When it comes to reaching financial freedom, a large percentage of how successful you are can depend on the mindset you have. Things such as your emotions can control the decision you make, but more so, the mindset you have overall can drastically change the way you view money, but more importantly, wealth. 

The two most common mindsets are typically the wealth-building mindset and the saving mindset. The saving mindset is where you focus on saving money to prioritise financial security, whereas the wealth-building mindset focuses on building opportunities to create more money. 

But which one is “better”, and which is the best for you and your goals?

Keep reading to find out the difference between a saving mindset and a wealth-building mindset and how the two can influence how you see and make money.

 

The Difference Between a Saving Mindset and a Wealth Building Mindset

A wealth-building mindset and a saving money mindset have two very different opinions and values towards money and what the term “wealth” might mean.

The Saving Mindset

If you have a saving mindset, you are someone who prioritises financial security. 

You may even have a fear of losing money and make an effort to protect it. Although having a saving mindset can be beneficial and allow you to put money to one side for things such as emergencies and holidays, it can also lead to the scarcity mindset and other limiting beliefs that can negatively impact your ability to build on your financial situation. You may even find yourself living below your means just so you can build a cushion of “spare cash”. 

However, when done correctly, a saving money mindset can help you build peace of mind and financial stability, as you will have a fallback of finances if anything unexpected happens. It’s important to remember that in order to make a saving mindset work, you need to fight the fear of losing money and allow yourself to take small risks that could result in a better outcome.

The Wealth-Building Mindset

The wealth-building mindset is almost the opposite of a saving mindset in the sense that it views money as a means to make more and grow financially. 

If you have a wealth-building mindset, you will view money as a tool and focus on long-term wealth creation by taking calculated risks. You can do this through things such as investing in stocks.

However, just like a saving mindset, there are also some downfalls to a wealth-building mindset. Although taking well-thought-out and calculated risks can result in positive payoffs, there is a chance you can be overconfident with your risks. This can lead to rash decisions and negative results. For you to truly build your wealth, every investment you make needs to be thoroughly planned out and play a part in your overall goal to reach financial freedom.

 

Why Saving Alone Limits Financial Growth

Although a saving money mindset is great to ensure you have a fallback for unexpected charges and emergencies, it can actually limit your financial growth. The main cause of this is inflation. 

When you put money into a savings account, typically, the interest rate is lower than the inflation rate, meaning that by the time you come to use that money, it will buy less than it would have originally. So, the money you have in your savings account will have lost its value. Although you can argue that you have more money than you would have if you didn’t use a savings account, there is also the counterargument that you might have been able to double that amount if you had invested it in assets. 

The solution to this “problem”? Save and invest. It’s always sensible to have a savings account that you can fall back on, but if you want to build your wealth, you might need to invest as well. Investing allows you to use your money in calculated risks to grow your wealth and beat inflation.

 

The Role of Investing and Income Expansion

Investing and income expansion are two separate methods that can be important for reaching your financial goals. Out of the two mindsets, wealth-building and saving, it is more likely that a person with the former mindset has considered these two things.

Investing refers to committing your money to assets such as stocks and shares, with the ultimate goal of earning a greater return in the future. Whereas income expansion is a financial strategy which focuses on increasing the amount of money you earn right now. This can be done through things such as your primary job, a secondary job, or even investing.

When trying to build on your wealth, blending investing and income expansion can give you the best results. This way, you will improve both your immediate income and your long-term finances simultaneously.

For an in-depth look into these methods, take a look at our blog, “How To Build Multiple Streams Of Income”.

 

Shifting From Scarcity to Abundance Thinking

Shifting the way you view money can have a huge impact on your financial success. One of the best shifts you can make is altering your view on money from scarcity to abundance.

The scarcity mindset (often linked closely with the saving mindset) is where you fear never having enough money and/or losing what you have. You mainly view everything through the lens of ‘not having enough’, whether that be time, money, or love.

The abundance mindset (often linked with the wealth-building mindset) focuses on gratitude and recognising plentiful opportunities. You may celebrate small wins daily, and even challenge limiting beliefs that are holding you back.

