Everyone has a complicated relationship with money, and our attitudes toward it have a major impact on our financial outlook. An unhealthy perspective, combined with poor spending and saving habits, make it difficult to move in the right direction.
Fortunately, you can start making changes simply by being more conscious of the way you view your money. These are a few of the most common attitudes that cause people to struggle with their finances. Identifying these issues is the first step toward gaining more control over your money.
It’s common for people to avoid thinking about their money problems entirely rather than trying to work through them. This is one of the most well-known bad attitudes toward money, but that doesn’t mean it’s easy to overcome. As with any source of anxiety, putting off the inevitable confrontation only makes it more and more difficult.
If you’ve ever avoided checking your balance or bank statements because you’re worried about what you’ll find, there’s a good chance you have this attitude. While it might seem overwhelming right now, you can take steps to make things more manageable. Regardless of your current financial situation, avoidance is never the right solution.
Solution 1: Be Honest with Yourself
Finally reviewing your statements and balances is never fun, but it’s a necessary step toward a better financial future. The earlier you move past your fears and start being realistic about your financial situation, the easier it will be to turn things around. Letting bad habits go unchecked only makes it tougher to change them later on.
Solution 2: Start with Manageable Goals
Once you’ve evaluated your spending habits, you’ll have a better idea of problematic areas and what you can do to change them. Don’t overwhelm yourself by trying to completely change your budget overnight—small, gradual changes are more likely to stick over time, and failing to reach unrealistic goals can be extremely discouraging.
Keep looking for ways to save more money each month, and continue evaluating your results in case of any setbacks. Over time, you’ll find it gets easier and easier to monitor your spending habits and be honest about your finances.
Solution 3: Find an Accountability Partner
You’re less likely to avoid managing your finances if you feel accountable to someone else, so consider talking to a friend or family member about your situation. Let them know that you need help sticking to your financial goals, then check in with them each month to review your progress.
Most of us experience large fluctuations in motivation from one day to the next. You’ll have a reason to stay committed with a trusted accountability partner. It’s critical that this person is someone you feel totally comfortable with—they have to be honest with you if things aren’t on track.
Overspending often goes together with avoidance, but it’s a distinct attitude that affects each person differently. While some people spend too much money on status symbols such as fashion or cars, others overspend on things like eating out, going out for drinks, or smaller expenses like coffee and digital subscriptions.
When you spend too much of your paycheck, it’s easy to fall into debt or have trouble saving money. Saving more each month allows you to get out of debt and build an emergency fund to cover unexpected costs. As with financial avoidance, people with spending issues need to recognize the problem before they can fix it.
Solution 1: Set a Budget
Once you’ve identified the things you overspend on, the next step is developing a reasonable budget that includes a limit on purchases in that area. If you’re currently spending 15 percent of your income eating out, for example, try to cut down to 10 percent. It might take a few months to reach your goal, but at least you’ll be consistently improving.
Solution 2: Use an App
Downloading a mobile budgeting app can help you track your expenses more accurate. These services automatically categorize each purchase and make it easy to see where your money is going each month. There are countless free and low-cost applications available for both iOS and Android.
Solution 3: Avoid Debt
People who have trouble controlling their spending often end up going into debt to finance their lifestyle. While it’s satisfying to get what you want immediately, remember that you’re paying with money you don’t have. Credit cards are especially problematic since they’re so convenient to use and come with extremely high interest rates.
If you’re currently in debt, focus on paying off those balances before doing anything else. Contribute whatever you can to your debts each month until you’re debt-free, then start putting that money into a savings or investment account. It will be much easier to avoid going back into debt once you’ve accumulated some savings.
3. Focusing on Immediate Needs
Most American workers are living paycheck to paycheck, and that’s an unavoidable reality for some of those people. On the other hand, you may be contributing to that problem by prioritizing your short-term desires and needs over long-term goals.
People with this attitude tend to think of saving as something they’ll figure out later on in life when they’ve started earning more money. The truth is that putting off long-term financial goals only makes them tougher to achieve—every month you fail to save puts you further and further behind.
Solution 1: Make Saving a Priority
The 50-30-20 rule is a popular trend, but you don’t have to save 20 percent of your income to make a difference. Something is always better than nothing, and getting started gives you something to build on in the future.
If you’re having trouble with savings, set a contribution to deduct automatically from your paycheck. This makes it easy to include savings in your budget—after a few months, you won’t even notice the difference.
Solution 2: Start Investing
You might think of investing as something to consider later on, but there’s no reason to wait. You could start earning substantial returns on your investment in as little as a few weeks, and investors can be successful even with a small initial contribution.
Getting into investing for the first time can be overwhelming, but there are numerous websites and mobile apps available to streamline the process and help you learn the basics more quickly. Being able to access your portfolio from any device makes investing more convenient, and there are a variety of free and low-cost options. You’ll be surprised at how quickly your investments grow once you develop the habit of making regular contributions to your account.
