When it comes to money, everybody seems to want it. They talk and dream about it. People often imagine a life with plenty to go around. Heck, they even play the lotto and try their hand at gambling. They throw their hard-earned cash to a myriad of programs out there that promise an easy windfall. Yet they’re broke. It’s because their beliefs about money have determined their financial destiny. Your beliefs affect your finances.
You see, money is a very liquid thing. It comes and it goes all too quickly. It’s hard to make and easy to spend.
When it comes to financial success, there are a lot of promises out there. You see dozens of programs that promise overnight windfalls. I know, I’ve tested some of these myself. The result? I lost money and it made me poorer.
But if you take a close look at what it truly takes to become wealthier, there are some fairly straightforward steps to actually improving our wealth and our situation. So let’s start with the basics, shall we? Step one if you may. And this first step doesn’t actually involve those dollars in your wallet. Rather, it’s how we perceive those bills that matter most at first.
It All Begins With Our Perceptions And Beliefs
For years I’ve studied all kinds of advice about money. I would occasionally read that our thoughts about money affect how we actually spend it. That it starts with our attitude about wealth, how we identify with it in our lives. I actually didn’t really give it much credence, rather choosing to believe that what I did with that money mattered more. I felt the physical act was the defining reason for wealth: what you did with it was the key. How could my beliefs really affect things?
So I did what most everyone else does: I attempted to control it without taking into account my beliefs first. I felt my actions were sound. However, I didn’t realize that greed eventually ended up playing a big role that ultimately cost me more than I made. I failed to consider my core perception of wealth and what money really meant to me.
I also believed that my debt was normal. Everyone seemed to have it. I was in the same situation everyone else was in so it was acceptable. I didn’t consciously realize that my thoughts about money dictated how I utilized it. My habits of spending, saving (or lack of it), or investing were all tied to my beliefs about how money was to be used. This had a direct impact on my personal economic life. It put me more and more into debt as a result. And it was destroying my financial success.
So, let’s take a look at step one in our financial journey and how we can take the more productive (and ultimately wealthier) stride towards success. This step entails eliminating negative, self-defeating beliefs and embracing concepts that will benefit us from day one.
Point One: How We Think About Money Determines Your Success Or Failure
What you believe about money determines your results
What are beliefs, you ask? Beliefs are an acceptance of a conceived truth or validity of something in our life. They are developed because of the experiences you’ve had, the environment you’ve been raised in, and the thoughts/teachings you may have. Over time they help define what you currently believe to be true. Although this is a very simple definition (and I’m sure there are many differing opinions out there), our beliefs are what ultimately anchors our understanding of the world around us.
Those same beliefs apply to our finances. Your beliefs really do affect your finances. Many of us already have pretty firm rules in our lives in how we think about and ultimately use money. Often, it’s learned from our parents and/or peers. However, don’t assume what you’ve always thought about money in your life is the only truth. Be an active thinker and challenge those beliefs.
How do you look at your finances? Do you feel you earn too little or that the budget is stretched every month? Most likely, you feel like there is not enough to go around. Perhaps you’re living paycheck-to-paycheck? Does it feel like you’re stuck in a rut and it’s too hard to make more money or elevate your financial situation? Do you accept this as your reality? This is then an accepted “truth” for you. It’s easy to allow our beliefs about our situation to dictate the future.
Is there an alternate path for you?
Do you consider yourself a lower or middle-class person financially? Why not upper class? What’s preventing you from achieving this status? Will your beliefs limit you to this level forever? What are your current limiting beliefs?
Most people transition into adult life and very quickly develop beliefs about their situation and “class” fairly early. Most settle for their circumstances. They then feel this is normal. They believe that breaking out of this situation is for the exceptional few. The lucky or extremely talented. Perhaps being in the right place at the right time. The very idea of early retirement is out of the question.
The truth is, you can create as much wealth as you want. Today there are myriad of opportunities that never existed before. Teachers becoming millionaires. Kids posting videos online and becoming ultra-wealthy. Those that achieved these results changed their beliefs about what was possible. Yes, they had to take steps to get there, but it was their perception about what life could be like that started the process.
But if you don’t believe this is possible you will never do it.
Let’s challenge our beliefs about saving money. It’s easy to “want” more, but do you “save” more? Is it important in your life or do you accept that your savings accounts will always be minimal? If you changed your views, realized the importance of (and excitement of) saving money could you learn to do it effectively? If you began to realize the life-changing aspect of it, does it change how you view what before was boring into something that offered so much more?
Challenge your beliefs about paying off debt. It doesn’t sound fun at all. We would rather use that money elsewhere. And we get used to the ball and chain of debt. But it doesn’t have to be that way. There is financial freedom. There can be no debt. You have to simply accept this as a possible reality – then change begins to take place when it becomes a part of your belief system.
