How To Ditch The Toxic Money Mindset Your Parents Gave You

Who you are today is shaped in large part by your upbringing – for better or for worse – and growing up with a toxic mindset around money can take a toll on your financial future.

By Ella Carroll-Smith4 min read
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It’s completely normal to stress about money from time to time, especially in this economy. Unexpected costs will inevitably come up throughout your life, whether it’s a broken water heater, expensive car repairs, or even job loss. Life happens! Stressing about money is normal when it’s circumstantial, but when stress veers into all-consuming dread, anger, or truly ruinous habits, that’s a different story. 

So what is a “toxic money mindset” exactly? Everyone’s financial situation is different, but a toxic money mindset is essentially any pattern of behavior or thinking that is detrimental to your financial well-being. There are many different ways that this can manifest. Here are some of the most common:

The “All Credit, All the Time” Mindset

Let’s say that you were raised in a household where your parents didn’t save a dime and racked up boatloads of debt on their credit cards. It might have seemed like you guys were well off financially for a certain period of time, but you have to pay the piper eventually. 

Growing up in an environment where your parents spent money they didn’t have means that you’re far more likely to continue those ruinous credit card habits today, and it can be very difficult to break out of that toxic financial cycle. If you find yourself swimming in credit card debt right now, take a hard look back at the way you were raised and the way your parents treated money. There’s likely a connection there. 

That doesn’t mean that credit cards are inherently bad. On the contrary, utilizing credit cards and building your credit is a huge part of creating a healthy financial life. But that only works if you actually pay off those credit cards and don’t continue to accumulate lots of debt. Even small amounts of credit card debt can turn into a bottomless pit of despair pretty quickly if you’re not careful.

Delayed gratification makes us feel like we’ve earned the things we want in life. 

Demonizing credit cards in and of themselves is not the way to shake this toxic “all credit, all the time” mindset. It’s not the credit cards that are the problem, it’s your mentality and actions surrounding them. Instead of opting for the instant gratification of buying something on credit and figuring out the financials later, flip that mindset on its head. 

The next time you want something, look at it as something you need to earn. Focus on saving up, not giving in. Delayed gratification is often far more satisfying than instant gratification because it makes us feel like we’ve earned the things we want in life. Delayed gratification can even result in improvements in your health, sense of self-worth, and career success. 

The Scarcity Mindset

On the flipside, let’s say you were raised in a home where your parents were living paycheck to paycheck and constantly concerned about how they would put dinner on the table. That scarcity mindset was likely embedded in you at a young age, causing you to stress and pinch pennies even if you’re at a completely different point in your own adult life now. 

I’m not saying that it’s bad to be frugal. Quite the opposite! Developing smart money habits like investing, budgeting, and having an emergency savings fund is very important! Please, be frugal and don’t spend your money frivolously. But also realize that spending the money you do have on things you genuinely want is not a bad thing. 

It’s important to be frugal, but you shouldn’t feel guilty about going on vacation. 

Your life should involve a certain amount of enjoyment. Having fun, taking time off, and going on vacation are all healthy things to do, and you shouldn’t feel guilty about indulging every once in a while. Now, that vacation doesn’t need to be a weeklong stay at the Four Seasons in Maui. Unless, of course, that fits within your budget, in which case, more power to you! 

Perhaps a weekend getaway at a cabin fits more in line with your financial situation. Or a staycation in your hometown where you and your hubby spend a night at a nice hotel. Whatever it is that you can afford to do in order to unwind, do it

If it makes you uncomfortable to indulge, then start small. Maybe your idea of splurging is grabbing a latte at Starbucks or treating yourself to a nice dinner. The only way to get out of the scarcity mindset is to get out of your comfort zone and realize that the world won’t end if you go on a vacation.

The “Money Is the Root of All Evil” Mindset

These days, we often hear politicians and activists screaming about how billionaires are evil and rich people need to pay their fair share. Of course, the United States isn’t perfect and there are some rich people who flout the rules, but the U.S. actually has one of the most progressive tax systems in the world and the top 25% of earners pay about 70% of all federal income taxes. 

Insisting that rich people never pay their fair share is simply naive and can lead to a very toxic mindset around money, where you believe it’s inherently evil for no other reason than some people have it and many people don’t. 

Money in and of itself is not a bad thing, it’s the choices individuals make around their money that can be deemed either good or bad. If someone makes far more money than they need and refuses to donate one dime to charitable causes, I would argue that person is not a very good person. That doesn’t mean that money itself is evil though. There are many billionaires around the world who do donate large portions of their wealth to charity, or to fund exciting new ventures, or to try to solve the world’s problems.   

Money doesn’t determine whether a person is good or bad; their choices do.

Money can also be very motivating. It inspires people to apply themselves, work hard, take risks, and think outside the box. Wanting to make more money so that you can afford a nice house or a new car is also not a bad thing, but it’s important to recognize that more money will rarely make you happier. 

Studies have shown that money can buy happiness – but only to an extent. Once you make enough money to live comfortably, making any more doesn’t result in excess levels of happiness. Additionally, making more money typically means you work in a more stressful environment (such as a doctor or lawyer) and stress negatively affects your emotional well-being. The saying “more money, more problems” has a lot of truth to it!

It comes down to values. How do you spend your time? How do you give back to your community? Where do you find your purpose? Once you make enough money to support yourself and your family and your financial situation is stable, your values are what will determine your level of happiness. Money doesn’t determine whether a person is good or bad; their values and choices do. 

Closing Thoughts

If you identify with one of these toxic money mindsets and are struggling to shake old habits or beliefs, it’s okay. Most people struggle with their relationship with money at some point in their life, and the first step to solving any problem is to recognize that you have a problem. Whether your issue is saving or spending, try to do one thing this week to get yourself out of your financial comfort zone.

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