The key to thriving in your financial life is having the tools to reflect on, gain awareness of, and change your unhealthy beliefs and attitudes. By understanding the past, you can better understand the present and, with the right strategies and guidance, shape the future with greater clarity and confidence.
There are three rules that everyone should follow before we provide a few simple tips to help you discover, understand, and change the beliefs that shape your money map.
- Simple strategies, well executed, are the key to lasting behavior change. Find small things you can implement, with consistency, and change will come.
- This is a no judgment zone. Money is very emotional, and you will likely unearth at least one thing that is uncomfortable. Give yourself grace and don’t judge yourself for what you discover.
- Change takes time. Don’t expect an overnight shift in how you feel or behave with your money. My father always said, “Patience is a virtue.” I hate that he is right (but I still love him).
Now let’s analyze the process of breaking down five steps that you can implement today in order to reconstruct your financial plan.
1. Identify Your Money Beliefs.
The initial step in enhancing your money mindset involves recognizing the positive beliefs you wish to retain and the negative ones that are no longer beneficial. Commence by compiling a record of the financial choices you have made within the past week or month (the specific time frame is at your discretion). For every decision, pose three inquiries to yourself:
- Why did I make this decision?
- Did the decision align with my values?
- How do I feel about the decision?
The purpose is to reflect on the decisions made and become aware of the factors that influenced them.
2. Go From Reflective to Introspective.
The initial step involved contemplating choices made in the past. This step involves introspection regarding future financial decisions that are yet to be made. Therefore, prior to utilizing your credit card or making a purchase on your preferred online shopping platform, pose the same three questions to yourself, considering the present: Why am I making this decision, does it align with my values, and how will this decision make me feel?
By carefully examining your decisions before making them, you can gradually gain control over the thoughts and emotions that influence them.
3. Look for Autopilot Moments.
Humans have a tendency to follow routines. Reflect upon the numerous choices related to money that you make on a daily basis. Consider how often these decisions are made unconsciously.
As you go about your daily routine, make a mental note of the moments when you consciously think about your decisions, as well as the moments that usually pass by without your conscious awareness. Bringing about change necessitates a greater focus on being deliberate in the choices we make.
4. Change Your Decision Framework.
Have you ever been asked about your thoughts? Personally, I prefer inquiring about people’s thought processes. Our thoughts usually represent momentary opinions or feelings, whereas our thinking refers to the decision-making process we employ.
When using a decision framework, the first step is to define the desired outcome. After that, one must review the available information and identify any gaps. The next step involves generating alternatives, followed by evaluating the options and ultimately making the final decision. Having a structured approach to decision-making allows for greater clarity and consistency in managing finances.
5. Change Your Environment.
The environment consists of both the physical aspect, which refers to your current location, and the social aspect, which pertains to the individuals surrounding you. Both aspects play a significant role in steering your choices. Although the physical environment can impact your actions, I prefer to concentrate on the individuals we consciously integrate into our lives.
According to self-help expert Jim Rohn, the individuals we frequently associate with have a significant impact on shaping our thoughts and actions, ultimately determining our overall character. The crucial aspect to consider is identifying those influential individuals in your life and reflecting on who you are evolving into as a result of their influence. Furthermore, it is vital to contemplate the kind of people you aspire to have as your primary influences.
By considering your financial decisions, recognizing your money habits, and altering both your mindset towards money and the circumstances in which you make choices, you can enhance your understanding, certainty, and management of your money. This process is essential because your money map and the underlying beliefs, values, and attitudes that guide it have a significant impact on every financial decision you undertake.
What Is a Toxic Money Mindset
Have you ever desired to resign from your job intensely, but still willingly agreed to work additional hours? Have you experienced the situation of awaiting a legal resolution for many years, only to feel that the compensation received did not adequately make up for the time and suffering endured? Have you ever exerted great effort to obtain alimony or child support, only for the moment of receiving it to feel like a disrespectful gesture?
If you find yourself feeling resentful of every penny you earn, it means you understand how it feels to receive income and consider it toxic money. Margaret M. Lynch, the author of Tapping Into Wealth, and Gull Khan from The Money Mindset Podcast explain that toxic money originates from a disliked source, and even if you accumulate a large amount, it never brings you any satisfaction. To begin addressing a toxic money mindset, the initial step is to assess whether you possess toxic money habits or toxic money itself.
Do you have toxic money habits?
Toxic money habits primarily involve negative financial behavior rather than the actual money itself. There are various forms of toxic habits, but the most prevalent ones include dishonesty about your financial status, using retail therapy as a means to escape emotions, and relying on credit cards instead of cash.
In summary, a toxic money habit refers to any repeated behavior that is detrimental to your finances. It may involve excessive spending or insufficient earnings. According to Underearners Anonymous, under-earning encompasses various aspects, not solely related to money. Apart from the obvious consequence of being unable to meet present and future needs, under-earning also involves an inability to acknowledge and showcase one’s abilities and skills. It entails underachieving or not fully realizing one’s potential, regardless of income. Recognizing the pattern and cultivating improved habits can help address and resolve toxic money habits.
Or do you have toxic money?
Toxic money refers to income that evokes resentment, typically originating from a previously cherished or valued source. It stems from a change in emotions where the relationship has ceased but the financial connection lingers. We provided examples such as alimony and child support, but it could also involve a loan received from estranged parents to fulfill your child’s aspirations of attending a private school.
Lynch describes toxic money as being connected to a prolonged struggle which compels one to conform, abide by someone else’s rules, remain wounded or ill, or unable to reach their full potential. Toxic money enters one’s life through a distressing procedure that instills a sense of being a victim, whether it is received as a financial settlement or a regular salary. It can have a significant negative impact when it diminishes one’s earnings in other areas (such as child support pushing them into a higher tax bracket) or when it is utilized for a detrimental purpose (such as alimony being used to repay a parental loan).
When you come to the realization that your money is toxic, you are faced with a choice: retain it, return it, or contribute it to a cause. There is no definitive answer, and each option carries its own outcomes. According to Khan, toxic money can make you feel trapped, yet it is your emotions that determine the extent of your financial resources. The more negativity you associate with the source of your money, the more poisonous it becomes.
If you are able to survive without the money, it is advisable to contemplate the option of walking away. Accepting it may lead to negative emotions such as guilt or shame. However, if you require the money, the initial step towards attaining freedom is acknowledging your dependence on it. The subsequent steps involve controlling your mindset, improving your financial relationship, and seeking additional sources of income.
