Money Psychology

9 Warning Signs You Have a Toxic Money Mindset

March 29, 2023

It's common for people to feel like they can't make a significant impact or achieve success. These thoughts can hold us back and prevent us from reaching our full potential in different aspects of our lives.

One example is a toxic money mindset that can be limiting.

Sometimes with this mindset, one might believe they don't deserve their current situation, or they might think that changing their circumstances is impossible. However, it's important to recognize that we have the power to work toward positive change and improve our situation.

If you're someone who has felt this way before and wants to get better, this article is for you. It's true that not everyone has the same opportunities or luck, but it's also important to remember that our mindsets play a significant role in our outcomes.

A toxic money mindset can cause us to focus on the negatives and miss opportunities that could lead to success. So, it's essential to recognise the warning signs of this mindset and take steps to overcome it.

Let's explore these warning signs and what we can do to combat them together.

1. A Scarcity Mindset

This is a belief that there will never be enough resources or money to go around, leading to constant anxiety and fear around finances. This mindset is often associated with a toxic money mindset because it can lead to a host of negative financial behaviors, such as hoarding money, refusing to spend money on necessities, or feeling guilty about spending money on anything.

When someone has a scarcity mindset, they may be constantly worried about losing their job or not having enough money to pay their bills. This can lead to a cycle of stress and anxiety, which can be incredibly damaging to one's mental and physical health. It can also lead to a lack of generosity and a tendency to focus only on one's own needs, rather than those of others.

A toxic money mindset, which often includes a scarcity mindset, can also lead to unhealthy financial behaviors such as overspending, compulsive shopping, or accumulating debt. It can create a sense of shame or guilt around money, leading to avoidance of important financial decisions such as budgeting, investing, or seeking help from financial professionals.

Tip: Breaking free from a scarcity mindset requires a shift in mindset, which involves reframing one's beliefs and attitudes around money. This can involve practicing gratitude for what one has, setting financial goals and working towards them, and focusing on abundance and opportunities rather than scarcity and lack. It may also involve seeking professional help, such as financial counseling or therapy, to address underlying emotional or psychological issues that may be contributing to a toxic money mindset.

2. Money as the “Root of All Evil” Mindset

The belief that money is the "root of all evil" is a common and often-repeated phrase that reflects a toxic money mindset. This belief implies that money is inherently bad and that having too much of it will inevitably lead to moral corruption and negative consequences. This idea is not only inaccurate but can also be harmful in many ways.

Firstly, it promotes a negative attitude towards wealth and can lead to feelings of guilt and shame around money. People who believe that money is the root of all evil may unconsciously hold themselves back from earning more or may feel uncomfortable with the idea of accumulating wealth. This can limit their financial success and cause unnecessary stress and anxiety around money.

Secondly, this mindset can lead to a sense of victimhood, where people feel like they have no control over their financial situation. They may blame their financial struggles on external factors, such as the economy or the wealthy elite instead of taking responsibility for their own financial decisions and actions.

Finally, the belief that money is the root of all evil can create a self-fulfilling prophecy. If someone believes that money will inevitably lead to negative consequences, they may unconsciously engage in self-sabotaging behaviour that limits their financial success.

3. “I Can Survive on Short-term Loans” Mindset

Saying "I can survive on short-term loans" can lead to financial instability and chronic debt. This statement implies a reliance on borrowing money to make ends meet and a lack of financial planning or foresight. While short-term loans may offer temporary relief, they often come with high-interest rates and fees that can quickly spiral out of control.

Relying on short-term loans to survive can create a vicious cycle of debt that is difficult to break. Each loan may provide temporary relief, but the underlying financial problems that led to the need for the loan in the first place are not being addressed. This can lead to a cycle of borrowing and repayment that becomes increasingly difficult to manage over time.

Moreover, this mindset can also prevent you from building financial stability and security. Short-term loans are not a sustainable or reliable source of income and can lead to a sense of financial insecurity. Relying on short-term loans may lead to your missing out on opportunities to save money, invest in your future or build a solid financial foundation.

4. Always Deferring Sorting Out Your Finances to a Later Date

Consistently deferring sorting out your finances to a later date can lead to financial stress, anxiety, and missed opportunities. It implies a lack of urgency or priority when it comes to managing money and can lead to a cycle of procrastination and avoidance.

The problem with deferring financial responsibilities to a later date is that it creates a sense of overwhelm and anxiety when the time finally comes to address them. People who adopt this mindset often put off important financial tasks, such as creating a budget, paying bills on time, or saving for retirement until they become urgent or even overdue. This can lead to a sense of financial chaos that is difficult to manage and can result in missed opportunities or costly mistakes.

