5 Toxic Money Habits to Let Go of in 2021
Money is tough for so many reasons: we aren’t taught about it, it’s taboo to talk about, and we derive a lot of our self-worth from our financial status.
And that’s just if you’re a white man.
Women and even more so, BIPOC, have infinitely more working against them when it comes to their money. There are pay gaps, investing gaps, accessibility gaps, discrimination - and the list goes on and on.
BIPOC have been stripped of wealth, over and over again, through policies, massacres, and illegal scandals.
The playing field is far from equal when it comes to our money, and personal finance is anything but one-size-fits-all.
But despite all that, many of us encounter similar pitfalls when it comes to our personal finances. If you feel stuck, here are simple steps you can take that will help you make real headway in your financial wellness goals.
Read on to see how letting go of these toxic money habits can jumpstart your journey.
Toxic Money Habit #1. Punishing yourself for your mistakes.
Have you ever listened to what you tell yourself about money? We can be ruthless, whether we criticize ourselves for not making enough, spending too much, being in debt, or avoiding the topic altogether.
Not only do we punish ourselves for our current money habits, we punish ourselves over and over for our past mistakes. Although this might feel like we’re trying to hold ourselves accountable, it isn’t productive because we’re not learning from our previous actions.
Shifting how you react to your money “mistakes” and showing yourself some compassion can help bring you closer to your money goals. Forgiving yourself for your previous mistakes is a powerful and important first step.
If you need inspiration, take on a positive and powerful money mantra and remind yourself of it often.
Toxic Money Habit #2. Paying yourself last.
For many of us, we think we’re prioritizing saving as a money habit but it’s really an afterthought. How? It’s actually in the way we try to save.
We think of savings as the money left over after we pay our bills and spend on our lifestyle. It’s pretty ironic when you think about it. We work hard to earn money, we pay our bills, and we prioritize paying everyone else first. And then there’s never any money left to save.
Our expenses chip away at our checking account, month after month, leaving nothing leftover for our goals or our future.
Paying yourself first means switching the equation. Put away some savings, then use the leftover money to pay for bills and lifestyle expenses. If you’re not sure how saving would even be possible, start small. Set up an automatic transfer of $5 per week to an online savings account.
See how it goes. If you hardly notice, inch it up!
Toxic Money Habit #3. Feeling powerless to environmental toxins.
When it comes to our money and our money habits, it’s easy to feel alone. Money isn’t something we talk about, even with our closest friends and family. It can feel like we’re out to accomplish our money goals all on our own. This sets us up for failure and puts us at risk of environmental toxins derailing our goals.
What are environmental toxins? Environmental toxins are the people, places, and things that get the best of your spending. Maybe it’s a friend that you shop with that always encourages you to “treat yourself” or there’s an aisle of the grocery store that tempts you to buy things you know you don’t need. It might sound harsh to think of your friend as toxic to your spending, but it’s not personal. It just means your spending gets off track when you spend time together.
Environmental toxins can put your spending in a tailspin, derailing your savings plans. While we can’t always avoid these situations, we can deal with them in a way that’s powerful. You can formulate a plan to mitigate these toxins in your life.
Take note of what triggers you to spend money (without punishing yourself about your answers). Your goal is to gather information, not to guilt yourself for mistakes. What are your environmental toxins? What happens when you encounter them?
Toxic Money Habit #4. Keeping quiet about money goals.
Despite being a big part of our daily lives, money can be taboo so we often avoid talking about it. But when the people you spend your time with don’t know what you’re out to accomplish in your money life, they can’t support you and they may even sabotage your goals and money habits.
If your friends and family don’t know how hard you’re working to save for a vacation or pay off student loans, they might encourage you to spend money on other things that aren’t aligned with your goal.
When they do know about your goals, they can be your biggest champions. If it seems too daunting to share everything, you can let them know about your goals without sharing specific numbers. For example, your goal is to spend less than $200 this week on shopping and food. You don’t have to share details about your savings or debt.
Sharing your goals with them may even inspire them to share their own goals with you–and just like that, you’ll have a support system Dream Team.
Toxic Money Habit #5. Wasting money.
We often have no idea where our money is actually going because we spend out of habit or let technology automate our bills and expenses. Not to mention, we might not want to know where our money is going.
We’re separated from the pain of paying: we hop out of Ubers without taking out our wallets, we hit buy when online shopping and then find boxes at our doors, and we swipe credit cards for just about everything. Paying with an app or card feels really different than handing over cash, and it’s easy to spend on things that don’t contribute to our happiness.
The solution? Start a money journal and track what you spend and earn. As the year goes on, it will be easier to identify which purchases are simply a habit and which are bringing joy to your life. You can only use each dollar once, so you might as well use them for things that make you happiest in the short and long term. Aligning your spending with your values is one of the most powerful money habits!
Building new and powerful money habits can feel like a daunting task but the easiest way to go about it is to start by letting go of your toxic money habits. Walk through these five steps to make some real headway in your financial wellness goals.