Now, challenge your beliefs about investing money. Do you just normally just splurge and spend all you make? It’s certainly easy to live in the moment and not think about the future. But when you realize your future self will love the efforts you make today, the prospect of living a more abundant life a few short years from now start to sound more and more appealing.
I’ve seen countless people around me who value money only in the context of their current situation, never truly realizing that they can change that situation for the better. If you think you will always be poor, you will be. Your beliefs play an important role in attracting money or driving it away from you. Many of us say we wish we had more money but then we resist any chance of making (or keeping) it when the opportunity comes.
Point Two: Money Is Just A Tool
As with any good tool, it can be there to hurt you or to help you. We acquire tools to make our lives easier. They make a task simpler. It’s the same with money since it’s a tool as well. It can help you or it can hurt you.
How do many of the wealthy people today make their money? Through inheritance, you might say? No, not the majority. They’ve earned it, leveraged it, were smart with it, and it ultimately provided greater wealth. Those that have inherited it are usually trained on how to make more of it and to keep what they’ve got. They’ve learned to use the tool effectively!
But if we don’t know how to use the tool properly, its effectiveness will be lost. Think about it: money comes and money goes. What has it done for you this month except keeping the lights on at home and paying for your favorite TV streaming provider? Has this “tool” propelled your financial life forward?
Given the normal state of things, it’s easy to just let money come and all too quickly go out of our pockets. However, this money can do more for you in the long run. If we stopped spending money on frivolous things, a few luxury things, then we’ll have the money to be used to pay off bills. To build a savings account. And, yes, to make you more money later on. Certainly, it’s about choices no doubt about it. Sometimes these choices are hard in the near term but beneficial in the long term.
Think about the goals you have in life. Most likely someone isn’t going to provide them for you. You have to make it happen yourself. Is your money helping you to get to your goals? Why not? It’s just a tool after all. Not enough to go around, you say? Well, maybe, but most likely you can tighten things up a bit and provide that leverage you need to make significant changes towards these goals.
Every time you pull out your wallet, ask yourself if it’s helping you achieve your goals.
Point Three: Debt Doesn’t Have To Be Normal
Uh, what? Yes, you heard that right. There is no rule that says debt should be a part of your life. And before those of you who argue the “good debt vs bad debt” case before me, let’s just sit back and imagine a life where you owed no one anything. No credit card payment. No student loan bills. Heck, how about no mortgage? Sounds great, right? Talk about a feeling of freedom!
Then imagine what that freed up money could do for your future. You see, our perceptions about debt can mean a lot. If you feel that credit card debt, car debt, and any other liabilities are a normal and acceptable part of life, you will always be obligated to someone else. And guess what? That comes with a high-interest rate most likely. This debt can be one of the worst killers of your financial future.
And to those who argue about the benefit of using “good debt” and leveraging it to get wealthier: yes, this can work but you need to be knowledgeable and skilled in its use. So you have to be very careful here. And concerning the homes we live in, yes, I believe some long-term debt can be “reasonable”. We most likely need that debt to eventually purchase the home provided it’s a sensible cost/earnings percentage.
But let’s talk about what really plagues the majority of us: short-term debt. For most of us out there, a significant part of our debt load is most likely this short-term high-interest debt such as credit cards and auto payments. I would argue most of us out there use this “bad debt” on a regular and consistent basis. Over and over again. And we tend to have a lot of it actually. This can devastate our financial future if left unchecked. Changing our belief about that debt can instead catapult our financial success.
Point Four: Quit Thinking Negative Thoughts
This one can be tough. We all do it from time to time. Life is hard and if we’re not careful it can get us down. It’s the same for us financially. Have you ever had these thoughts?
- I’ll never get out of debt
- The rich get richer and the poor get poorer
- I can’t afford that
- I don’t make enough to save/invest
- I’m not good with money
- It’s selfish to want money
How you think about money is absolutely determining your success. The very act of stating these to yourself are powerful motivators, positive or negative. The beliefs you have will either allow you to have more or will limit you to barely have enough. I do believe the “love of money” can destroy lives. However, there is nothing wrong with being smart with money which can help support your present and future lifestyle. I truly believe being appreciative of making and keeping more will enrich your life and even the lives of others around you.
Point Five: Past Mistakes Don’t Have To Determine Your Future
I know for myself, I’ve made plenty of financial mistakes. There have been times I’ve spent way too much on items I don’t need. When I look back on things a year later I wished I could have put that money to better use. I felt I had thrown money down the drain. I’m sure there are things in your life you wish you could take back financially.
