“Unless you change how you are, you will always have what you’ve got.” - Jim Rohn
"Named must your fear be before banish it you can." - Yoda, from Star Wars: The Empire Strikes Back
"Three great essentials to achieving anything worthwhile are: hard work, stick-to-itiveness and common sense.” - Thomas Edison
When it comes to personal financial literacy and development, your beliefs about money, or your “money mindset” are critically important to examine, especially when you’re trying to learn something new or make some significant progress. I don’t think anyone would ever argue that your money mindset isn’t all that important, it’s just that it’s really hard to articulate “what it is”, especially when you’re first starting out. In fact, most of us don’t really even think about our “money beliefs”, that is, until we’re forced into a stressful financial situation. That’s when our true, gut-level beliefs about money spring forth and the discomfort can be quite unexpected and overwhelming.
I cover this topic as part of my “30 Day Debt-Elimination Quick-Start Challenge” video series. Here’s a video where I discuss the importance of examining “what’s between your ears”.
This video sits in the context of my “30 Day Debt-Elimination Quick-Start Challenge” . It's a step-by step video series designed to help you get started with 1) organizing your finances, 2) writing your first (or latest) budget 3) beginning to address your debt and 4) getting some “quick wins” in the process.
More precisely, this question of beliefs about money doesn’t really press on us acutely until we’re asking questions like:, “how do I change the results I’m getting with my money?” or “how do I address this money mess I’m in?” There’s something about the emotional nature of money that starts to poke at us once we’re in the process of actually doing the really important work of: organizing our finances into a budget, starting to track our expenses or addressing/eliminating our debt.
Understand that the actual pre-planning piece can be really fun and exciting. Starting down the road to improvement often feels exhilarating and refreshing for sure. But it’s when you get down to the actual behavior modification process (i.e. budgeting, expense tracking, making needed changes, etc.) that some of the negative thoughts and emotions can ambush you. In fact, there’s typically a large “side dish” of anxiety and dread that comes as a natural part of the process and it almost immediately starts to reveal our underlying beliefs, especially once we’ve dug into the processes that drive (like budgeting and expense tracking) behavior change with money..
What do I mean more specifically? Let’s say you’re new to budgeting and expense tracking. You successfully organize all your bills, expenses and debts into a written monthly budget and you’re feeling pretty good. The next part is to actually start behaving your way toward making that budget be the boss (and throttle) for all your money.
Typically as you start to track expenses, deal with your freshly revealed money-imperfections and blindspots, you’re going to be faced with some ideas, habits, practices that need to be changed. Like, “wow, I didn’t realize we actually spend twice as much on food as we had in the budget” or “do we really spend that much on entertainment?”, for example.
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Situations like this are going to be the ones that simultaneously tempt you to quit the process altogether, BUT are some of the most pivotal in terms of presenting a “teaching moment” to help you examine your underlying money beliefs. You just need a big enough “why” and some encouragement/community/coaching to keep you in the game.
It’s my contention that examining your beliefs about money (i.e. how you grew up thinking about/experiencing it, asking if it’s “evil”, asking yourself why you have a hard time holding onto it, etc.) should definitely be attempted in the beginning of your process, but it shouldn’t stop there.
As I mentioned before, when it really counts is when you bump into a (temporary) failure in your behavior modification (i.e. budgeting, expense tracking, etc.). When you can train yourself to properly respond to those challenges, is when you REALLY start to make progress AND change your underlying beliefs about money.
We’ll go much more into depth on this as we move through the post, but for now, let’s begin by addressing 3 questions that you’re probably asking yourself as we dive into this material, namely:
Let's dive into those questions now.
As I mentioned in my recent post “Starting With Why”, most of us start any life change/self-improvement process precisely backwards from how we should. We start with the “what to do” and the “how to do it”, when what we really need to do in order to be hyper-effective in our goal attainment, is to “start with why”.
Take budgeting for example. Most of us would run to a piece of budgeting software or app (a “what”) and then head over to YouTube for a “how to” video. Then, when we get frustrated at trying to stack too much complication into one activity (i.e. organization, budgeting, learning software), we get frustrated and quit.
