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“I’ll always be in debt.”
“I don’t deserve to earn more.”
“My family is bad with money, so I am too.”
The moment you hear the inner voice in your head repeating a negative money mantra, it’s important to nip it in the bud.
Not to get all Freudian, but the way you see yourself can play a big role in how you behave, especially when it comes to making decisions about your money.
Below, we examine nine money beliefs and why they can be harmful. Have you ever caught yourself thinking one of these? Well, many of us—if we’re honest—have. Which is why we invited both a financial expert and a psychologist to weigh in on what underlies them, and how you can get to a happier money place.
1. “I’ll always be in debt.”
“This is the mindset of a dependent type of personality,” says Fran Walfish, Psy.D., a Beverly Hills psychotherapist and author of “The Self-Aware Parent.” Dr. Walfish says this describes “somebody who is afraid to go out into the world and give things a shot on his or her own. Maybe this person feels that Mom or Dad will pull them out of a financial hole. Working on autonomy and independence by taking baby steps is key.”
For example, you may not be able to get out of all your debt right away, but if you try putting a small amount of your own money (even $5 or $10) toward a debt payment, you may find the sense of accomplishment empowering. You can look in the mirror with confidence and say: “I did that—all by myself.” Trust us, this far beats waiting to be rescued.
It’s also critical to keep in mind that there are two kinds of debt: good debt and bad debt, according to LearnVest Planning Services Certified Financial Planner™ David Blaylock. Paying off a mortgage or a student loan is considered “good debt,” because those are investments that can help you earn more money in the long-term.
Auto loans and credit card balances are considered bad debt because they aren’t moving you toward building wealth over time—cars depreciate (instead of growing in value like a house or enabling you to increase your earning potential like education) and paying credit card interest just means that your purchases become more expensive over time. Don’t get down on yourself if you have good debt. “Focus first on getting rid of any bad debt,” says Blaylock.
2. “My family is bad with money, so I am too.”
The problem with this is, you’re not your family, and you probably earn your own paycheck. Thinking this way probably means you’re shirking responsibility and basically saying, “It’s not my fault.”
“You’re blaming your problems on everyone around you instead of holding yourself accountable for your own choices. It’s your life. Reframe the mantra by taking ownership,” says Dr. Walfish. For instance, your new motto could be: “My family has always been bad with money, but I refuse to let that happen to me.” Once your perspective changes, your behaviors should too.
“I remind clients that plenty of successful people came from families that had nothing,” says Blaylock. So it is possible to break the pattern. “Look at someone like Jay-Z,” says Blaylock. He came from the projects in Brooklyn and grew up poor, but earned $42 million between June of 2012 and June of 2013 and regularly makes the Forbes 100 list of the most powerful celebrities in the world.
3. “Everyone else is luckier than I am.”
Once again, you’re choosing to play the victim, and likely not just when it comes to your money. “You’re in the backseat of the car, so to speak, and you’re letting someone else navigate the course of your life,” says Dr. Walfish. “You have to realize that you’re in the driver’s seat.”
Blaylock agrees. “There is some degree of luck in the world, sure. But financial success is most often a result of determination and self-awareness,” he says. For instance, maybe your house burned down and you’re suddenly in a money mess. Did that happen because you’re unlucky? Or did that happen because you never planned ahead and bought home insurance or created an emergency fund?
“No matter how wealthy you are, you are always going to experience things that you didn’t count on. If you create a financial cushion, then you’ll be ready if and when things go bad,” says Blaylock.
4. “I can’t save for an emergency fund on this salary.”
You can, as long as you make it a priority. “Oftentimes we think that we have to set aside huge sums of money to save, but that’s not true,” says Blaylock. “Even if you set up an automatic transfer of a small amount, like $50 a month, to a savings account, at the end of the year, that’s $600.”
Many people think of spending as addictive, but Blaylock says that saving can be equally addictive. “When you look at your growing balance, you’ll feel rewarded. Momentum builds. You’ll want to keep feeling rewarded, so you’ll be motivated to look for even more ways to save,” he says.
