Limiting Beliefs Hold You Back from Financial Independence

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Financial independence begins with an abundance mindset. You’re not going to achieve your goals without believing in yourself and your ability to grow and save money. But what happens when you don’t believe that or you find yourself struggling to save money?

You might have something called a limiting belief stopping you from achieving your full potential. 

Are Your Money Beliefs Holding You Back?

Limiting beliefs are core beliefs that you have about yourself that are inherently negative. If you have limiting beliefs about money, it can impact your ability to grow and save money.

Everyone has money beliefs. They stem from your home of origin, or from formative experiences in your life. 

If your family was stressed about money growing up, you might feel like you can’t splurge on yourself. Alternatively, you might feel like you have to spend money while you have it because you might not get the choice to spend it later. 

Money beliefs are very person specific and you might have them about very different things. 

For example, in my house we only buy generic foods—except for cream of soup. I can afford name-brand food now, but I still buy generic, because it’s what we did in my house growing up. It’s a rather trivial belief that stems from a lack of money, but it governs my shopping and affects what foods I purchase.

Not all money beliefs are bad though. Some are very helpful. 

I grew up thinking I was a good saver, because my parents taught me how to save money with my allowance. We basically did the 50/30/20 split with money and so I grew up having a very healthy relationship with a savings account.

Find Out What Your Money Beliefs Are

Not sure what your money beliefs are? Some money beliefs will be easy to pinpoint; others more difficult. 

Taking time to journal your feelings about money will help you figure out what money beliefs you have. 

This exercise is emotional and will bring up things that you probably haven’t thought of in a while. So I suggest making a fun night of it. Settle in with your favorite beverage and snacks, curl up with your favorite pillow, put on some punk rock music (or whatever gets you going), and get to know your money beliefs. 

Change Your Limiting Beliefs about Money

Thankfully, even if you have limiting beliefs about money, you can change them.

It takes time and thinking through mental roadblocks, but it’s the best thing about creating a financially independent lifestyle.

When you have strong and positive beliefs about money, you’re able to frame your life in a positive way, and then the money starts to accumulate.

Let’s take this limiting belief: “I can never save money because I’m bad with money.” 

In this example, you’re making a negative statement about yourself that keeps you from learning a new behavior. To fix it, you need to think through the limiting belief and find where it stems from, and then address that problem.

I used to believe this limiting belief about myself. It was because when I was a kid making $30 an hour (which I did y’all, I was bougie as a teenager), I spent all my money and never learned how to save.

But just because I believe I’m bad with money and can’t save, doesn’t mean it’s true. I just need to flip the script on the limiting belief. I haven’t practiced saving, so it feels clumsy to me. But I can learn to be a better saver.

Why Change Your Limiting Financial Beliefs?

The short answer: You need to overcome your limiting beliefs in order to achieve financial independence. Otherwise, you might not have the mental resolve to make the hard choices like saving money. 

Financial Independence is the ability to maintain your lifestyle without relying on a job.

Some people use passive income through books, courses, blogs, and other side hustles to fund their lifestyle. Others focus on real estate to fund their endeavors. And still more invest in the stock market.

What’s more common though is to have a combination of money funds to create a self-sufficient lifestyle. These multiple income streams create a makeshift salary that individuals draw on.

Now I know what you might be thinking. Wow, that sounds like something for only rich people. I could never achieve something like that. 

This is not a fact about yourself. Instead, it’s a limiting belief! 

You are believing that you’re not capable. Probably because the task feels so daunting. And it is. Saving, investing, growing passive income, and scraping together money to achieve such a feat isn’t for the weak of heart. But that doesn’t mean it isn’t possible.

How to Reduce Your Limiting Beliefs

What can you do to avoid slipping into these limiting thought patterns?

The first big step is recognizing when these negative patterns occur. It might be helpful to talk this out with a friend or someone who specializes in correcting limiting beliefs. 

A lot of emotions can come up around money and what you believe about money, so make sure that you’re in a good place emotionally before you dig into the root cause.

Money scripts (your unconscious beliefs about money) are a huge part of changing this pattern. If you can break them, or change them, you’ll be able to progress in your money journey.

Working with a financial coach or therapist can help you look at your money beliefs and develop better habits and patterns. Any self limiting belief can be changed if you’re committed to the process.

Sometimes change is easy, like just deciding that you can be good with money. And sometimes, change is harder, and you need to work at finding evidence to contradict your limiting belief.

Learn More:

8 Steps to Creating an Empowering Belief System

The next thing you need to do is begin to build empowering beliefs. These are beliefs that empower you to make and save money, and ultimately achieve financial independence.

Jess from The Fioneers has built her entire coaching practice off the idea that limiting beliefs can be changed. She has 8 tools that help her tackle those pesky negative thoughts and create an empowering belief system. 

1. Define the Limiting Belief

Take some time to think about where you’re coming up against mental roadblocks. It’s important to take some time to figure out exactly why you’re struggling with something. Sometimes naming the thing gives you power over it. 

2. Flip the Script 

Once you’ve named the negative belief, the next step is to flip the script. If your belief is: “I’m poor because I’m not good with money.” Can you say, “I can learn to become good with money and save so I’m not poor”? If you can say it and believe it, creating action from this step will be even easier.

3. Look for Evidence

If flipping the script isn’t enough, look for evidence where you made good decisions. Even if they’re small decisions, finding places where you’ve done well financially can help you determine where you’re succeeding. You can take that success and build on it. 

“I’m not bad at saving, just not practiced at it. Last week I didn’t order Starbucks because I knew I couldn’t afford it” statements go a long way when practicing financial literacy. 

4. Sit Down with Your Inner Critic

This is my personal favorite exercise. Probably because my inner critic is so loud. She’s always telling me I messed up too much to be good with money. And I’m a fraud for writing about money because I don’t have good money management skills. 

