep your budget realistic and don’t make too many cutbacks. This will allow you to stick to your budget, which is the hardest part of the entire process. If your budget is realistic you can easily follow it along and when you don’t make too many cutbacks you can maintain your desired lifestyle and not lose motivation. Remember, having fun is important too!

Also Read: Understanding Budgeting in Financial Management

Embracing a Growth Mindset in Finances

“No matter what your ability is, effort is what ignites that ability and turns it into accomplishment.” – Carol Dweck, American psychologist responsible for popularising the concept of growth mindset.

A growth mindset is all about believing that you can improve your skills and knowledge through dedication and hard work. The flip side of this coin is a fixed mindset, which means thinking that skills can’t be gained through effort. For example, one might think, “I don’t think I can ever do taxes myself because it’s all so complex and confusing.” This person has a fixed mindset. If someone says, “I’ve never done taxes myself but I’ll learn about the various aspects of tax planning so I can confidently do them next time.” 

This person is approaching this situation with a growth mindset. With such a mindset, you’ll see every setback as an opportunity for self-improvement. You will not back down when faced with challenges, instead you will take them on with confidence, and always seek more knowledge about the financial world. 

Building Healthy Financial Habits

“A habit cannot be tossed out the window; it must be coaxed down the stairs a step at a time.” -Mark Twain

And Mr. Twain is spot on. If you have a bad financial habit like overspending, or not saving enough, you’re not going to kick it overnight. Similarly, building any healthy financial habit will take time so start as soon as you can. You can start by listening to finance podcasts, reading finance articles, or watching videos. You’ll learn about the jargon, workings of the financial world, history, and current developments. 

As your financial literacy gets better, you will get more confident about the decisions you make, and you’ll actively change aspects of your finances for the better. Another good habit to build is periodically reviewing your overall financial plan, which includes budget, investments, retirement savings, and debt liabilities among other aspects. When you regularly monitor these, you leave less room for mistakes and you can make adjustments to make sure you’re still on track. Actively look for solutions in areas where you’re having trouble. 

For example, if you have trouble setting aside savings, make it the first thing you do when you receive your income by automating the task. Remember, small but consistent steps can lead to big long-term results.

Also Read: The 5 Simple Habits of Financial Fitness!

Seeking Professional Guidance

Here are some ways in which an expert in personal finance management can help you cultivate a healthy money mindset:

A financial management consultant can help you create a personalised financial plan.

  • They can help you set realistic goals, and budgets, and develop better habits.
  • One might carry many misconceptions about finance like mutual funds being extremely risky. A financial management consultant can assist by addressing any such fears and misconceptions.
  • They can educate you and make you aware of various concepts in personal finance management and financial terminology.
  • They can analyse your spending, saving, and investment habits and give feedback.


A change in mindset requires an honest and thorough introspection. Look inward and replace the negativity with positivity. Set clear goals and make a plan to achieve them, adopt a growth mindset, and build healthy habits. If you’re ever unsure about your plans, don’t hesitate to seek help from a financial or registered investment planner. Getting a full makeover will be a slow process, but it will help you build an unbeatable mindset and set you on the path to success.

Let’s finish with the words of Mahatma Gandhi:

“Your beliefs become your thoughts, your thoughts become your words, your words become your actions, your actions become your habits, your habits become your values, your values become your destiny.”

So in the new year, focus on your money mindset and take control of your financial destiny.

Wishing you a joyful and prosperous New Year!