On one hand, managing money is just math: how much comes in, how much goes out, and how much gets set aside. On the other hand, it has nothing to do with math and everything to do with emotion. It’s about your perception of time, energy, desire, self-worth, and so much more. All of those non-mathematical factors combine to create money mindsets, or money scripts, in your head. These can manifest as self-limiting beliefs that will keep you from reaching your goals.
To kick off 2023 on the right foot, identify whether your actions are influenced by any of the following money mindsets and start working to change them:
I’m a spender, not a saver
While you may be more inclined to spend your money than to save it, there is a danger in adopting this tendency as an identity. Mainly, this identity likely conflicts with major financial goals you have such as affording a nice vacation, buying a home, or retiring someday.
Reframe: Replace the voice in your head that says, “I’m a spender” with one that says, “I’m a person who…” and fill in the blank with a new identity that aligns with your goals, but also feels true to you. For example, you could say, “I’m a person who spends sometimes and saves sometimes.” This opens up room in your identity to start setting money aside.
Try this: Save your round-ups. Build evidence of your new identity by starting to save in the easiest way possible.
I shouldn’t spend on luxuries
On the opposite side, feeling like you should only ever spend on needs and never on wants can also have a negative impact on your life. This belief leads to anxiety and guilt around making purchases and it can create an overall sense of scarcity that keeps you from enjoying what you do have.
Reframe: Rather than equating money with security, think of it as a tool for creating the life you want. Security is part of that, but it’s probably not all of it.
Try this: Set up a splurge fund. Create a new checking or savings account to use just for fun and non-necessities.
I’m never going to get out of debt
If you feel crushed beneath the weight of your debt or a nagging feeling that it will be following you around forever, you are not alone. About 20 percent of millennials who have debt believe that they will never pay it off. Paying off debt may not be easy, but it is possible—especially if you focus on shorter-term actions and milestones.
Reframe: Becoming debt-free may take a while, but you can make progress immediately. Remind yourself that every day is an opportunity to get closer to being debt-free.
Try this: Use a debt payoff calculator to calculate how long it will take to pay off your debt by just paying the minimum (as long as you are not putting new charges on the card, you will pay it off). See how the timeline changes if you add an extra $50 or $100 per month. Identify what you could do differently to be able to pay that extra amount toward your debt.
I can’t earn more money
When you work in a low-paying industry or struggle with a lack of resources, it can feel like it’s impossible to bring in more money. You may be facing legitimate hurdles—a lack of time, energy, childcare, education, or systemic racism could be holding you back. Or you could have other priorities that are more important in your life right now such as spending time with your kids or working on your mental health. Either way, you still have agency over your situation.
Reframe: Acknowledge your personal challenges while identifying what you can do. Finish this sentence: “I can’t earn more money because of XYZ, but I can…” For example, “I can’t earn more money because I’m too tired to take on a part-time job, but I can ask for a raise at my current job.” Or, “I can’t earn more money because I don’t have the right education, but I can start researching programs I’d like to enroll in and scholarship opportunities.”
Try this: Brainstorm at least five ways you could make more money (or that would put you in a better position to make more money). Take action on one of them.
