6 Harmful Money Beliefs That Are Keeping You Poor


All action begins with thought. Even in our financial lives, how we think about money, the biases we hold about ourselves and money, and the money messages we receive from others influence our financial reality. (See also: 5 Stupid Things My Parents Taught Me About Money)

If you're working to build a brighter financial future, don't let these six common money beliefs sabotage your success.

1. I'm Just Not Good With Money

I wasn't good with sewing, flossing before bed, painting a house, or cooking until I tried each and taught myself the basics. For this belief to hold, a person has to cling to the mistaken idea that learning is impossible. Sure, you may never pose a threat to Suze Orman, but anyone can learn to budget, discipline their spending habits, and gradually take greater control of personal finances. (See also: Money Management in 5 Minutes a Day)


Shift your thinking away from the powerless "I'm just not good with money" and replace it with the truer and more empowering "I may not have been taught how to manage money well, but I resolve to learn."

2. I Don't Make Enough Money to Save

In a world of high-prices, razor-thin budgets, and stagnant salaries, it's easy to conclude that saving is a pursuit reserved for other people with fatter paychecks. And though everyone's financial picture is unique, saving starts by making it a priority and embracing the idea of socking away something on a regular basis — no matter how modest the amount may be. Once you get a little bit of money saved something wonderful happens: Momentum builds and you get a buzz from watching your nest egg grow. It's a quietly powerful force and one you shouldn't deny yourself.


Revise this belief by being less attached to the numbers. Instead of a $100.00 a week, could you save $10.00? What figure would be a reasonable starting point that you could build on later? (See also: 101 Ways to Save Money Around the House)

3. Creditors Won't Lend Me More Money Than I Can Safely Repay

Sadly, we live in a world where it seems lenders use one part black magic and two parts shameless guesswork (note: black magic proportions are just estimates) to determine how much credit to extend to consumers. Their numbers should in no way inform your spending or override your own good judgment. Sure, lenders aren't in the business of making bad loans (…ahem… usually), but their calculations don't factor in your financial goals and important quality of life issues that indebtedness affects.

To illustrate the divide between what lenders offer and what's in the best interest of borrowers, here's a story from own experience.

In 2004, I applied for a mortgage on my first home. The lender approved me for a mortgage four times the amount I was comfortable with. When I saw those numbers, I laughed out loud. Why? Well, first, I didn't need a four-bedroom house with a swimming pool. And second, I didn't want a mortgage payment so steep that I'd end up chain-smoking over nightly dinners of canned pork and beans. Sure, I could have made the payments every month, but I would have been miserable and constantly stressed.


Replace this belief with "Regardless of what a third-party number-cruncher says, I won't borrow more money than I can safely and sanely repay." Staying true to your own financial reality is the best way to preserve your happiness — and your good credit score.

4. Credit Card Debt Is Just Part of Life

According to the Consumer Financial Literacy Survey conducted by the Harris Poll in 2014, one in three U.S. adults reported that their household carries over credit card debt from month to month. Though the trend to pay off card balances in full each month is growing, normalizing long-term consumer debt is an insidious part of easy credit. Over the years, unchecked debt erodes people's chances at real financial security by siphoning off significant portions of income through interest, late fees, and other charges. It's financial death by a thousand cuts.


Although consumer debt may be unavoidable at times, reject the notion that it's normal operating procedure. When you put high interest credit card debt behind you, you free up the income that can build real wealth over time.

5. Being Frugal Means a Lifetime of Denial

This isn't just one of the biggest misconceptions about frugality; it's the one folks most often point to as an excuse to continue their spendthrift ways. But healthy frugality is less about denying ourselves everything and more about exercising strategic restraint in order to accomplish specific goals. For example, a frugal person may vacation in the Bahamas every other year because she's driven the same used car for ten years and never carried an auto loan. People who direct their resources mindfully in order to stay out of debt and live richer lives get labeled "frugal" when "focused" might capture the breadth of the lifestyle better.


Give up the bias that frugality is synonymous with voluntary poverty. Instead, look for areas in your budget where you can cut back in order to achieve specific ends. Dream big and see how a more a strategic approach to saving and spending can help make frugality fun.

6. Money and Romance Don't Mix

You know what's even less romantic than realistic discussions about money? A break-up from money-related arguments, chronic debt, and endless financial anxiety. Compared to divorce, frank and honest money talk seems absolutely swoon-worthy, doesn't it? Think of it this way: Understanding where you and your partner stand with money, debt, and spending is essential information to determine if you're a good long-term match. Getting on the same page financially helps protect your love affair, build a happier domestic life, and accomplish your goals as a team.


If you're hesitant to broach the topic of money with the person you care about, start by reading this article together and then reserve a time to "get naked" about your finances in a non-judgmental, constructive way. Once you've opened up about finances, it'll be easier to find ways to manage money with your partner proactively.

The lesson here is a simple one: Don't accept limiting financial beliefs at face value. Question your own money self-talk and the wisdom behind casual advice that suggests you're powerless to control this important aspect of life. As hokey as it may sound, changing how we think really is the first crucial step in changing our fortunes.

What harmful beliefs about money do you have? Which old beliefs were the toughest for you to get over?

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Guest's picture

Good post - I've got some friends who just refute to be good with money, saying that they can't be! It really frustrates me that they won't even begin to try.

Guest's picture

Love #3. When we purchased our first house, we bought about $80k less house than 'they' said we could afford. Fast forward through the economic mess of '08 and the following years, and two kids later, and we still have that house, even though we're down to one income since I stay home with the kids. Best decision we ever made, and had we purchased the amount the bank suggested, I am confident we would have lost that nice house to foreclosure sometime after '08.

Don't let the lender decide what you're borrowing. Ever.

Guest's picture

Great article. You are so right on so many things! Frugal doesn't have to mean flour sack dresses and soaking navy beans nightly before bed (unless of course you like flour sack dresses and really love eating navy beans that is!). Frugal just means being conscious of your spending. We gave up cable and switched to Netflix and Huluplus years ago. Sure, we don't get all the shows from before, but we get enough -- we've decided HGTV and Food Network are just 24 hour long commercials enticing you to always want better, different, more, but with a "fun" host. Besides the benefit of financial savings, TV has shifted from us changing our schedules for "must see TV" to "eh, when I have time to see it I will TV" now. Liberating on many fronts! Another trick has been grocery shopping more often for produce and dairy so there is less food waste from spoilage. It's decreased our family's food budget dramatically. Of course there are millions of small, easy changes when you start looking for them.