5 More Ways Your Money Mindset Is Holding You Back

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BearMoney Team

BearMoney Team

BearMoney is the balanced finance blog for new and old Canadians alike. We are a team of people living international that research, write, and share

Money Mindset Warrior

In our previous article on money mindset, we outlined how toxic behaviors like overgeneralization and jumping to conclusions can hold you back from achieving your financial goals. It might be no surprise to you that there are not just five ways in which you might start stumbling off the track to financial independence.

We’ve put together a list of five more negative ways of thinking that might be holding you back from achieving your goals.

1. Overreacting/Underreacting

What is It?

We’ve all been told that we’ve overreacted to something. Most of us absolutely hate this being said to us, it certainly doesn’t calm things down. In every area of our lives we’re faced with situations that require a response. What the response should be is a matter of law, experience, and opinion.

In the same way we can also brush uncomfortable truths under the carpet. Many of us don’t like conflict or the feel like we are the bad guy/gal in any particular situation.

Although so much of behavior is subjective, for every reaction you take there is definitely a line where you are either overreacting or underreacting. It is the point when you created long-term negative consequences for yourself. We all fall into it from time to time, but as a pattern it can be absolutely fatal to our success.

How Does It Affect Your Money Mindset?

By reacting poorly to situations we can miss out on immediate and future successes. Think about a time you were too rude to a friend for example. You might have snapped at them unnecessarily and now, 6 months down the road, they are not going to ask you to go to a sporting event with them.

This might not be a huge deal but suppose that event was where your team won a championship or you ran into an old colleague who had a great job opportunity. On the flip side you might keep letting a person take advantage of you and end up spending money that you could have invested in yourself.

Whatever the hypothetical scenario, the outcome is the same. If you react in an inappropriate manner you stand to lose our personally and professionally. Although it is hard to judge in the moment what to do and hindsight is 20/20 every single one of us has made obvious errors in this area.

You’re either being too soft or too hard, and in this way you are inviting negative outcomes.

What Can You Do About It?

This is a very tough one. Proportionality is so subjective between genders, cultures, even different areas of small towns and individual families. What the ‘crowd’ think is a good reaction might not actually be the best, or most proportional, response. A good example of this is our problems with drug addiction. Stigmatizing and criminalizing addiction has failed everywhere it’s been tried. Nevertheless you can find entire groups of people who will tell you to imprison people with drug problems.

Although our laws can guide us somewhat in determining what a solid reaction is, not everything is a legal situation. A lot of our mindset failures come from our social lives. To combat overreaction and underreaction you have to build experience, find trusted people to advise you, and apply the ‘average joe test’.

Whenever you are faced with a situation that needs a reaction stop and take a deep breath. Remember if you’ve faced this before and what you did. Failing that try to remember if you heard of anybody else in a similar situation and the lessons they learned. Finally, imagine what the average person on the street would do.

Trust yourself first, your friends second, and society third.

BriefOct11

2. Feelings Over Facts

What is It?

Most of us have heard the stupid response from political commentators like Ben Shapiro ‘Facts Don’t Care About Your Feelings’. It’s usually used as a zinger to shut down debate, but in many ways it is true. The facts of a situation exist independent of your emotional response.

Now we have to be very careful here. Emotional reactions are perfectly natural and appropriate. Nobody lives their lives by solid logic and the mocking of emotional reasoning and intelligence has caused a great deal of harm to our society. This is especially true when minority voices, usually female voices, are disregarded due to being ’emotional’.

Feelings Over Facts refers to the act of taking your emotions and running with them, disregarding all logic and just ‘feeling’ your way to a solution. An example of this is feeling too old to start a business when you turn 30 despite that fact that most successful entrepreneurs don’t start their business until the age of 45!

In a sentence it means letting your overly negative or overly positive feelings override your intelligence.

How Does It Affect Your Money Mindset?

While listening to your gut can be key and can indeed help or money mindset by helping us avoid bad decisions, quite often it leads us astray. The reason for this is that many of use did not grow up in a healthy financial environment and now exist in an unhealthy economy.