Although you may be able to identify that you have a scarcity mindset, it can be harder to break the habit. Below are some practical steps to develop a wealth-building mindset that STARTrading recommends. 

Identify Your Scarcity Triggers

If you find yourself regularly noticing your “lack” of something, like time, money, etc., you should try to identify what triggered this way of thinking. Often, people find that this stems from a mindset they have learnt from a young age. Once you have identified this, you can begin to look into why and alter the way you react when said triggers occur.

Practice Gratitude

Instead of thinking things such as, “I don’t have enough,” or “X is more successful than I ever will be,” try to flip these on their head by regularly acknowledging what you do have, rather than what you don’t.

Ensure you celebrate even the smallest of wins, and soon you will retrain your brain to look for gratitude even in the most dire situations. 

Celebrate Others’ Wins Too

Instead of viewing people as your “competition”, you should view their wins as a positive, proving to yourself that change is possible. This will foster proof of possibility and maybe even inspire you to strive harder towards your goals.

Practice Positive Affirmations

Challenge those negative thoughts you may have by using positive affirmations. Reframe your negative outlooks to ones that will help you reach for goals rather than already believing you never will. For example, instead of saying, “I never have enough money,” try changing this to something like, “I can create growth opportunities.”

Give Back

Although you may believe that there is not enough to go around, this is incorrect. By giving back and practising generosity, you can alter this mindset to foster a sense of giving and help you to believe that there is enough for everyone.

For more tips on how to change your mindset from scarcity to abundance, read our blog “How To Rewrite Your Brain For A Positive Money Mindset.”

 

Improve Your Wealth Building Mindset With STARTrading

STARTrading is not about get-rich-quick schemes, fast cars, and fancy watches. In fact, we view “wealth” as financial peace, community, and connections with the people you love. And we help people reach these goals through the use of safe and successful trading. 

If developing a wealth-building mindset through trading sounds like something you would like to learn, why not join our free trading course? Here you will learn all the basics of trading from our Founder, Lewis Crompton, and insider strategies to enhance your earnings. He uses his years of experience in the trading industry to successfully teach others how to be confident when trading, but also how to mitigate risks.

For more information, please reach out, or take a look at the other beginner swing trading courses we offer.

 

Wealth-Building Mindset Vs. Saving Mindset FAQs

How Much Should Someone Save Before They Invest?

There is no set amount that someone should save before they begin to invest. However, it is always recommended that you have enough money to support your life-style before you put anything into investing. This is to ensure that, should the investment fall through and you make a loss, you still have enough money to live on. Start by investing small amounts to build your confidence and knowledge, and then slowly increase once you feel you are ready.

Can You Have A Saving Mindset And A Wealth-Building Mindset?

Yes, you can have both a saving mindset and a wealth-building mindset.  Utilising both mindsets may actually prove to be the best solution, as saving money is the foundation for building wealth. However, ensure that you have a positive outlook on money and not the scarcity mindset when you start to save. View saving as empowering and shift focus to long-term financial freedom for the two mindsets to work cohesively.

How Much Time And Money Do I Need To Spend On Investments For It To Be Worthwhile?

There is no set amount and time you should spend on investing to make it worthwhile, as it always depends on what you view as “worthwhile”. If you are cautious of using your time on investing when you could be doing other things, you may have also fallen into the trap of a scarcity mindset, where you feel you do not have enough of a particular thing.

With STARTrading, we will show you how to invest successfully and safely by using only 30 minutes a day, and by starting with small amounts. We will also help change your views from a scarcity mindset to viewing opportunities for growth.

Can Saving Money Build Wealth?

Absolutely, saving money can help build your wealth. You will put money away into a savings account, which means you (hopefully) won’t spend it and will develop interest on the amount as time goes on. However, some interest rates are lower than the rise of inflation, meaning that when you are ready to use your savings, you might find yourself able to purchase less with the money than you would have been able to before. The best approach may be to save your money while also looking for opportunities, like investing, where you can grow that amount too.