7 Wrong Money Mindsets You Need to Ditch Today
No matter how many Robert Kiyosaki books you read, nothing will change if you don’t get your thoughts about money right.
For a lot of people, your finances may not be the way you expected. Maybe you’re still in debt, or you’ve not been reaching your money goals recently. Or maybe you have actually adopted a few good money habits, but you still feel a bit backward, like nothing has changed. Stop forcing the habits, what about the mindset?
Your money mindsets are those ingrained beliefs that shape your perception, attitude and behavior towards money. So, instead of forcing yourself to behave a certain way regarding money, the best bet is to change your mindset, which has better chances of leading to a changed behavior.
Below, I’ve highlighted seven (7) money mindsets that are blocking your financial growth, and how to correct them.
1. You only live once
If you’re trying to be prudent, the frequent temptation of YOLO and FOMO (Fear of missing out) sometimes sets in. Thoughts like “what if I never get the opportunity to splurge like this?” or “why do I struggle to make money if I can’t spend it the way I want?”. That’s an emotional way of thinking, and you should always keep your emotions aside when dealing with money.
Honestly, in the past, I have been tempted to just spend a huge chunk of my savings because I don’t know how long I’ll be alive, so I should spend when I can. It might look like a sensible thing to do on the surface, but there are a few reasons why it doesn’t make sense.
First, owning stuff doesn’t increase happiness in the long term. It only raises the bar to a new level, so that if you don’t splurge like that often, you’ll probably feel worse. Secondly, just the same way that you could invest a whole lot and not use it tomorrow (but at least your dependents will), it’s the same way that you could spend all you have today (on stuff you probably don’t need) and be broke tomorrow.
Which of these two would you prefer? It’s your call.
2. I’m not earning enough yet to save
This is a very hard mindset to change.
At least that’s what I’ve learned from people I know that think this way. To think differently, you need to see saving as a life habit, and not just a means used to achieve a financial goal (like paying off debt or buying a new phone). When you do this, you won’t see the amount you put aside as little. Instead, you’ll be content that something was actually set aside, consistently, while you watch it grow over time.
It’s important that you also look for ways to increase your income, through side hustles, passive income, or a job with a higher salary. It may be easier said than done, so keep at your savings habit while you look for better earning opportunities.
3. I don’t need to save if I’m using the money for my personal growth now
“But I need that new camera for my YouTube.”… “Hey, I got it! But I’m broke again”
I recently read a post on Instagram by a financial advisor who pointed out clearly how spending on personal growth/self-improvement still counts as spending.
Investing in yourself is necessary, yes. But don’t make the mistake of classifying it under financial investments like stocks, bonds, real estate, etc. The exact level of liquidity they can provide for you at a future date is more estimable than an investment in yourself.
There are times when you urgently need to spend your last dime to start a new business or get a new gadget or take a new course. It’s fine if you are willing to undergo the risk and other things that come with it. However, this should not be a frequent habit, if not it could bankrupt you.
4. Investing is only for people who want to be millionaires
If you associate investing only with the likes of Warren Buffet and Charlie Munger, you’ll never see the need to do it. And if you don’t invest, you have lower chances of living a quality and standard life. Even when you land a well-paying job, emergencies can come up that take up an unexpected amount of money. Bills pile up quickly (especially when you have people you’re taking care of). You’ll always need to have another source of income to handle unforeseen things
And no, saving alone won’t help.
In my country for example, an average employee would have to save about 30% of their salary for about 4–5 years to buy a decent vehicle alone. What about other things you’ll need? Do you want to wait another 4 years before you buy them too?
Investing helps to speed up savings and multiply your money so that you can get more in less time. So no, investing isn’t just for millionaires.
5. Investing is too risky.
Everything is risky. Just being alive means taking the risk that you could die any day.
Leaving money in the bank is a risk, as they could liquidate tomorrow. You need to remind yourself that wherever you put your money is a risk, but the higher the risk, the higher the potential returns. If you want to live an average life forever, then you can consider savings alone. However, if you want to be comfortable and afford improve your standard of living over time, then investing is the only way to go.
If you’re still scared of high risks, you could go for other options such as government bonds, mutual funds or treasury bills. If this is your choice, then you must be content with the nature of returns you get. To increase your earnings on investment, you need to either have more money to invest at once, or go for opportunities with higher risk.
6. Money doesn’t buy happiness
In some ways, money helps cushion the impact of some of life’s problems. So, even though it doesn’t always directly lead to happiness, it helps limit the kinds of negative emotions we experience. For example, with money, you don’t have to worry about physiological and safety needs like food, clothing, and job security. So, it helps to ensure that some of our needs are met.
Also, consider why you think money cannot buy happiness.
Is it because material objects are fleeting?
If so, then what about experiences? Imagine the way you can experience the world when you can afford some of the things you want. You get to fly first class instead of otherwise. You can afford to stay in comfortable hotels during vacations. You have more money to give to the needy, which also boosts your sense of value. Honestly, you could be a lot more beneficial to society if you improve your financial capacity, so why limit yourself?
7. The more money I earn, the richer I get
Nope. The process isn’t automatic.
Getting rich means increasing your earnings, reducing spending, while also increasing earnings from investments. As you earn more, you should be willing to keep more money aside either for an emergency fund, or for investing.
If your spending goes up with your income, you might even end up poorer. So don’t just focus on how much you’re bringing in. develop habits to manage your money properly, and you’ll see the best results.
Which faulty mindset have you been guilty of? Leave a comment to let me know. I’d love to hear from you.
Thanks for reading!
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