6 Attitudes That Breed Financial Failure

by Kentin Waits on 20 June 2012 9 comments
Photo: Zach Klein

Financial success or failure is often the result of attitudes — both conscious and unconscious — that affect our behavior. No amount of budgeting and self-control can help us when we’re up against ingrained ideas about money management, spending, and debt. If you’re having a tough time shifting your financial behavior, maybe it’s time to change your mind about money. Here are six common attitudes that work against us financially. (See also: The Secret to Making Tough Financial Decisions)

1. Stuff Is Just as Good as Money

Besides a few important exceptions like our home, car, and other necessities, objects are seldom as valuable as cold hard cash. When you trade your hard-earned money for objects, don’t fool yourself into thinking they retain even an approximation of their retail value for very long. Typically, by the time we file our receipts, depreciation, changing styles, or new technology has reduced our treasures to trinkets.

2. I’ll Start Saving When I Make More Money

There’s no optimal time (or salary range) to begin the good habit of saving. Setting your course early in life, regardless of how much money you make, establishes a routine and habit that can be tweaked as your financial realities and goals change. Many people tell themselves “I don’t make enough to save,” but isn’t the flip-side of that “I make so little that saving is essential"?

3. Time Is on My Side

Twenty-somethings may disagree, but time really does fly. Saving early and often will compensate for most financial mishaps. The twin powers of habit and compounding interest can make huge nest egg from even the most modest income.

4. Little Things Don’t Count

Volumes have been written about the “latte factor,” and various savings gurus argue the point ad nauseum. I’m not a proponent of total self-denial, but there’s something to be said about how our little habits and mini indulgences can, if left unchecked, add up to big expenses. Understanding how our own personal latte factor (whatever it might be) erodes our larger financial goals is important first step in becoming more savings savvy.

5. Debt Is No Big Deal

Everybody carries some sort of debt, right? Wrong. Simply put, most debt is draining, and there’s real freedom to be found in avoiding it. Besides the interest, the worry, and the depletion of readily-available cash resources, debt limits our opportunities — and that is a big deal. With the exception of a home and education, seriously consider how consumer debt is foreclosing on your options. What choices would you make if you didn’t have debt? If you could do it all over again, what debt would you avoid? Do you still emotionally embrace debt even while being intellectually against it?

6. My Lifestyle Should Constantly Improve

We live in a society where the arrow on the chart is always expected to head north. We’ve even come to see consistency or stasis as some sort of warning sign. Companies are expected to cut costs and make more money; consumer spending should increase quarter after quarter; factories are expected to expand. Even our homes should grow, as we trade that “starter home” for something larger. But what’s wrong with a bit of satisfaction in what we already have? Why can’t our lifestyles, after a certain point, remain relatively constant as we work toward our financial security? Maybe it's time to embrace debt-free living as the ultimate new luxury item.

When we change our attitudes about money, we change our relationship with it. And when we recognize how culture is a big part of how we’re conditioned to think about our finances, we can slowly start to shift that thinking. In short, the quickest and most powerful thing we can do to reinvent our financial lives is change our minds.  

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Guest's picture

I think the "I'll start saving when I make more money" thought is one of the most detrimental to your financial future. Like you said, instead of thinking this, these people should be saying "I make so little, that saving would be a better idea than spending it all". This will not only allow people to build up savings and get into the habit of not spending everything, but seeing a bank account grow will be incentive to keep going. Once you see those numbers going up, you'll be motivated and interested in seeing them grow even more.

Guest's picture
BigFire

Point #5 is my rule #1 in my Personal Finance Religion, which states "Never Pay Interest on Credit Card", and its many correlations (never pay bank fee, never pay late fee, etc).

I'm pretty sure my bank hates me, but I basically look at my credit card as an extension to my checking account. If I cannot cover that amount, I don't pay for it.

Oh, the only other rule I have in my religion is #2 "Never pay for parking if you can help it". This means I don't visit Oldtown Pasadena as often as they want me to.

Guest's picture
Jamie

Wise advice. Time really does fly by, and it's great to have those saving habits ingrained as soon as you start earning your first paycheck. And #6 is so important as well. I notice as my friends get older, there seems to be a certain amount of entitlement. ("I should be able to afford to take my family on a 2 week cruise... I should be able to afford a 2500 square foot house") which leads them to splurge on these things, even if they can't really afford to.

Guest's picture

Great post. It's the little things that turn into big things and lead to financial failure. Little things do count and a little debt is a big deal. I recently added up how much interest I paid on a few credit cards that I carried a balance on, and it was really eye opening. Interest never sleeps and never takes holidays. It just keeps adding up.

Guest's picture

Great article and I agree with everything that you stated.
Unfortunately, a large percentage of people are living at or above their means instead of below it. Material possessions project a certain status and being "debt free" is not a common goal. Most people would rather look like they have money than actually have any.

Guest's picture
Bryan

Good thing I don't have any issues with any of these attitudes.. ;)

Guest's picture

Financial success or failure is often the result of attitudes both conscious and unconscious that affect our behavior. No amount of budgeting and self control can help us when we are up against ingrained ideas about money management, spending, and debt.

Guest's picture

The notion of "Time being on your side" is a killer. There is a real sweet spot for people between the time they graduate college, if you are a traditional student, and say 30, where it's critical to save and be financiallyresponsible. This is not to say that you can't have fun because, obviously, you should. But if you do the right things at this point and indulge in moderation, you will set yourself up nicely when/if you want to start a family, buy a home, move, or start a new career or business. You're less likely to have financial difficulties or have to delay doing something that you truly want to do.

Guest's picture

I honestly think it is depends. Yes we need to count money and now where they are going.

But in general there lack of financial discipline because lack on inspiration. Same like with the information and food - there is so much of it, that we are
slowly but surely stop taking care what we consume.

Should we have clear inspirational goals - we would be more disciplined.