Let’s talk about three common money myths that may be hurting your finances.
Myth 1: Budgets are restrictive
The thought “budgets are restrictive” is pervasive in our culture.
And if you find yourself believing this myth, that likely results in one of two things:
- You don’t use a budget at all
- OR you use a budget, and totally dislike it
The second point – you use a budget and totally dislike it – quickly causes a lot of resentment.
You feel like you can’t do the things you want to do because you don’t have the budget for it. Friends invite you for drinks but you don’t have that in your budget? Resentment and frustration for your budget quickly surface.
I know because I’ve been there.
So if you buy into this myth, what should you do?
Try thinking these ideas instead:
- This my budget for this season of life
- This budget will help me reach my bigger goals
- Budgets are freeing
Let’s break these ideas down.
This my budget for this season of life.
It’s important to remember that nothing in life, especially our budget, is permanent. It’s helpful to remember that everything is just for a season.
Say you wish you had a larger travel budget and you feel resentment towards your budget since you wish you could go on that nice vacation you saw someone post on Instagram. Remind yourself that the travel budget you have currently is just for right now. It’s not your travel budget forever!
This budget will help me reach my bigger goals.
Practicing this idea has served me so well over the past couple of years. Whenever I feel restricted by my budget, I remind myself of what I’m saving for. That reminds me it’s all worth it.
What financial goals are you reaching for? Paying off student loans? Saving for a down payment on your first home?
Remind yourself of these larger goals whenever you feel yourself thinking “my budget is restrictive.”
Budgets are freeing.
Yes, it is actually possible to think this way!
I know because I’ve made the transition from believing budgets are restrictive to believing that budgets are freeing.
Say you decide to budget $100 for clothes for this month. You can now spend that money guilt-free on clothing instead of a voice in the back of your mind thinking “this should be going towards my student loans.”
It’s easy to beat yourself up about how you spend your money, so switching to the idea that budgets are freeing can lead to happy, guilt-free spending!
Myth 2: I’m not an “investor”
Many people (and women, in particular), have the idea “I’m not an investor.”
Unfortunately, this myth stops people from taking any action.
It stops people from learning about how to invest money.
It stops people from signing up for their 401Ks.
It stops people from reaping the benefits of compounding growth when their money isn’t the market.
If this is you, try these ideas instead:
- I am capable of learning about investing
- I am smart enough to learn about investing
- I can be an investor
- (And the ultimate idea) I am an investor
If you think these thoughts, you’ll be inspired to take action.
You’ll feel capable of learning and confident you can figure out investing.
And that inspires action. You’ll seek out new podcasts to listen to or purchase a book to learn about investing. You’ll take baby steps forward, and those baby steps will lead to real progress over time.
So if you find yourself struggling with the perception “I am not an investor”, try practicing thinking one of the ideas above.
Myth 3: “I deserve it”
This common mentality is behind all lifestyle inflation.
With new jobs or new raises, we increase our lifestyles by spending more money on a nicer apartment, going out to fancier restaurants, or taking those vacations that we’ve been putting off for so long.
We’ve wanted these things for a while, and now we finally “deserve it.”
But this money myth ultimately leads to overspending on things you just can’t afford.
While a small change here and there doesn’t make a huge difference, the compounding effect of all these small changes leads to many people struggling to pay their bills no matter how much they make.
There are many scary statistics out there showing that many people who make six figures a year are still living paycheck-to-paycheck. And that comes down to their thinking that they “deserve” to have nice things.
If this is you, try these ideas instead:
- I want to spend within my means – that will put me in an even better financial situation in the future
- I can have some of the things I want now, and some of this I can have in the future
- My happiness is not dependent on getting all these things
Reminding yourself of these simple statements will help ward off the lifestyle inflation to a level you can’t afford.
It also reminds you that there’s a future ahead where you add in more of the things you want. You don’t need everything you want right now.