There are probably a few money mantras you’ve heard and adopted over the years. We all know them – “A penny saved is a penny earned,” “Money doesn’t grow on trees,” and “You can’t take it with you.” Most of us nod our heads in agreement and use these tried-and-true phrases to help spur us to make better financial decisions. Many of them can be incredibly powerful tools – whether you use them as principles to live by, or things to strive for. However, sometimes money mantras can impede us from making the best, informed financial decisions for ourselves. Which money mantras we tell ourselves aren’t so healthy? Don’t fall for these myths!
#1: I don’t need a budget.
A lot of us are in a financially secure place where we no longer or have never really needed to worry about not having enough. The advantage is a sense of comfort and control that we can treat ourselves to something we want without feeling guilty or held back. However, the potential windfall here is if we don’t put a lot of thought into our purchases, we may end up spending more than we need to.
Flip the mantra: A savings plan lets me be intentional about achieving my goals.
Calling a budget, a ‘savings plan’ may be that first step toward putting a positive spin on it. A savings plan allows you to direct money toward goals or certain accounts (Hello, retirement early). You can then work backward, figuring out how much you typically spend on say, entertainment, every month, and adjust accordingly – or not. The important part is knowing how much you want to put towards specific goals. It is all about intentionality. Maybe it spurs you to cut back on things so you can build those accounts more, or perhaps not.
#2: My partner manages the money, so I don’t have to.
In many relationships, there is one person with a natural tendency to take the reins of the financial situation. Often, the person who doesn’t track cash flow sighs with relief and says, “knock yourself out.” It makes sense – finances are not the most intriguing thing to everyone. However, if you’re the one entrusting that the lights come on and your accounts are funded, it’s worth challenging yourself with the question – how could I benefit from knowing more about our financial situation?
Flip the mantra: My partner manages the money, but I know enough to make conscious decisions with my partner towards both our goals.
If balance sheets, cash flow, and maxing out retirement accounts don’t excite you, don’t worry. Even if your partner is geeking out over the excel workbook every month, knowing what’s happening financially in your household can be empowering. It can open a dialogue about dreams for the future and ensure that you’re both on track to meeting goals. And the most important part is the goals will be ones you’re both financially and emotionally invested in! You may even surprise yourself with what you’re curious about as you learn more about your household’s financial situation.
#3: The little man never gets ahead.
This money mantra disguises itself in a lot of different ways, but ultimately manifests itself as ‘I will never get there because of ___.’ It’s a negative thought that floats around when we’re scrolling through social media or reading about the overnight success of an entrepreneur. It’s also typically tied to the idea that other people, particularly successful people, have a leg up because of their connections or affluence. What this phrase does is compare what we’re able to do from where we are with the resources we have, to people in different situations.
Flip the mantra: I can create a plan and build wealth in a way that works for me.
Comparing our financial situations with those we see as successful can lead us to live a life of “Keeping up with the Joneses.” We all know that’s not a solid foundation to start on. Instead, we can focus our attention on what is in our control to get where we want to go. If we don’t have a plan, we can make one. If we don’t have the tools or the knowledge, we can get those too.
#4: Financial planning is not for me (I’m too old/young to start; I don’t make/have/know enough, etc.).
You probably have at least some idea of where you are financially right now. You’ve also probably thought about things like the age at which you’d like to retire or places you’d like to visit in the future. A financial plan connects now to then. It is dynamic, and when done correctly, allows you the freedom and flexibility to maneuver and make decisions that are right for you at the time. The reality is – the worth of a financial plan is not dependent on your age, your knowledge, or your portfolio size. Everyone should have a financial plan.
Flip the mantra: Financial planning is a roadmap to help me get to where I want to be.
Building a financial plan does not have to be an investment-only focused process, and you don’t have to do it alone. The more complex your financial situation is, the more sense it may make to reach out to a financial advisor. Their expertise can help you make better financial decisions, and more importantly, educate you and help you get to where you want to be.