6 Harmful Money Mindsets You Need To Break (Until They Broke You)

Ivan Skladchikov
April 15, 2020
Harmful money mindsets article featured image

Money and health have been the hottest topics over the past month. Today, we decided to shake them into one. In this article, we will highlight 6 harmful money mindsets that negatively affect your financial health. Read on to know if you share any of these destructive beliefs. 

“Being rich is bad” message as a part of the pop-culture. Image source: Teepublic

Mindset 1: “Money Is Bad”

If you belong to this category, you agree with the statements like: “Good people cannot be rich because It’s impossible to earn millions”, “Money makes life complicated” or “Humble living is happier and stress-free”. It’s one of the most harmful money mindsets shared by many (poor) people worldwide.

Money Avoidance: How It Works Against You

As you subconsciously dislike and avoid money, you tend to spend them without any plan. You shop spontaneously and often buy stuff when you feel unhappy. Budgeting is below you. The result is predictable: your budget is a mess, but you prefer not to think about it.

Speaking of saving, ‘money avoidants’ don’t have an emergency fund. Partly, because it requires some planning, and partly because they see it as compulsive hoarding. Having a financial cushion does not make them feel comfortable. On the contrary, it makes them feel “bad”  — self-centered, not generous enough, focused on material things.

As for investing, such people tend to avoid it as it means making friends with money and learning about how it works. They can buy some assets because a friend recommended it and then panic-sell everything when the price goes down. Developing a strategy requires a mindful attitude, and they lack it.

Solomon was probably the first one with “Money is everything” mindset. Image source: QuoteFancy

Mindset 2: “Money Is Everything”

“You can never be too rich”. “It’s impossible to be poor and happy”. Feel like these are your own words? Then you might be “a money worshipper”. Such people measure their success by their income and the stuff they possess. Collectively, they invented the phrase: “If you are so smart, then why you are so poor?”

Money Worship: How It Works Against You

At first sight, it looks like a success mindset  — you have a strong urge to be wealthy and seek prestige. But in practice money worshippers tend to overspend and buy things they cannot really afford. These people know how much they are spending, but the pride of driving a luxury car is bigger than the pleasure of having a positive balance. If you belong here, you tend to make debts and overuse your credit card. 

With such harmful money mindsets ans spending habits, you often have no safety net. It’s impossible for a money worshipper to save. The only reason for them to hold money is to impress others.

In investing, these people often opt for high-risk assets in the hope of fast multiple returns. Their dream is to get rich, and fast. Another drive is FOMO (Fear-of-Missing-Out): money worshippers are afraid to miss The Chance. Therefore, they often lose money due to bubble-schemes and scams.

Harsh truth by J. P. Morgan, an American banker.

Mindset 3: “I Cannot Afford This”

“I cannot afford spending $60 on shoes”. “I can buy it cheaper or make it myself”. A scrooge type is always looking for a cheaper alternative or a bigger discount, no matter how much money he makes or owns. Let’s see how this mindset can be ruinous for money health.

Being Stingy: How It Works Against You

Imagine, you need new sneakers because the old ones are falling apart. Of course, you cannot afford spending $60 – 80 on shoes, because it’s unreasonable. You are not the one who overpays for a name. So, you buy generic shoes that look very similar but cost $20. The bargain makes you happy, but in 2 weeks, your shoes start looking $10 because the quality is low. Or  — surprise!  — they fall apart, too.

We can apply this scheme to any purchase a stingy type makes. But if you always opt for the cheapest, you pay more in the long-run. Besides, looking cheap negatively affects your public image, and this lateral damage can cost you more than you saved directly. The worst scenario is when you “cannot afford” good food and sports gear: then, you may end up overspending on medical treatment.

Naturally, a stingy type has much money saved for a rainy day. But this chronic underspending and hunting for special offers (that are not really special, at a closer look) rob them of many pleasures and opportunities. Also, they waste a lot of time.

In investing, this mindset lets you down, too. Unlike money worshippers and status seekers, you are afraid to lose money and not an opportunity. It makes you avoid any risks and focus on supersafe schemes. Sounds rational? Yes, but if there is no growth to compensate for inflation, your money will lose part of its value in several years.

Dalai Lama didn’t mean you have to spend everything today. Image source: Life and journeys.