It would have been (and always IS) MUCH more fruitful to “start with why”. It would have been much more consequential to sit down and go through the following thought experiment namely, “why exactly do I feel like I need to learn budgeting in the first place?”
You see, starting with “why”, gets to the strong, passionate emotional reasoning for the goals we’re saying we want to accomplish. It causes us to examine our desires and motives at a deeper level than “what” or “how to” ever could. So it would be correct to say that this exercise of examining “what’s between your ears” is a really close sibling of that “starting with why” process.
Why is it important to start with “why” and to examine “beliefs”? I love that you keep asking that question! :) It’s important because, as you dig into the “what” (i.e. financial organization, budgeting, expense tracking, etc.) and the “how to”, you’ll be faced with internal resistance that will try to keep you from pushing forward.
In fact, sometimes this internal resistance will be so intense, that you’ll be highly tempted to quit. If you’ve ever engaged in this process before, that may be what actually happened.
So, to avoid quitting this time around, developing that solid “why” and a concrete understanding of “what’s between your ears” about money, will help you to see those temptations in the proper light. And the proper light is that these challenges are a normal part of any improvement.
We sort of know this inherently, but we must be reminded of it often.
Examining your beliefs about money really means digging into the process of personal development. It’s almost required that you make a commitment to improve your finances by putting yourself under some stress, to really examine what your money beliefs are.
Like I mentioned earlier, going through the process of: financial organization, budgeting, expense tracking, increasing your savings rate and investing is going to create “ah-ha” moments that cause you to reflect on what it is that you believe about money AND more importantly the results that those beliefs have produced in your life up to this point.
The best way to examine your underlying beliefs about money is to ask yourself a series of questions. You may not be able to answer some of these quickly, so don’t be afraid to sit with them and even come back to them after taking some time to ruminate on them.
If you’ve been around this platform for any amount of time, you’ll know how I paid off $43,000+ of debt in 2.5 years. As a friend of mine recently said, I had “all the debt”. But I looked a little more "intelligent" because I had rolled it all into a Home Equity Line of Credit or HELOC. So, instead of having a bunch of credit card accounts and a car loan, I had my financial silliness neatly rolled into my HELOC.
Fortunately, my own self-deception was very soon shaken out of its slumber for good.
As a brief bit of background, about 3 years prior to my financial crash and burn, I had left a corporate sales job for a career as a freelance music contractor. Without going into nauseating detail here, the important point is that I was financially unprepared for the career switch and that fact caught up to me very quickly. I had A LOT to learn.
So, I started asking myself questions like, “why do I want to get out of debt?” and “how did I get here?”. I had absolutely hit rock bottom, so it was a bit easier for me in my desperation to ask these kinds of questions.
And through this personal Q&A I started to realize that I had a hard time holding on to money, that my spending was part of my overall “people pleasing” posture with my friends and colleagues and that I didn’t have a plan or a budget for my money. It entered my bank account and exited almost as immediately.
So, I want to show you how I responded to the very same questions I posed to you earlier in the hope that you might 1) connect with my story and process a little more and more importantly 2) that you use my thoughts as a springboard to examine your own situation.
I had a very “scarcity” oriented belief system around money. It was complicated by the fact that, although my mother was frugal and taught frugality by example, it was more of a “poverty” posture and didn’t really have a strategic element to it.
So, I looked at frugality and her eschewing of the middle class value of serving debt very negatively. My full rebellion took place during and after my university education, where I totally adopted all the “normal” middle class attitudes about money and debt, much to my detriment and regret.
I actually did feel that money was evil and that I was a bad American or Christian if I held on to some of it. I actually felt “selfish” if I didn’t almost drain out my bank account regularly. I was completely given over to the “hyper-consumerism” mentality that grips much of our culture and it had gotten me into a lot of trouble.
Like I mentioned, frugality equaled poverty in my mind and my father was quite the opposite of my mother in that regard. He seemed to spend with reckless abandon and seemed to be trapped in the “consume, spend, repeat cycle” and actually criticized my mother as a “tightwad” and other derogatory names I’ll leave out.