What we feel is quite influenced by our upbringings and surroundings. It is no wonder then that people who live in areas where every neighbor tries to outdo each other “keeping up with the Jones'” tend to be mired in debt. This is because you feel like bad financial decisions are good life decisions.

Sometimes this is true. For example when you take a pay cut to move to a less toxic workplace. However I would argue that the lifetime financial benefit of that decision is positive. There is no mental or financial upside into taking on debt to buy a new car you don’t need.

Taking feelings over facts effectively makes you financially dumb, it bypasses your financial mindset and chases the endorphins of doing what feels good now, not what is best overall. More than any other issue, this will prevent you ability to maintain a positive money mindset.

What Can You Do About It?

This is a very tough issue to grapple with because if you have cultivated a high level of emotional intelligence you are likely able to trust your gut. However, if you are routinely wasting money and struggling to stick to budget, you might not be as emotionally intelligent as you thought.

What can you do about it then, if you lack the impulse control or long term thinking? Unfortunately there’s no solution for this but tough love and a calculator. You have to create a budget a stick to it, sure you can account for ‘fun money’ but you also have to keep within the lines.

You have to sit down and rationalize out every significant financial decision you’re going to make. If you don’t have time to rationalize it, then your answer is no.

Over time you will be able to rationalize quicker and cultivate a better gut instinct, but for now, you need to write it out, add it up, and take a cold mathematic approach.

3. ‘Musterbation’

What is It?

No, it’s not something you do at home with the lights off! Musterbation is the toxic behavior of framing everything in your life as a ‘must’ or a ‘should’. It is a expectation on yourself and other to totally match a predetermined behavior.

When you engage in musterbation you are making your positive steps into basic requirements for self-respect. You should save 20% of your income every month. The insinuation here is that if you don’t you’re a failure and unworthy of respect. This will make you depressed and liable to fail.

In the same way if you apply these standards to others you will get angry when they don’t do what you want, you will burn bridges and create a toxic cloud around yourself as a friend/colleague/spouse.

Note: This refers to things that are positive steps, it is not a excuse to stop holding yourself or people accountable. There are some things, e.g. murder, that you shouldn’t do…

How Does It Affect Your Money Mindset?

The effect of musterbation on your mindset is quite apparent. It makes you too hard on yourselves and others. There you have it, we worked in a dirty pun. Seriously though, the strictness of using shoulds and musts turns you into a hair trigger for reacting to any setback.

When you fail to meet a goal and your mindset is rigged up in such a toxic way you don’t learn from your failure and you are doomed to repeat it. You’re also likely to create a cascade of failures by taking too strict an approach.

When people fail you it’s likely that you’ll blow it out of all proportion. You’ll alienate allies that will help you along your road to financial independence. You have all seen the grumpy entitled people that shout at wait staff in restaurants? They are massive musterbators.

What Can You Do About It?

In all honestly this behavior is both the easiest fixed and the one that requires a bit more of an open mind. It is as straightforward as replacing your self-talk and planning behaviors with positive words and ranges respectively.

Whenever you are trying to create a behavior that will benefit you, avoid using the word should. Instead follow the logical train of thought to the benefit. It is not that you should workout. It is that it would be great for your health, mood, and lifestyle if you did workout. Notice that nowhere does that imply that not working out is a failure, there is not should, no ‘better’ just it would be great.

Baking this principal into your financial planning is also functionally simple. Whenever you are playing for a goal that can be counted, you need to research a comfortable range of success. Instead of aiming to save 20% of your income, you aim to save 10-35%. The aim here is to create ranges that you will fall within 99% of the time. You are subconsciously saying it would be great to save 20% but anything from 10-30 is fine.

Mindset Challenges
What you look like when you label yourself

4. Labelling Yourself

What is It?

Labeling yourself is something that many of us do on a daily basis. At its most basic it involves thinking about yourself as if you are the dictionary definition of a negative or positive term. Sound weird? Have you ever thought or said ‘I’m a loser’? If you have, then you have labelled yourself.

