3. End your self-defeating money behaviors.
You can’t create prosperity if you are stuck in a continuous cycle of self-defeating financial behaviors. “Self-defeating behavior” frequently sounds like a cliché to the uninformed. However, a recent study from Brigham Young University indicates that 68% of the population has one or more of these four common, self-defeating financial behaviors:
Overspending or debting
Underspending or neglect of financial needs
Under-earning and/or underemployment
Lying to ourselves and others about our finances
Some people are still skeptical that self-defeating money behaviors exist, but I can prove that they very much do. Consider the following self-defeating behaviors:
Chronically and knowingly spending too much money but cannot seem to stop
Working at a crappy job with low pay, then leaving the job to find something better but taking another terrible job with substandard pay—a repetitive cycle
Living a lifestyle that is so frugal friends and family are alienated by the cheapskate behavior
Spending money a spouse/partner would not approve of then hiding the spending to avoid a conflict
Engaging in an endless cycle of budgeting and then free spending
Constantly giving gifts or giving away money one really can’t afford
Essentially, the same past that gave us our personal and emotional problems is the same past that created these persistent money-management problems. To free yourself from this endless looping financial disaster, you must alter the subconscious, learned lessons that created these behaviors.
Training Your Brain to Break Free of Your Self-defeating Financial Loop
Change your destructive subconscious money thoughts and behaviors by implementing these five steps:
Identify the looping behavior that is causing your problems.
Determine what messages you received from your past experiences that created this current, financially harmful modus operandi.
Forgive yourself for your past mistakes.
Reframe your related, negative past experiences into a more positive story.
If you have problems with these steps, try reading my book, From Money Disaster to Prosperity: The Breakthrough Formula. It contains an entire workbook on overcoming these very common issues.
4. Budget to create high financial performance.
Everyone knows they are supposed to create and follow a budget, but far less than half of Americans bother with this task. Creating and working with a budget is the difference between living paycheck to paycheck and the high financial performance required to create over one million dollars in assets. For example, in 2023, 64% of Americans were living paycheck to paycheck with little to no reserves. A budget is a lifeline that can rescue you from poor financial outcomes. A budget also allows you to make decisions about where your income could be best spent to get the most value from your money. Finally, a budget is also one of the few practical ways to create regular savings that can be invested.
Training Your Brain to Love Your Budget
Not having the correct mindset—often overlooked by budgeting books and even by financial instructors—is the number-one reason why so many people fail at budgeting.
People confront the same profit requirement that controls all businesses and, whether they understand it or not, are essentially a “Me, Incorporated.” In business, you cannot go deeper and deeper into debt in your weekly, monthly and quarterly budget reports and remain solvent. If you are operating in the red as an individual, you must quickly make changes to become profitable. The idea is to use a more logical and business-like approach to analyzing your personal budget. This technique’s big advantage is that it provides the emotional distance required for individuals to calm themselves and their budget anxiety.
Just like any other business, with Me, Inc. you will have to analyze income and expense statements on a monthly, quarterly and annual basis. Me, Inc. should also strive to increase profitability each year.
Use this business approach by examining the following:
• Do I make a profit (savings) each month?
• What changes can I make to become more profitable (more savings)?
• What is my largest expense category, and how can I reduce it?
• What can I do temporarily to increase my short-term profitability?
• How can I eliminate some less-important expenses to increase profits?
• How can I use my monthly profits to create even more profits (investing)?
• How can I increase my annual income?
Companies that break even or go slightly in the red are not considered good companies. Make Me, Inc. a powerhouse of financial strength. Looking at your budget from this perspective can empower you to keep working through the budgeting processes.
To learn more about various budgeting mindsets and overcoming self-defeating financial behaviors, read From Money Disaster to Prosperity: The Breakthrough Formula.
Next newsletter, see the third and final installment of Millionaire Mind Trainer.