Incorporating Growth Mindset in Personal Finance Classes

When it comes to personal finance education, instructional goals tend to focus on teaching students strategies and providing them with tools to help with money management. Although these resources have their place, helping students develop a growth mindset increases the chances that they will use tools like budgets and investing apps or strategies like financial goal setting in the future.

In 2020, The Decision Lab conducted the Mind Over Money study in partnership with Capital One, which found that a simple change in perspective can make a big difference in one’s financial well-being.

Connecting Mindset and Money Management

Responsible money management begins with the right mindset. One way to help students establish a strong “why” for money management is to surface some of their underlying beliefs about money and then work with them on developing a growth mindset as it relates to finances.  

One way to surface these beliefs is to ask students to fill in the blank: Money is _______. How do your students fill in the blank? Is it positive or negative? Their initial response can reveal their attitude toward money. These attitudes are learned by what they see and hear others say on a regular basis or by past experiences that they may have had with money. Taking time to address the root of these beliefs is essential before introducing students to financial tools and strategies. 

Helping students understand how to differentiate between a growth mindset and a fixed mindset can be helpful as they start to shift their mindset to positive beliefs about their financial well-being. A fun way to help students practice differentiating between growth and fixed mindsets is to play a game with various statements where students identify which mindset is represented.  

A growth mindset statement could be “I invest my money now so that I can become wealthy later.” A fixed mindset statement could be “I don’t have money to invest, so I’ll never become wealthy.” I’ve presented this activity to both middle and high school students in the form of a flash-card game, and they have a fun time playing together while learning how to differentiate between growth and fixed mindsets.     

Adopting an ‘I can’ Perspective

Even if students have had negative experiences with money management or have observed the adults in their life make poor financial decisions, the future of their finances begin with adopting a positive “I can” attitude.  

One way to help students adopt an “I can” attitude is to encourage them to approach financial challenges by asking the question “How can I?” instead of saying “I can’t.”

Approaching challenges with the question “How can I?” encourages students to think about options and solutions to their problems. You can help students practice this by presenting them with personal finance scenarios where they can work with peers to come up with potential solutions to financial challenges by brainstorming ideas to the question “How can I?” 

After working with a group of high school students on budgeting skills, I presented them with the following scenario: You want to go to a concert with your friends in six weeks. The concert costs $200. You make $50 per week walking your neighbors’ dogs. You save $50 per month, and your monthly expenses include daily lunch from your favorite deli ($100), your cell phone bill ($40), and a YouTube subscription ($10). Your parents are not willing to help you pay for the concert, and you only have $50 saved for an emergency. What are you going to do?  

Students who ask the question “How can I go to the concert?” work together to come up with a plan of action, which includes ideas like walking more dogs to earn more money, getting an after-school job that pays more money, or bringing lunch to school each day instead of buying lunch from the deli.

Some students ask themselves, “How can I pay myself first?” They say that they won’t go to the concert because they need to work on paying themselves first by saving up at least $500 for an emergency fund. 

There are some students who figure out how to pay for the concert as well as contribute to their emergency fund. Giving students an opportunity to work together on these scenarios helps develop their ability to think flexibly and interdependently while learning different ways to approach financial decision-making.

Learning from Past Mistakes

Part of developing a growth mindset is to embrace mistakes as learning opportunities. Taking the time to explore some common mistakes people make with money and engaging students in a conversation where they can suggest better solutions are great ways to get students to learn from failure. Exploring common mistakes also creates a space that invites students to make personal connections with and share their own experiences with money with their peers.  

There are so many real-life examples of individuals who make bad financial decisions in current events that provide great learning opportunities for students.  Consider engaging students in a financial news conversation.

During these conversations, present a current events story that focuses on poor financial decision-making, and discuss the lessons that can be learned from the news story. These conversations can be about anything from the latest statistics for how much money Americans have saved for emergencies to the consequences that influencers face when they heavily invest in volatile assets.

Mindset is the foundation upon which healthy financial habits are built. Taking the time to help students understand how embracing a growth mindset can help them approach personal finance with a positive outlook, even when they make mistakes along the way, will increase the chances of their staying the course in the long term.

Financial wellness is a marathon, not a sprint, and only those who believe that they can finish the race make it to the end. The earlier we help students believe in their ability to be good stewards over their finances and provide them with the resources to do so, the better equipped they will be to finish the race well.