This matters because there is no such thing as being 100% a loser or 100% a success. People lose, and people succeed. We all do stupid things, we all catch lucky breaks. We have agency and the ability to change things we aren’t a black and white dictionary definition.

How Does It Affect Your Money Mindset?

A lot of the time the effect of this negative thinking pattern is quite subtle. Think of it like a mood amplifier, it can make you wallow in sadness an extra 10% of the time when you fail at something and just think about how much of a loser you are. If you miss a monthly saving goal it just proves how terrible you are at life, right?

When you don’t see life as an ‘ebb and flow’ when you will succeed and fail at different times, you end up reinforcing negative behaviors. This applies to both failure and success. You will be more inclined to give up if it fits your label of ‘loser’ while you will be less inclined to be sensible if you think you’re just great 100% of the time.

You will miss targets, you will exceed targets but that should never lead you to conclude that you shouldn’t keep trying and be mindful of your progress and potential.

What Can You Do About It?

Accept that people have agency, that labels are only generally useful when full context isn’t available. Make a point of catching yourself whenever you label yourself. Don’t allow your own brain to declare that your story is already written and your character is fully developed.

Sit down and write out five wins and five loses you’ve had in the past year. Then pair them with an opposite event. If you beat your savings goal by 25% find a month where you didn’t reach it. Understand that you are somebody who can beat the rate and somebody who occasionally falls short. So long as you are moving forward with a plan of building more Ws than Ls, you will be ok.

5. Tipping The Scales

What is It?

This is something that will be very familiar to anybody with children or anybody that has dated a ‘gaslighter’. Tipping the scales is where you unfairly maximize or minimize your responsibility for outcomes in your life.

If you are late to work because there was a car crash on the freeway and you somehow think it’s your fault you’re late, that’s maximizing. If you lose a friend because ‘they never called you’ but you also never called them, you’re minimizing.

In non toxic people this is often a habit of low self esteem and/or a defense mechanism for insecurity. I think we all know people who never accept responsibility, but they are a different kind of problem than this. Tipping the scales is imbalanced thinking in the moment.

How Does It Affect Your Money Mindset?

This should be really clear as to how it affects us. Have you ever done ‘retail therapy’ after something bad has happened? You are essentially saying that an external force has made you spent all that money on (usually) useless things. Have you ever left a job and ended up in a worse environment? I bet you blamed yourself for leaving right? As if you created the toxic environment in your new jobs.

When we blame ourselves too much, or not enough, we are again trying to ignore the reality of our agency. With money this is incredibly dangerous. It leads to situations where we never get rid of negative spending habits because we pretend everybody else is the problem. Similarly we are afraid to take risks and grow because we think that not matter what negative outcomes will appear as we cause all the negative variables in our lives. It’s like not investing because you’d think stocks will tank just because you picked them!

What Can You Do About It?

You have to get mathematical about this. Many of us are the ‘hero in our own stories’. We are always there with good intentions and its other people that are the problem. If we accept that this can’t always be true, we can break down times when it is true and play the percentages on times where we have been at least partially responsible.

If you get into an argument about spending with your spouse, try to think what a fair % of blame would be for each party. This isn’t about winning a fight about how much some pillows or a lawnmower cost. Instead it’s about realizing that when blame is 60/40 there is absolutely no point in maximizing or minimizing your role.

Say your husband is bad with the grocery budget. He’s trying but you’re still top dog for frugal shopping. If you send him to the grocery store alone, how mad should you get at those 56 slices of bacon he comes home with?

Mindset Madness

As you can tell from having to take up two articles worth of space, there are many mindset traps that you can fall into with you money. They are really all flavors of a few key skill gaps though: patience, introspection, and fairness. If you can take the time you need, be honest with yourself, and make decent sustainable efforts, you will likely be able to beat all of these negative patterns.

It will take a lifetime of effort and occasionally check-ins with yourself but you can build a resilient money mindset without pretending you’re a robot with no feelings.

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One Response

  1. I like your angle on this. This is a cool, non-conventional personal finance post. It’s worthwhile because there is a lot about personal finance that has nothing to do with numbers! Good job!

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