So it would be accurate to say that money was a stressful and conflicted topic in my upbringing.
By the time I recognized I was in trouble, I was willing and able to pinpoint the guy in the mirror, his beliefs, lack of discipline and his irresponsibility, as the culprit.
Just a little pause to ask you, do you think you have a "growth" or a "fixed mindset"?
Bad money beliefs (i.e. frugality = poverty, holding on to money = selfish, stingy, miserly, un-American, un-Christian, etc.), no plan for my money (i.e. budget, expense tracking, organization), no overall strategy for money, extremely ill-informed as to how money works, etc.
By that time, I had discovered Dave Ramsey’s material and was in fact witnessing how people were improving their situations by following some simple principles and practices.
Dave Ramsey was probably the first person I heard say that “you need a $10k emergency fund”. It’s odd to me now that he was probably the first media personality that was actually encouraging people to win with money, rather than just trying to extract it from them. This was a huge flashpoint for me and helped encourage my own personal reformation.
I wanted to 1) be debt-free, 2) have at least 1-2 year’s worth of expenses saved as an emergency fund, 3) have a solid investment strategy, 4) be increasing my savings rate beyond 80% and 5) working my way toward financial independence (FI) inside of 10 years.
I’m happy to say that I’ve accomplished #1-4 and am over 60% of the way to #5!
I had less than $2000 in my bank account at the time and my expenses were right above $2000 per month. I felt hopeless to make my monthly obligations AND despondent because I couldn’t see a way out of my $43,000 of debt.
I had a deep fear of failure and was profoundly conflicted at this point in my life. I had recently survived a treacherous divorce that had completely turned my world upside down. To add to that pile, I was also still dealing with a lot of trauma from my earlier life and I truly believe that it had completely cross-pollinated with my finances. I was a wreck of a human being at this point.
I would also go so far as to say that, not only was I afraid of failure but I was also equally afraid of success. Can you believe that? Afraid of success? But yes, as I peeled away the layers of this process of uncovering my own beliefs about money, I began to see that (perceived) success had actually driven people away from me in some of my more formative years.I had to really address and deal with that. And… success with money, or at least “perceived” success with money cost me some precious (to me) relationships as a kid.
You see, there were people in my formative years that looked at my personal crusade toward self-improvement and not wanting to live in poverty as a personal affront and I didn’t realize how profound of an effect this had on me until I started my own personal finance/debt-elimination journey.
Like I mentioned before, I was insecure about failure AND success and it was affecting every area of my life.
Even though I was completely beat down at this moment in my life, I knew that I had what it took both internally (my history of perseverance) and externally (a solid debt-elimination plan). I had the benefit of being able to look back and see that I had overcome some pretty daunting obstacles and had that mustard-seed of confidence that, with The Lord’s help, I could conquer this hill.
And I did.
Ultimately, I credit my survival of this chapter of my life to God. I had gotten saved a few years before this and I knew that Jesus Christ was actively pulling me through all the pain and suffering I was enduring. Had it not been for The Lord saving me and giving me a new heart during this time, I shudder to think about what could have been.
And I can assure you, it wouldn’t have been good. But here I am, on the other side hoping to help you pull yourself across and join the chorus of the 10,000 people my wife and I are aggressively serving in pursuit of their financial goals.
The importance of these issues really are meant to precede the “what” and the “how to” of your personal financial betterment program. They’re super important vehicles in getting you to the place where you can even ask the right questions about your beliefs concerning money and I want to address each in turn.
I’ve talked about both of these earlier in the post, but I wanted to bring special attention to them as we wrap up. As you’ll hear me mention many times throughout my work, “why” is the most important question in personal growth and personal finance. It’s so important because your answer to the “why” question will ultimately uncover your own strong, passionate and emotional reasons for wanting to put yourself through the often rigorous demands of any sort of personal improvement.
