How do you Break Limiting Beliefs about Money?
01 July 2023 0
01 July 2023 0

Enriched Academy Staff

Are you an optimist when it comes to your financial outlook? Soaring prices, rising interest rates, and a possible recession are making it increasingly difficult to keep a positive money mindset and believe that things will get better for the remainder of 2023 and beyond.

In addition to economic conditions, common money myths can also affect your mindset by perpetuating misinformation or misconceptions about personal finance, investment strategies, and wealth management techniques. Negative money myths can significantly inhibit personal financial growth and wealth building by creating limiting beliefs and behaviors.

On the other end of the money mindset spectrum is the belief in financial abundance and that there is enough money and financial resources available to achieve your goals and live a comfortable life. People with this view tend to focus on solutions rather than problems and see opportunities for growth and abundance in every situation.

The problem is that circumstantial factors weigh heavily on our money mindset. If you were raised in an environment of scarcity or when times are tough like they are now, you can easily feel defeated when it comes to improving your financial situation. Overcoming this mindset is a huge roadblock and the starting point for improving your financial life.

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What are money myths?

Money myths often perpetuate a scarcity mindset, where individuals believe that money is limited and hard to come by. This mindset can lead to fear, anxiety, and an inability to see and seize opportunities for financial growth. Believing in these myths can lead to poor financial decisions, such as relying solely on how to save money without considering investing, neglecting to diversify one's income streams, or falling prey to get-rich-quick schemes. Lack of financial literacy can further enhance the negative impact of financial myths.

To overcome these limitations, it is crucial to challenge money myths, seek financial education, and develop a mindset that focuses on abundance, growth, and informed decision-making. By adopting a realistic and empowered perspective towards money, individuals can overcome these inhibiting factors and create a foundation for personal financial growth and wealth building.

What are some common money myths that people believe?

  • You need money to make money. It’s true that $10,000 invested the exact same way as $1000 will give you proportionally larger returns, but the power of compound investment returns is very strong and often overlooked. The sooner you get started investing with whatever spare funds you have, the closer you will be to achieving your long-term financial goals.
  • Money is too complicated. Managing money is actually a lot less complicated than many other day-to-day tasks. We spend hours learning how to use the hundreds of functions in a mobile phone or researching online to find the perfect hotel for our vacation, but we don’t prioritize learning about money management.
  • Investing is too risky. Investing can definitely be risky, but that risk can be managed according to your needs and risk tolerance. Investing all your money in cryptocurrency is risky, investing in an S&P 500 index fund and holding it for 5 years.... not so much. You need to learn to evaluate and manage risk, not avoid it altogether.
  • It’s someone else’s job to figure my finances out for me. You could rely 100% on a financial advisor, but it’s expensive and a leap of faith that many of us are not comfortable with, despite their fiduciary duty to serve in your best interest. Even if you do rely heavily on professional advice, teaching yourself the basics of personal finance will help you to make informed decisions and give you much better peace of mind.
  • It’s too late for me. A lot of Canadians are way behind on their retirement planning, and this is an often-heard money problem. The reality is that it is never is too late to get good with money. Trying to pick stocks and get rich quick when you are in your late 50’s could easily put you in trouble, but investing in an index ETF will usually give a nice boost to your retirement fund, even if you are only 5 or 10 years from retirement.
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How can money myths impact our financial decisions and mindset?

Money myths can reinforce the fear of failure and the belief that taking financial risks is inherently dangerous. This fear can discourage individuals from pursuing entrepreneurial ventures, investing in stocks or real estate, or even negotiating for better salaries or promotions. By avoiding risks, individuals may miss out on the best ways to manage money.

Money myths often instill limiting beliefs about wealth and success. For example, the belief that "rich people are greedy" or "money corrupts" can create subconscious resistance to wealth accumulation. These beliefs can lead to self-sabotaging behaviors, such as avoiding financial success or subconsciously sabotaging efforts to make money.

Money myths often promote unrealistic expectations and comparisons with others' financial situations. Believing that everyone else is financially better off can lead to discontentment and poor financial choices, such as overspending or accumulating debt to maintain a certain lifestyle. These comparisons can also contribute to feelings of inadequacy and a sense of being trapped in a cycle of financial struggle.

How can I change my money mindset and overcome money myths?

A positive financial mindset is a powerful tool that can shape our financial reality, allowing us to navigate challenges, seize opportunities, and build a secure and prosperous future. It involves developing money beliefs that promotes abundance, wise financial decision-making, and a healthy relationship with money. To create a positive financial mindset, it's essential to examine and reshape your beliefs about money. Start by identifying any negative thoughts or limiting beliefs you hold regarding money, such as "money is scarce" or "rich people are greedy." Challenge these beliefs and replace them with positive affirmations that align with abundance and prosperity.

  • Embrace gratitude and abundance. Practicing gratitude for your current financial situation is a powerful way to shift your mindset. Take time each day to reflect on the things money has provided for you, such as shelter, food, and opportunities.  Additionally, cultivate an abundance mindset by focusing on opportunities rather than limitations. Recognize that the world is full of possibilities, and wealth and success are not limited resources.
  • Set clear financial goals. Establishing clear and specific financial goals is crucial for developing a wealth mindset. Whether it's saving for a down payment on a house, starting a business, or paying off debt, clearly defined goals give you a sense of purpose and direction. Break down your goals into smaller milestones and celebrate each achievement along the way. This process will motivate and inspire you to continue making progress.
  • Focus on solutions instead of problems when it comes to your finances. When faced with a financial challenge, look for ways to overcome it rather than dwell on not being able to get what you want. Reframe negative thoughts and beliefs about money into positive ones. Instead of thinking "I can't afford it," try thinking "How can I afford it?"
  • Educate yourself and seek knowledge. Knowledge is power when it comes to financial matters. Take the time to educate yourself the facts about money management, investing, budgeting, and other relevant topics. By becoming financially literate, you'll gain confidence in making informed decisions and seizing opportunities that align with your goals. The more you know, the more empowered you will feel to take control of your finances.
  • Practice Mindful Spending and Saving. Before making any purchase, consider if it's a need or a want, and if it will truly bring long-term satisfaction. Implement money saving tips and focus on ways to save money that reflect your financial goals. Don’t neglect tracking your expenses. Prioritize saving money over spending money and automate your saving process as much as possible. By being mindful of your financial choices and having strategies to save money in place, you will enhance your sense of financial well-being.
  • Surround yourself with people who have a positive attitude towards money and who have achieved financial success — a relative? co-worker? celebrity? YouTuber?
  • Be open to new opportunities and ways to make more money. Keep your eyes open for ways to increase your income.
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Can changing my money mindset lead to greater financial success?

It’s easy to focus too much on the facts of personal finance and overlook the importance of your mindset. For example, self-directed investing requires you to learn about risk management, diversification, fees and ROI, and many other factors. However, if you can’t overcome your initial mindset that investing is too risky, you will never invest in the stock market. Changing that mindset is a critical first step, and it can be pretty hard to do!

Creating a positive financial mindset is a transformative journey that requires dedication, self-awareness, and consistent effort. Changing your mindset is not an overnight process, but a lifelong commitment. Stay persistent, surround yourself with positive influences, and celebrate each step forward. With a positive financial mindset as your foundation, you can navigate challenges, embrace opportunities, and become financially free.

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