Mindset 4: “I Want to Live in The Moment”

As Brigitte Bardot said in one of her early movies, “they invented the future to spoil the present”. This statement is 100% true if you mean mindfulness and the ability to enjoy simple pleasures of life. But when it comes to material things, it’s tricky.

Butterfly Type: How It Works Against You

Let’s imagine you want a coffee. Instead of waiting for 10 minutes until you arrive home and make it, you grab the fanciest cappuccino in Starbucks  — just because it’s the best option right now. A cup of coffee seems small, but you apply the same ‘live in the moment’ rule to everything. Over a year, these spontaneous buys will add up to an impressive amount. This money could save you in an emergency but instead, they just disappeared without a trace.

A butterfly spender never saves because “it’s not for them” or ‘they have no money to put aside”. They may have a good job that pays decently, but mindless spending and the focus on immediate needs leave them with nothing at the end of the month.

Normally, such a person avoids investing for 2 reasons. First, they don’t have money. Second, there is always a funnier way to spend it. 

Sounds smart, but it stops working at some point. Image source: Notable Quotes

Mindset 5: “I Have a Credit Card For This”

Well, we should probably place this one at the top of our list of harmful money mindsets.
Many people, when they see something they cannot afford, say “That’s what I have a credit card for”. Banks are aware of it  — that’s why it’s so easy to get this card. “Just imagine, you want to go on a fancy vacation… With our card, you don’t have to wait!”. “Sure, there are big things you want  — with us, your dream will come true tomorrow”. For those with the credit card mindset, such arguments are very strong.

Credit Card Overuse: How It Works Against You

There is nothing bad in dreaming your dreams, but the reality is harsh. Unless you’ve been saving for this huge TV,  it’s out of your reach right now. Your shiny Platinum Credit Card is not a solution, even if your bank says otherwise. So, buy yourself some comfort foods and go to the movies, instead.

The worst-case scenario is when you use your credit card for something that means high operation and maintenance costs. Are you sure this business-class coffee machine is good for you?


Don’t be like Scarlett and Ronald – think of it today. Image source: QuoteFancy

Mindset 6: “I Will Think About It Tomorrow”

We speak of good old procrastination and inertia. You understand that it’s necessary to revise your lifestyle because it’s getting harder to make the ends meet. But it waits until tomorrow, and tomorrow never comes.

Tomorrow Mindset: How It works

You feel your money go somewhere every month. If you analyze your budget, things will become clear. 10 online services you never use keep billing you every month (you started with a free 1-month trial period, didn’t liked it but then forgot to cancel the subscription). You pay for the gym you rarely use. You are too lazy to change your phone plan for a better one.
Marketing guys made the barrier to entry very low because they knew – inertia is a great power.

Change your thinking to change your finance. 

Harmful Mindsets: How To Combat Them

Ok, this was our list of the top harmful money mindsets.
Have you recognized some of your spending patterns? It’s important to understand there is nothing wrong with your psychology itself. These mindsets are just scripts you can re-write.
Below are a few tips to help you create healthy relationships with money:

  1. Start with small things. For instance, you can automatically put aside X dollars every time you get your paycheck. Then, it will become a habit.
  2. Harness the technology. Use digital tools to track your spendings. Now, almost every payment app offers this feature. Some of them categorize the expenditures for you.
  3. Think long-term. Many harmful money mindsets work just because you don’t see a bigger picture. You want to buy this thing now, and you don’t care it will take ages to pay out the debt. Or you want to save money now, and buy poor quality stuff that won’t last. Go out of your comfort zone for a broader perspective.
  4. Curb the anxiety. When your priority is immediate survival, it leads to wrong long-term decisions. 
  5. Change your attitude to budgeting. Most people hate budgeting because they don’t like the idea of cutting their expenses. Instead, see it as a useful tool that will allow you to avoid waste and save some money for the things you need.
  6. Keep connected to your goals. It’s easier to save money when you have a clear goal in mind. It may be early retirement or a bigger house, you name it. Imagine this house in detail, make plans for the future.
  7. Don’t separate the future and the present, mentally. When you see them separately, you tend to sacrifice one for another, depending on your bias. Remember, your future self is not an enemy who wants to rob your present self. It’s the same person.
  8. Learn the basics of trading and investing to avoid typical mistakes. 

We hope these tips were useful!

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