Money mindset: How do I deal with money?

What does "money mindset" actually mean?

The money mindset describes your inner attitude and how you handle your own money. "Financial self-efficacy is an important aspect for me," says Margarethe Honisch. Do I have confidence in my own abilities? Do I trust myself to deal with my finances and make my own long-term decisions? "Logically, if I don't believe in my financial competence, I won't even start to deal with the topic," she explains.

Margarethe Honisch came to Germany as a refugee with her family when she was a child. "Money wasn't a taboo subject for us, but it wasn't one that was talked about much either," she recalls. "But I learnt early on that the more I have, the more freedom I have to make decisions."

As a female financial expert, she often experiences the social expectations that still play a role: Women should "not want too much", not be selfish - especially not when it comes to money. These ideas often continue to have a subconscious effect. "I work with the idea that money is a tool. It gives us freedom, flexibility and even health," says Margarethe Honisch.

The origin: imprints from childhood and society

In Germany, money is still a taboo subject - which is why Margarethe Honisch always asks in her courses why the participants haven't talked about it before. "And there are always two answers: either it's shame that you have less than everyone else, or it's fear of envy because you have more than everyone else," she reports.

The causes for both feelings, but also for the lack of access to the topic, often lie in childhood. During this time, we are very dependent on external guidance and usually adopt what our parents and those around us say or how they behave. These imprints also influence how we deal with money in adulthood: we remain frugal, we think that money has to be earned hard, we believe that nobody earns much money with journalism or that there are much more important things than money.

Psychology also calls this the "confirmation bias". The term describes how we unconsciously focus our attention on the aspects that match our inner perception of the world. We tend to make decisions in such a way that their consequences confirm our attitudes. If you think you can't handle money, you are less likely to buy a financial book and probably won't join in the conversation with your friends about salary and pension provision.

Money is not that important to me ..

"I very often hear the phrase: 'Money is not that important to me'," says Margarethe Honisch. This implies that money is being compared with something else: Money is not as important to me as my relationship, money is not as important to me as my children, money is not as important to me as my health. "And I always ask myself, why does it have to be a comparison?" says the expert. "I can just say: money is important to me. Full stop. That doesn't make me any more selfish than anyone else."

At the same time, it can be observed in society that people measure their own worth in terms of money. If you earn a lot, you have something and can do something; if you earn less, you are worth less. "A bank account says nothing about how valuable I am as a person, but rather whether I was lucky enough to receive financial education at an early age," says Margarethe Honisch. Her examples show the complex influence of our relationship with money - and why it is therefore very helpful to become aware of our own thoughts.

Beliefs: Handbrake or accelerator pedal

"The best step is to really sit down and think: What do I think about money? How do I feel about this topic?" However, to avoid just scratching the surface, Margarethe recommends writing down in a notebook or using the note function on your mobile phone whenever a thought or feeling about money comes up over a period of weeks. "Sometimes it's just a thought that makes me hesitate about something, that makes me think: 'I can't buy that now' - or I get irritated when friends have a different opinion."

Only then can we take the step of working with these beliefs and transforming them into a positive, self-determined version. "Beliefs have developed over decades, I won't be able to dismantle them in one evening." Because only when a new sentence sounds right to me can I internalise it. "I myself was taught the belief 'money has to be worked hard for' and I'm still working on it," says Margarethe Honisch.

Financial planning takes time

It's not just new beliefs that take time; Margarethe Honisch recommends taking your time to build up financial knowledge that will prevent you from making expensive decisions. She gives an example:

"If you invest 200 euros a month as quickly as possible now and do it through a bank, with a 2.5 per cent annual management fee, compared to an ETF savings plan you choose yourself, with only 0.2 per cent costs - then after 30 years you will either have paid 50,000 euros in fees to the bank or 5,000 euros in costs for the ETF. And that's something you just have to understand. Money that I pay in fees to the bank can't work for me."

This is where financial self-efficacy comes into play again and Margarethe Honisch's tip: "Give yourself enough time to acquire enough financial knowledge so that you can make decisions yourself with a good feeling."

5 exercises for your money mindset