Taking her out to coffee can be daunting. But I do it. And it’s helpful. I discover a lot about myself when I do that. The loudest thing my inner critic tells me is that I’ve failed before, so I’ll fail again. But that’s not true. I can point out how my life is different than it was before. And help reason my inner critic. 

5. Practice Thought Exercises 

Thought exercises are when you take your limiting belief and you place it on someone else.

What would you do if your friend told you that they were terrible at something; or that they weren’t capable of something; or that they would never amount to anything?

Most likely, you would tell them they were wrong, that they were amazing, and that they were capable of anything they set their mind to. Why don’t you offer yourself the same grace?

6. Experiment with Believing the Empowering Thought 

This is another great idea that Jess shares and I’ve used myself at one point or another. You simply believe that the empowering thought is true and act like it is. 

I used this when I was trying to go full time as a freelancer. I didn’t believe I was a good enough writer to make full-time money, but I acted like it. And low and behold, it came true. 

7. Have Friends with Similar Goals

Having friends that share similar goals is super important to achieve a huge goal like achieving financial independence. 

If you don’t have friends that want financial independence, you can find plenty of spaces online that are pro-FIRE. 

For me, I see this a lot when I’m freelancing. I have a community of freelancers who help me get through the day, and pick me up when things are tough. You need that financially as well.

8. Use a Timer to Think Through Possibilities

If you’re really stuck on your limiting belief, it’s helpful to set a timer and run through as many possibilities as possible. 

If you’re trying to hit $100,000 in your net worth by the time you’re 30, how can you manage to do that? Set the timer, and then go. Having the pressure of a clock will help your brain think of solutions that you might not have had otherwise. 

How to Plan for Financial Independence

Once you have developed an empowering, new money mindset, you can use it to guide the planning process for financial independence.

I always recommend setting up SMART goals for financial milestones along the way. It’s a great way to plan for financial freedom. Part of the initial struggle when pursuing financial success is improving financial literacy.

One of the most common questions is how much money do you need for financial independence.

Unfortunately, that number depends on you and your lifestyle. If you have a minimalist lifestyle, you can survive on less and live comfortably than someone who has a more bougie lifestyle.

Neither is better or worse than the other. Sometimes those with minimalist lifestyles achieve financial independence earlier than those who have a bougie lifestyle, but sometimes it’s the opposite.

A general rule of thumb is to take your yearly expenses and multiply by 25 or 30. Twenty-five is the more standard calculation, but I like doing by 30 as well to get a more conservative estimate.

For example, if I’m making $40,000 a year, and spending $35,000, I’ll want to set up the following equations:

35,000 x  25 = $875,000

35,000 x 30= $1,050,000

So I’ll need between $875,000 and $1,050,000 to retire from my day job (if I want to). I can reduce this number by creating passive income streams that supplement the income I’m earning.

If you create enough passive income that you can replace your salary completely, congratulations, you’ve achieved financial independence. 

Learn More:

Deciding Your Timeline for Financial Independence

Once you decide how much money you need for financial independence, the next important thing you can do is work out your timeline. You want to ensure that your money beliefs are indicative of success and not super inflated.

That means really looking at how much you can save. 

It’s one thing to believe: “Just because I have been a bad saver doesn’t mean I will continue to be a bad saver. I can learn how to save and become a good saver.” 

It’s an entirely different thing to believe: “I am the best saver in the world and I will be financially independent in two years even though I make $11 an hour.”

You can’t create a plan based on your dreams if your money cannot support it. You want to look realistically at what you can afford to save. Using FIRE calculators can be a great way to work out scenarios and decide when you can reasonably retire. My favorite is cFIREsim’s calculator. 

Frequently Asked Questions (FAQs)

What Are Limiting Beliefs Examples?

You won’t succeed if you don’t believe in yourself. It’s like creating a self fulfilling prophecy. If you think that you’ll never get out of credit card debt, then you won’t ever get out of credit card debt. But if you think that you can save 10 percent of your income this year, you’ll be able to set yourself up for success (if that goal is reasonable). 

Your core beliefs set up the patterns for your life. Energy goes where your beliefs are. If you believe that you’re a bad freelancer who isn’t capable of making money, then you’re not going to be consistent and turn in assignments on time. It’s all about accepting the best version of yourself.

This is scary. It can be hard to commit to positive ideas about yourself. But that’s far and away the best thing you can do for yourself when you’re on the journey to financial independence.

What Is the Best Financial Habit You Can Develop?

Financial Independence is really all about habit creation. Even if it’s small at first, if you create a habit of saving $25 of each pay check, by the end of the year, you’ll have $300 saved – which is more than you if you haven’t saved at all.

Even better though, is that each time you save $25, it becomes easier, and you miss it less. So you can increase that number. You have the proof that you can save money, so it becomes a challenge to save even more money. If you save $250 a month, at the end of the month you’ll have $3,000 saved. That’s half way to maxing out your Roth IRA!

Little money challenges like this are great avenues to saving money creatively. Using challenges to increase your savings is a great way to combat limiting beliefs because you’re appealing to your inner child. Children know little about limiting beliefs and love playing games. When you invoke your inner child, it can short circut the limit belief and allow you to save money freely. 

The Bottom Line

Your limiting beliefs keep you from having an abundance mindset. And that mindset is crucial to creating habits around financial success.

There are a ton of different resources available for those seeking to overturn negative beliefs. Financial coaches are great resources to start when looking to eradicate limiting beliefs from your financial vocabulary. You can also turn to people in the personal finance community who have similar stories to yours. 

Whatever you do, remember to believe in yourself and your ability to save money and achieve financial independence. And if a limiting belief gets in the way, you know how to get rid of it.

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