Some years ago I lived in Italy for a few months, sharing a Tuscan villa with an elderly gentleman, a cheerful widower who was all of 92 years old. It was unusual, unexpected and extraordinary, and I’m glad to remember Rodolfo here for a moment.
Tell you why: amazingly, he was still competently driving (although he did graze the villa’s gutter downpipe once or twice), darting around the countryside to visit his children, grandchildren and great-grandchildren.
More remarkably, he was still focused on continually learning. At the time, next up on his list were tackling the world of computers and learning how to speak English. At 92!
Definitely someone I wanted to be like when I grew up.
We all tend to take on one of two mindsets in life: either one that is ‘fixed’ or one that is ‘growing’. Basically, either we hold that we’re already as smart and talented as we’re ever going to be, or we can have the attitude of continually being able to learn and grow our abilities further. Unfortunately many of us unintentionally fall into seeing our intelligence as fixed, and it turns out that can make a huge difference to our success.
This has been richly explored and elegantly put forward by renowned researcher Carol Dweck – whose work, I’d say, relates not just to intelligence but our financial IQ, too.
Are you good with money?
If you look at it from a fixed mindset, you may see money smarts as a talent you either have or you don’t. If you’ve got it, all you have to do is dial it up and use it without much effort. It comes easy: calculating the cost of credit, understanding how mortgages work or figuring out your strategic asset allocation for investing. But look out – this mindset could put you in difficulty when obstacles arise, and you may peter out before reaching your highest potential.
With a growth mindset on the other hand, your money smarts can always be developed further through hard work and dedication – and whatever talent you have already is just a starting point. This mindset not only helps you extend your ability, though, it creates resilience so you can weather any storms that may come. With this mindset, you can reach ever higher levels of achievement.
When the going gets tough
Dweck’s key point from her years of study is that those who see intelligence as fixed and unchanging tend to avoid challenges when they come up, give up easily in the face of obstacles and see any effort required as just not being worth it. In the face of negative criticism or finding that others around them are successful, they ignore useful feedback and feel threatened. Instead of achieving their full potential, they flat-line and fizzle out.
Those with a growth mindset, instead, reach higher levels of achievement. Looking to learn, they embrace challenges that arise, don’t give up even though there are setbacks, and put in the effort needed to master a subject. Criticism isn’t negative – they learn from it – and others’ success is inspiring, not threatening.
It is very much the mindset of an entrepreneur – those who run a higher risk of failure yet go on to create real wealth. In fact, having a growth mindset puts failure in a completely different light: it’s a learning opportunity.
Why it’s so hard to talk about money
If we look at money smarts as something only some people are capable of having (believing that either you’ve got it or you don’t), then we become more eager to show that we are among those with a high financial IQ. If our mindset is fixed, we want to look smart.
I think this is one of the reasons it’s so hard to talk about money in our culture today – we may be falling into a fixed mindset and not wanting to uncover our money messes, warts and all. Someone might think we’re not great with money.
Yet we are all in the process of becoming our best selves, aren’t we? And with money matters so complex, there’s always more to learn. One of the reasons why we have this blog is precisely that. I’m not the brains behind it; if anything I’m the voice of experience – the guy figuring it all out alongside everyone else. The goal is to help each other along the way through this conversation.
The good news: mindsets can change
At Sorted we’ve got this core belief that we can all grow to make smart decisions about money – we just need the right tools, information and encouragement. We all can learn the skills and the right lessons to navigate through a lifetime of choices, have the confidence to ask the right questions and be on the winning side of our decisions.
But we’ll need to keep growing our financial IQ. And changing our mindset if it gets fixed.
Around that time when I lived in Italy – and perhaps I remembered this as I marvelled at Rodolfo’s life – another friend told me to look at the life of any plant. “The moment it stops growing is the moment it basically dies,” he told me. That’s an image and an attitude that has stayed with me years later.
Got to keep growing.
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