Although this is now a relatively old book, published in 2006, it is an absolute game-changer in finance, wealth building, and success.  This book is my single most recommended book and is one of the rare books that change how I look at the entire world.  Big claims? Well, it is certainly worth reading.

Before reading this book, a lot of the books, I had read concentrated on a positive mindset, positive self-talk and developing positive thoughts. Although there was some truth to this positive thinking approach, a positive mindset and positive psychology were only part of the story.

Other thinkers concentrated on the goal-setting mindset and stated that successful people achieve greatness by clarifying their goals and adopting the right mindset.

Main Idea

Carol Dweck, an Educational Psychologist at Stanford, spent most of her career looking at what makes people learn and, in turn, what makes them successful.  Her ideas have become very popular in education, sports psychology and business. Her main thesis is that there are two types of people, those with a fixed mindset and those with a growth mindset.

Those with a fixed mindset seek to prove their worth by seeking external validation, putting themselves in situations where they will appear favourably and avoiding negative feedback.  This type of feedback is seen as a threat and something to be avoided.

On the other hand, in a growth mindset, individuals will concentrate on the process of growing and developing from within.  Negative feedback other sometimes difficult is seen as something that can be worked on and used to develop and grow constantly.  They will put themselves in difficult situations and see failure as simply data to improve.  They fail fast and often to learn the lessons to develop a growth mindset.

The thinking patterns that successful people use to break through limiting beliefs, build confidence and ultimately achieve great success were perhaps unsurprisingly those who adopted a growth mindset.

Key Lessons from Mindset

Abilities in any area are not set in stone

Most people have a fixed mindset when it comes to abilities. They believe that their talents and skills are set in stone and that there's nothing they can do to change them. This fixed mindset can lead to a lack of motivation, as people feel that there's no point in trying to improve. It can also lead to disappointment and discouragement, as people immediately give up when they don't see results. However, it is possible to adopt a growth mindset instead. This means believing that abilities can be developed through effort and practice. People with a growth mindset are more likely to persist in the face of setbacks and ultimately achieve success. They're also more likely to be interested in learning new skills and taking on challenges. So if you're feeling stuck, remember that it's never too late to learn something new or improve your existing skills. Instead, keep your mind open to growth, and you'll be surprised at what you can achieve.

A fixed mindset sees failure as an endpoint and constantly seeks out external validation

A fixed mindset is when an individual sees failure as an endpoint and is unwilling to step outside their comfort zone. This can lead to negative thought patterns and a reliance on external validation rather than personal development. Individuals with a fixed mindset may feel that they are not capable of growth or change, leading to stagnation in both their personal and professional lives. By contrast, those with a growth mindset see failure as an opportunity to learn and grow. As a result, they are more likely to take risks, embrace challenges, and persevere in the face of setbacks. As a result, they are more likely to experience personal and professional success. If you find yourself stuck in a fixed mindset, remember that it is never too late to develop a growth mindset. With effort and perseverance, you can reach your full potential.

A growth mindset sees failure as a learning opportunity and seeks out honest feedback and failures as a way to develop.

People with a growth mindset see failure as a positive opportunity to learn and grow. They view honest feedback and failures as essential parts of the learning process. They focus on the positive things that can come from failure. As a result, they tend to have a more positive outlook on life and are more likely to persist in the face of adversity. People with a growth mindset view challenges as an opportunity to improve. They are more likely to take risks and seek out new experiences. They also tend to be more resilient in the face of setbacks because they know that each failure brings them one step closer to success. If you want to achieve your full potential in life, it is important to develop a growth mindset.

A fixed mindset avoids difficult situations, and those with a growth mindset actively seek them out

Anyone who has ever embarked on a new project knows that a certain amount of uncertainty is always involved. Will you be able to learn the new skills required? What if you encounter some of your worst setbacks? It can be tempting to avoid these situations altogether, but that isn't the best approach if you want to succeed. Instead, it's better to have a growth mindset. This means actively seeking out new challenges and embracing them as opportunities to learn new things. It also means learning from your mistakes and not letting them hold you back. When you have a growth mindset, you stop worrying about whether or not you'll be able to do something and instead focus on how you can make it happen. This positive attitude can make all the difference in whether or not you achieve your goals. So next time you're facing a new challenge, remember that it's an opportunity for growth. Embrace it and see what you can accomplish.​

Our mindset is influenced by our role models, particularly in childhood

Our mindset is greatly influenced by our role models, especially during childhood. The people we look up to play a big role in shaping how we think and feel about ourselves. Suppose our role models are negative and critical. In that case, we're more likely to adopt negative thoughts and develop a negative view of ourselves. On the other hand, if our role models are positive and supportive, we're more likely to have a positive mindset and believe in our ability to achieve success. The words and actions of our role models can have a powerful impact on our self-image, so it's important to choose who we look up to. It's also important to remember that we have the power to choose our own mindset, regardless of what our role models may think or say. We can choose to focus on the positive and believe in ourselves, even when others doubt us. By developing a success mindset, we can achieve incredible things.

Growth and development are possible in any area with a growth mindset

It's a misconception that some areas are simply "growth areas" while others are not. The truth is, growth and development are possible anywhere - it just takes a growth mindset. With a few simple tweaks, you can turn any area into a place of success.

First, it's important to remember that growth is a lifelong quest. It's not something that happens overnight; instead, it's a continuous journey. By staying open to new opportunities and experiences, you can keep your mind fresh and ready for growth.

Second, it's essential to have realistic expectations. Rome wasn't built in a day, and neither is a successful life or career. Be patient and focus on the long-term; success will come if you stick with it.

Finally, don't be afraid to take risks. Trying new things is how we grow and develop. If you're always playing it safe, you'll never stretch yourself beyond your comfort zone - and that's where the real magic happens.

So whatever area you're in, know that growth is possible. With the right mindset, you can achieve more than enough success.

How do we develop the best mindset to build wealth?

This book provides a simple framework for how we can change our mindset and build success through embracing failure and learning from it. This is relevant in all areas of our lives, particularly in finance. How many times have you noticed self-limiting beliefs and developed a fixed mindset in the area of your finances?

Often we tell ourselves we do not understand mortgages, financial products, or how the system works. Understanding our limiting beliefs and pushing outside our comfort zone requires a courageous and self-trust mindset. Of course, this doesn't happen overnight, but by slowly adopting a growth mindset.  Learning in this way is what this blog is all about, and I hope you find the educational material useful.

Actionable Steps:

1. Take some time to think about what areas (particular in personal finance) you have a fixed mindset. 'I never understand that, 'my.........takes of this, and 'we can't afford.....' are all signs of a fixed mindset in your personal finances.

2. When was the last time you made a mistake in your personal life or finances.  Did you respond in a fixed, emotional way?  What did you learn from it?

3. Watch Carol Dweck's talk on 'Not Yet'

4. Buy a copy of this book

5. If you have found this useful, please subscribe to the blog at www.diarmaidmcmenamin.com

Good luck on your journey!

Diarmaid