Solution 3: Take Advantage of Your Match
Some companies offer matches on 401(k) contributions up to a certain limit. If your employer provides this benefit, you can effectively double a portion of your salary by contributing to a 401(k). Neglecting to maximize this contribution is one of the most common financial errors.
Different companies have different matching practices, so talk to someone in accounting or HR to learn more about your policies. They’ll help you set up automatic contributions and get as much as possible out of your employer match.
4. Always Needing More
While some people really don’t have enough to live comfortably, a large number of people who think they don’t have the money they need could actually be a lot more comfortable. If you feel like you need more money to live the lifestyle you want, you’re much more likely to live beyond your means.
This attitude can cause serious problems in both your financial and personal lives. People who chase money tend to overwork themselves and be more stressed. You might also tie the amount of money you earn to your social status. It’s important to understand the root of these issues in order to develop sustainable solutions.
Solution 1: Reevaluate Your Lifestyle
If you find yourself consistently needing more money, there’s probably no amount of money that would fix your problem. Rather than blaming your current financial situation, be realistic about your income and the kind of lifestyle you can afford.
For some people, the need for money stems from deeper insecurities that go beyond personal finance. Your money should work for you, not the other way around. Consider talking to an experienced therapist about your financial and personal situations if you have trouble managing them on your own.
Solution 2: Don’t Spend More Just Because You Can
If you don’t budget well at your current salary, a raise might not make things any better. Many people who start earning more money end up spending more to match and have just as much trouble with their finances as they did before.
While there’s nothing wrong with living more comfortably after a raise, it’s important to stay disciplined. A higher income allows you to spend more, but it also makes it easier to save. If you’re currently saving 10% of your paycheck, for example, you could try to save 15% after receiving a raise. Try not to spend more than 50% of the extra money if you can avoid it. Saving half (or even 25%) of all raises from your initial salary is an easy way to grow your savings without having to cut back.
5. Financial Anxiety
Anxiety about money affects people in a variety of ways, and it impacts both your financial and mental health. Many people with financial anxieties feel guilty about spending too much or not saving enough. They might also hide their financial struggles from friends and family in an attempt to manage things on their own.
Over time, these common attitudes lead us to have a dysfunctional relationship with our money. Money is a common trigger for people with anxiety disorders, and each one can make the other more difficult to manage. Overspending, obsessive frugality, and other bad financial habits often stem from money-related anxieties.
Solution: Set Aside Time for Finances
If you don’t schedule a specific time to think about money, it’s easy to feel consistent financial anxiety. A fear of the unknown can aggravate anxious feelings, and our problems become more manageable when we fully understand them. Once you’ve had a chance to honestly check your finances, you’ll have a clear idea of what to do.
When you’re just trying to “save money” for example, you might feel anxious every time you buy something you don’t need. Once you have a firm budget, on the other hand, you can spend up to the limit without feeling guilty. Explicit financial guidelines and goals make these decisions much simpler and help you feel confident in each decision.
6. Waiting for Your Paycheck
Many of us look forward to receiving our paychecks so that we can finally buy what we want, but immediately using your paycheck to spend isn’t a good habit. If you tend to go through your paycheck too quickly, it might be time to reevaluate your financial approach.
When you can’t comfortably account for a purchase in your budget, it probably isn’t the best decision. If you’re currently living paycheck to paycheck, consider taking a step back and trying to adjust your habits.
Solution: Set Up Automatic Contributions
Most people who spend their paycheck as soon as they get it have trouble saving money at the end of the month. When spending is your first priority, it’s easy to forget about saving and continue putting it off until the next month. Automatic contributions take this decision out of your hands and make sure you don’t spend the money you’re supposed to save.
It’s easy to set up automatic contributions to a savings or investment account. Someone in your company’s HR or accounting department can help you set a portion of your paycheck to deposit into the right account.
Money can be surprisingly scary, but it’s never too late to change your habits and start approaching finances more thoughtfully. If you identify with any of these attitudes, consider how they impact your life and what you can do to overcome them. The toughest part is getting started—you’d be surprised how much progress you can make in just a few months!
Maybe unlike some of the situations described above, you actually have healthy cash flow and are growing your net worth. But have you considered that there are many people in the world who are less fortunate than you are?
Remember, the pursuit and accumulation of wealth should not be ends in themselves; they should lead to something greater than some net worth number.
Hopefully, the goal of all your wealth-building efforts should be happiness. And guess what? Generosity leads to happiness.
Solution: Give Regularly
You don’t have to give away the majority of your wealth. Start small; perhaps this means giving $10 or $50 or $100 a month to a charity that you trust and have vetted.
Or maybe this means helping out a friend or family member in a time of need with no expectation of being paid back.
However you give, make sure that it’s something that you can commit to for the long haul so you can see the true impact of your generosity.
Logan is a CPA, personal finance expert, and founder of the finance blog Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money.