5 Limiting Financial Beliefs Keeping You from Building Wealth

When it comes to building wealth, we can be our own worst enemies. Indeed, many common thoughts about money are actually quite harmful to the average investor. Limiting financial beliefs can hinder our progress and keep us from reaching our goals.

The good news is anyone can grow their wealth, no matter your starting point. In this article, we’ll deconstruct five common limiting beliefs about money and the truths that can set you on a path towards financial freedom.

Consider the following limiting financial beliefs:

While there are countless limiting financial beliefs, certain beliefs about money tend to be more pervasive and harmful than others.

#1: More Money Means More Problems

Chief among the major limiting financial beliefs is the idea that more money automatically leads to more problems. Yes, there are people who have had trouble with suddenly obtaining large sums of money (e.g., lottery winners).

However, in general, having more money simply means you have different choices to make. For example, instead of price shopping, having more money may mean you should dedicate more time to long-term financial planning.  

In short, more money does not necessarily mean more problems. Instead, it means having different problems, and different options. Ultimately, more options equate to more freedom.

#2: Making Lots of Money Is a Rich Person’s Game

Another common misconception about money is that only those who are already rich can build wealth. In other words, you need money to make money. While there is no denying that it certainly helps to have more money, anyone can start making decisions to grow their personal wealth.

One way to become more disciplined about building wealth is to partner with a fiduciary financial advisor. An advisor can help you create a financial plan and develop an investment strategy based on your objectives and risk tolerance. In addition, a trusted advisor can help you establish better habits and hold you accountable for making smart financial decisions.

#3: It’s Selfish to Care About Money

Yet another limiting financial belief is that caring about money is automatically selfish. In reality, we need money for basic necessities as well as things that provide us pleasure.

Caring about money simply shows that you’re serious about your finances. Moreover, building wealth also allows you to take care of future generations and leave behind a legacy of your choosing.  

Of course, obsessing about money and being stingy is a whole other matter. As long as your concern for money is grounded by good intentions, caring about money doesn’t make you selfish.  

#4: Money Doesn’t Buy Happiness

We’ve all heard the famous song lyric, “Money can’t buy me love,” by The Beatles. And deep down, most of us can agree that there’s more to life than money. After all, you can’t spend it when you’re gone. But the idea that money doesn’t buy happiness can be an oversimplification in many cases.

Money provides freedom and the opportunity to do things that you enjoy. It allows you to travel, pursue hobbies, and be charitable, all of which can be tremendous sources of joy. Furthermore, money makes it possible for you to provide for others, which can be extremely fulfilling.

#5: Saving Is More Important than Investing

Indeed, saving is important. However, once you have an emergency fund that can cover at least three to six months of expenses), focusing exclusively on saving can be a headwind to building real wealth.  

Over the last 20 years, the average annual return of the S&P 500 Index is nearly 6%. Compare this to the average savings account, which today pays almost zero interest. This disparity can make a significant difference in your nest egg over time when you consider the power of compounding. In other words, it’s just as important to invest your money as it is to save it when it comes to building wealth.

Limiting Financial Beliefs — Final Thoughts

There are many factors that can hold people back from building wealth. At times, we can underestimate how important mindset can be when it comes to our finances. Recognizing our limiting financial beliefs—and taking steps to unlearn them—can be an important first step towards financial freedom. If you would like some help to overcome your limiting financial beliefs and develop a plan to start building wealth, please reach out to us. We’d love to hear from you.