When it comes to my investing approach, there are definitely changes I wish I could reverse. I feel I would be so much further ahead had I made different choices. Believe me, these hurt when you look back at all the opportunity lost when you realize what those lost dollars could have done for your future.
What I’ve realized is that my beliefs about money (whether I realized it or not at the time) affected how I spend and used my money. You can certainly sit in a rut for a while if you define your future from the results of your past. It took a while to realize this was a powerful tool I could use for my benefit. My failures could instead be motivation for future success. However, this didn’t happen overnight.
It’s time to move on and realize how we view money today can change our tomorrow. Forgive yourself and chalk it up to a great learning experience.
Point Six: Make It A Game
Is saving money hard for you? At one time it was hard for me too. And even though people would tell me the importance of saving 6-8 months of living expenses in an emergency fund, it didn’t really relate to me personally. I couldn’t find my passion behind it. In fact, it seemed impossible.
I’m guessing it’s the same for you. Is this something you even want to do? If not, I would wager that it’s because of your current view and your mindset behind it. You view this “task” as arduous and burdensome. There “seems” to be no reward.
Well, as with anything that’s hard, the best way to tackle it is to make it as fun or interesting as possible and take one small step at a time. Remember back when you were a kid and watched that piggy bank grow? It was one nickel, one quarter at a time.
It’s the same with our emergency (or savings/investing) fund. One small step at a time. I know when I look at the big goal, it’s daunting. Which means we don’t want to do it. We have to change how we look at this money step. Heck, make it a challenge for you and your family.
Start by getting rid of the name “savings fund”. I mean, that even sounds boring, right? Find a word that you’re more passionate about. Make it a “freedom” fund. A “dream” fund. An “I need it to survive so I don’t eat rice and beans later” fund. Whatever you need to motivate you, to excite you!
Now, every time you want to spend on something frivolous keep track of what you “could have saved”. If you have the initiative start by bargaining with yourself and commit to only spending half on something fun and half towards an emergency account. Regardless, keep track of your progress. Whether you’ve actually saved that money or not, your “record” will begin to show a positive balance. As the months go by, ask yourself if your “want” was worth it compared to your “balance” of what you could have had.
Now, imagine it 10 years in the future. What will you have? This imagined reality could be literally yours. Begin to seriously contribute to this freedom/dream fund. Before long, once you see an actual account balance building up, you’ll want to protect it. And it will become enlightening to realize you did this. No one else.
It will also bring a sense of security and peace. Knowing you have the money to do what needs to be done (versus relying on others or a credit card) is enlightening!
Once we change the intent of this fund, make it important for us, we’ll view this as something essential (and fun to do). Make a graph and chart it. Make it as visual as you need to in order to keep you motivated. I love graphs because they visually represent my progress (or failure) in a no-nonsense way. The line either goes up, steady or down. No second-guessing.
And realize that it’s ok to reward yourself a bit too. Life doesn’t have to exact every dollar you have toward the future. Enjoy a bit today as well. Just keep it reasonable.
Point Seven: Appreciate What You Have
Regardless of where you are today, someone somewhere else is having a worse time of it. Heck, if you live in any developed country today you’re blessed. So realize how fortunate you are and go forward.
By appreciating what you have today you will start abandoning the self-sabotaging behaviors that have held you back. For myself, I found myself in a fair amount of debt. It was painful to make those extra heavy payments each and every month. I couldn’t wait for the “suffering” to be over.
But guess what? By appreciating what I had, I realized that I had something of value: my net worth was climbing and my sense of freedom was increasing. I had a good home to live in and a family to enjoy it with. A decent car to get to work in. And I certainly had enough food to put on the table and keep the lights on. I was “wealthy” as I was. I then developed a “plan” to pay off that debt and then use those “payments” towards building a secure future. It became an immediate blessing to my family. And I firmly believe greater wealth will be forthcoming: both financially and in what we appreciate.
How I viewed this money “problem” had the potential to change my financial destiny for the worse or for the better.
Summary: You See, How You Perceive Money Can Change Your Results
So, I bet you didn’t realize just how important our beliefs about money truly was! How you think about money causes you to take certain actions in your life with it. This affects you and your family for decades to come. These seven ways of changing your beliefs about money can most certainly change your financial destiny. Your beliefs really do affect your finances.
Our beliefs and attitudes about money affect what we intentionally do with it: either spend it foolishly or use it as a great tool to build our wealth. Think about that the next time you pull out a card to buy something. If you want different results in your life concerning money, then change your money beliefs.
Be purposeful with what you believe. Design the future you want and don’t relive the past. If you do this then I believe you’ve made the important first step towards something great. You will attract wealth to you. Then remember to be gracious and appreciate it by using it wisely.
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