5. “Retirement is too far away to think about.”
It is a long way off, but that’s exactly why it’s important to start saving as soon as possible—after all, time is money. “You can make major headway with the power of compound interest. Just $200 a month over 30 years can turn into $300,000,” says Blaylock, but the secret is starting early.
Whatever you’re able to contribute, the point is to start today and increase your contributions over time. Make small spending cuts by eating out less or taking less extravagant vacations and put that money toward retirement, says Blaylock.
6. “I’ll never be able to afford a house. I’ll be renting forever.”
First, know that you should only begin the process of buying real estate when your finances are in good shape already. And saving up a down payment takes time!
To get motivated, try prequalifying for a mortgage with a mortgage lender, even before you’re serious about buying. The lender will offer suggestions about how much you’ll need for a down payment and tell you how much money you’ll be able to borrow. That’ll give you some savings goals to work toward, says Blaylock. And be careful—you can often qualify for more loan than would be truly affordable for your budget, so it’s super important to look at what works for your monthly cash flow, but getting pre-qualified is a good place to start.
One of the best things that you can do to be able to buy a house in the future is to make sure that your debt is managed properly now, says Blaylock. For example, late credit card payments will hurt you, because those will negatively impact your credit score, and that could impact the interest rate you’ll get when buying a home. Another factor to consider is your debt-to-income ratio, which creditors will evaluate before deciding whether to give you a loan.
If buying a house is still a few years off, see where you can find room in your budget now for a down payment fund. But, keep in mind that flexing your savings muscle now, and having a goal to work toward, is one of the easiest paths to get where you want to go.
7. “There is no realistic way to pay for my kid’s college tuition.”
Don’t beat yourself up. “It shouldn’t be all up to the parents,” says Dr. Walfish. “Young adults should be expected to chip in.” Walfish says she worked with a 19-year-old client who earned an athletic scholarship, took public transportation everywhere instead of buying a car and got three jobs.
“You can also take out student loans and apply for financial aid,” says Blaylock. “Just because you can’t pay for all four years of college doesn’t make you a bad parent.” And having your own financial situation in check is actually a higher priority: Remember, you can’t borrow for retirement but you can borrow for college, so talk to your child’s guidance counselor about all possible resources.
Besides, some research shows that paying the whole price tag for college (as opposed to covering, say, just tuition) can actually make students less motivated.
8. “I don’t have time to budget.”
“This isn’t about time. We all have time. This is about your not wanting to face something that’s scary or complicated,” says Dr. Walfish. “It’s a matter of will.” In other words, quit lying to yourself and step up to the plate. Trust us, you’ll thank yourself later.
Whether you’re saving for retirement, saving for an emergency fund, saving for your kid’s college tuition, saving for a down payment on a house—or all of the above—everything starts with budgeting. “You can’t do any of that until you know your cash flow,” says Blaylock. The good news is that there are plenty of free, digital budgeting tools, such as the LearnVest app, so creating a budget has never been easier.
9. “I can’t help impulse-buying.”
Some people who make an extreme amount of impulse purchases have a serious mental disorder, says Dr. Walfish. “I had one patient who charged over $100,000 of stuff on her credit card one weekend. This can be a symptom of obsessive compulsive disorder or bipolar disorder, for example.”
But in less extreme cases, shopping can be an antidote for feeling depressed. Maybe you lost your job or broke up with a partner, so you go to the mall to temporarily perk yourself up. Either way, “it’s not a healthy way to cope,” says Dr. Walfish.
One helpful tactic is to replace your shopping habit with something else that makes you feel good but doesn’t require you to spend money. Maybe try going for a run, reading a book or watching a movie. Also, avoid your spending triggers as much as possible, says Blaylock.
“If you’re trying to save and buying electronics is your weakness, don’t walk into a Best Buy, because you know you’ll be tempted.” If you have to go into a store that you love, create a rule. “A colleague of mine won’t get a cart when she goes to Target. She’ll buy only what she can carry in her hands,” says Blaylock.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.