Why’s close cousin, the growth mindset, will help you ensure that you’re coming to your situation expecting to learn, understanding that you’re going to make mistakes and, instead of looking at mistakes as failures, you’re going to look at them as learning experiences.
Cultivating a growth mindset will also help you to circumvent another pernicious adversary in personal finance and that is, perfectionism.
In my 10+ years experience as a financial/money coach, I’ve witness perfectionism take a toll on countless students and prospective students. Perfectionism through the lens of personal financial improvement will say things like, “if I can’t do it right the first time, I’m not even going to try”, or “I’ve tried this before and failed, so I’m not confident I’ll ever be good at it. Budgeting is the perfect example of this.
So many of our students struggle with getting on and staying on a budget and it’s usually because they don’t give themselves enough time to “fail forward” in the process. Failing forward is just allowing yourself to 1) make mistakes, 2) take time and analysis to learn from those mistakes and 3) working through the negative emotions constructively, rather than allowing them to completely derail your learning process.
So, failing forward is just focusing on truly improving rather than on what you might “look like” or how you might “feel”. And, one point that might comfort you is to remember that, everyone is actually too focused on themselves to really take notice of most if not all of your “failures.. :)
So, we’ve covered A TON of ground in this post, right? We’ve learned that, when it comes to personal financial literacy and development, your beliefs about money, or your “money mindset” are critically important to examine, especially when you’re trying to learn something new or make some significant progress.
We’ve learned that this question of beliefs about money doesn’t really press on us acutely until we’re asking questions like:, “how do I change the results I’m getting with my money?” or “how do I address this money mess I’m in?” There’s something about the emotional nature of money that starts to poke at us once we’re in the process of actually doing the really important work of: organizing our finances into a budget, starting to track our expenses or addressing/eliminating our debt.
We’ve talked about “why” what you believe about money is important, what it actually means and how to start addressing those beliefs by asking some tough questions like the following:
I also walked you through an extensive analysis of my responses to these very questions as I would have answered then when I was going through my elimination of$43,000+ of debt in 2.5 years. Hopefully, that outline will be encouraging and insightful to you as you embark on your own journey.
And lastly, we explored the importance of, “starting with why”, developing a "growth mindset" and thwarting perfectionism as a catalyst for getting you to the next level of your journey even to be able to start working on your own money beliefs.
This is the point of this post. I want for you to use whatever psychological or emotional momentum you’ve received from consuming this material and actually do something meaningful with it. Otherwise, I’ve only succeeded in “infotaining” you. :)
The clearest call to action would be for you to ask yourself, “what do I believe about money?” AND “What have those beliefs produced in my life?” Then, take some time to sit with those questions and their answers.
Do this next. Decide which describes you best and download the corresponding free guide:
If you’ve hung out on this platform, you’ll know I’m all about helping you to take action. And here are two very easy next steps to keep you moving in the right direction:
Again, I want for you to capitalize on any and all emotional momentum you’ve gotten from this piece of content by committing two just getting started by completing those two actions I mentioned above. If you’ve done that, congratulations, you’ve started! Now just follow the breadcrumbs and please let me know what’s helpful and what you might need more detail around.
Now that you have that as a basic framework for addressing your beliefs about money, the next step is to get as granular as possible with the rest of your financial life. I want to offer you another completely free resource that will help you map out your money with even more confidence.
Ready to get total control over your money? Introducing My FREE 8 Steps To Erase Debt Guide.
These are the steps I personally followed to obliterate $43,000+ of debt in 2.5 years.
Maybe your number is bigger, maybe it’s smaller. Either way the principles are the same and I want you to have them.
I’ve created a simple, easy to follow “8 Steps To Erase Debt” guide that you can use as your foundation as you navigate the absolute annihilation of your debt forever.
Here are some additional options to help you accomplish your personal finance goals:
And again, I’d LOVE to hear from you. The biggest compliment you can give me as your coach is to share your progress and your takeaways in the comments below.
I wish you nothing but great success in your personal finance endeavors and please let me know how I can help you accomplish your goals.
To your freedom,
Your Virtual Money Coach