Additionally, deferring financial responsibilities can also lead to a lack of financial progress. People who procrastinate on managing their finances may miss out on opportunities to invest in their future such as buying a home or starting a business. They may also miss out on potential savings or financial benefits such as tax breaks or employer-matched retirement contributions.

5. Constantly Worrying About What You Have Bought and Feeling Guilty

Constantly worrying about what you buy and feeling guilty about it can lead to financial anxiety, shame, and a lack of enjoyment in life. It implies a negative attitude towards spending and can create a cycle of guilt and shame around financial decisions.

Adopting this mindset leaves you feeling guilty about spending money on yourself, even when it is within your budget, and reasonable. This can lead to a sense of deprivation and resentment that can negatively impact mental health and well-being.

Additionally, this mindset can also lead to a sense of financial shame and a lack of confidence in managing one's money. People who constantly worry about what they have bought and feel guilty may feel like they are not capable of making good financial decisions and may avoid making important financial choices altogether. This can lead to a sense of powerlessness and a lack of control over one's finances.

6. Thinking that Being in Business is the Only Way to Make Money

Thinking that being in business is the only way to make money could be a sign of a toxic money mindset that can lead to a narrow view of financial opportunities and a lack of financial security. It implies a belief that traditional employment is not a viable path to financial success and can lead to a sense of pressure or obligation to start a business.

The problem with this thinking is that it can create a sense of pressure or obligation to pursue entrepreneurship even when it may not be a good fit or feasible. Starting a business requires a significant amount of time, resources, and risk, and not everyone is suited for or interested in this path.

This can lead to a sense of frustration or self-doubt when individuals feel like they should be pursuing entrepreneurship but are not interested or equipped to do so.

Believing that being in business is the only way to make money may lead to your overlooking other opportunities for income such as traditional employment or investing in the stock market. This can limit financial growth and stability and create a sense of financial insecurity.

7. Being Afraid to Invest in Order not to Lose Money

This fear implies a negative attitude towards risk and can create a cycle of fear and avoidance around financial decisions.

The problem with fearing to invest so that you do not lose is that it can prevent you from taking advantage of potential financial opportunities. This mindset may lead to people avoiding investing in the stock market, real estate, or other financial opportunities that have the potential for growth because they are afraid of losing money.

This can lead to missed opportunities for financial growth and stability, as well as a lack of diversification in their financial portfolio.

Additionally, it can create a sense of fear and anxiety around financial decisions, which can negatively impact mental health and well-being. People who fear investing may feel like they are not capable of making good financial decisions and may avoid making important financial choices altogether. This can lead to a sense of powerlessness and a lack of control over one's finances.

8. Deferring Saving Because You Don’t Earn Enough

I’ve never heard of anyone who said they had enough money. Billionaires do not stop looking for opportunities to make more and neither do ordinary people who are always seeking greener pastures where they can make more than what they are already earning.

Thus, deferring saving because "I don't earn enough" could be a sign of a toxic money mindset that can lead to financial instability and a lack of financial security. It implies a belief that saving is only possible for those with high incomes and can create a sense of powerlessness and resignation toward one's financial situation.

Someone with this mindset may not prioritize saving, even when it is within their means to do so, because they feel like they don't earn enough to make a difference.

9. I’m Just Not Good with Money

Thinking "I'm just not good with money" could be a sign of a toxic money mindset that can lead to a lack of financial confidence and a sense of resignation from one's financial situation. It implies a fixed mindset about money management and can create a self-fulfilling cycle of negative financial behaviour.

The problem with thinking "I'm just not good with money" is that it can prevent you from taking proactive steps to improve your financial situation. People who adopt this mindset may feel like they are not capable of managing their finances and may avoid making important financial decisions altogether.

This can lead to a lack of financial growth and stability.

Wrapping Up

We make money decisions all the time- consciously and unconsciously.

Since these decisions have an impact on our financial well-being, it is important to make them into consideration in building better financial health. We have seen some of the toxic money mindsets in this article and if you feel like you are having to deal with any of these, then it is time you considered how to get better.

You can reset your money mindset and eliminate the financial challenges that keep holding you back, earn or change your worth or develop money mastery which could help you control your financial destiny.

Whatever the case, empower yourself and create the financial life that you desire.

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Njenga has over 8 years experience in multimedia and business journalism both as a writer, editor and producer. He has over 5 years of experience in radio broadcasting as a news reader, reporter and presenter. He is also a 2012 Earth Journalism Network-EJN Fellow.