Have you gone off the rails for one reason or another and are wondering how to get your life back on track financially?
Whether it’s rising credit card debt, an emergency fund that never seems to build, or really just being overwhelmed by complexity, we have different financial situations that make us feel like we can’t stay on track.
If you’re wondering how to get back on track financially, we want to lay out six common money myths that could be holding you back from your long-term financial plans—and what you can do about them.
Find yourself wondering “Where did my money go?” all too often? Check out our comprehensive guide on this common problem.
Myth #1: I’ll Never Be Good With Money. It’s Just Who I Am.
You might think your ability to be “good with money” is as inborn as curly hair or green eyes. But here’s the thing: good money management functions a lot more like a muscle than a genetic trait. You have to work at it!
Think of doing push-ups: maybe right now you can barely do one pushup (if elbows shaking and only going halfway down counts). But what if you try to do a pushup every day for 30 days? It gets easier, right? You’ll start checking out your triceps in the mirror and giving a little flex. Personal finances are a lot like that.
Truth: You Can Get Better at Handling Money.
Trust me, I hear from people all the time about how they drastically changed their money story for the better.
There’s Angela—who used to have a credit score in the low 400s. Now, she owns two homes, three vehicles, has a near-perfect credit score, and they have 3-4 months of bills budgeted for in the future at all times. This is the woman who had a “VERY POOR” credit score!
There’s Dana Kay who remembers when she would try to pay for groceries and her card would get declined. Now she’s the one paying it forward and buying other people’s groceries. She took her own shame and flipped it into empowerment. I still get shivers thinking about that one.
There’s Natalie and Larry—who went from living paycheck to paycheck to earning a penny of interest in their savings account for the first time ever. Not only that, they were able to fulfill their dream of adopting!
What You Can Do About Feelings of Financial Inadequacy
If you’re stuck believing the lie that you’ll always be bad with money: start consuming more good personal financial information. Here at YNAB, we offer this in all shapes and sizes: from a weekly roundup newsletter, our friendly YouTube channel, quick tips on Instagram, tips on how to stick to your budget or pay off student loans on TikTok, or get plugged into our fan-led communities. Everyone is down-to-earth friendly and there are no stupid questions around here!
You probably wouldn’t run a marathon before you ran a 5K, and don’t pressure yourself into thinking you have to be good at money right away. Take it one day at a time! The More Money Challenge is a good way to jumpstart your blossoming financial confidence, find extra money, and start paying off debts.
Myth #2: I’ll Always Be in Debt, It’s Just a Reality
Lots of people carry some form of consumer debt: whether that’s a rotating credit card balance, a new mattress you’re buying with low monthly payments, or the car loan that’s a permanent fixture of your expenses. At first glance, you might feel like some of these debt payments are mostly painless.
I want you to challenge you to shift your paradigm: what if that kind of debt just wasn’t a “thing you did”?
Truth: Consumer Debt is Costing You
While financing, credit cards, and 0% APR purchases seem like they give you freedom at the point of purchase, these loans and their interest rates all locking you out of making future choices about that money. Stack up enough of those pay-in-the-future purchases and you’ll hamstring your own ability for saving money and reaching your goals.
How to Change Your Debt Mindset
Take back your financial freedom by getting under the pesky thumb of consumer debt. Here’s how: gauge what you can afford with only the money you have right now. Stop buying things with future money. It’s more dangerous and toxic to your financial health that you might realize.
If you’re not dealing in the powerful world of your current financial reality, get back on track with the help of a YNAB budget. It will help you rework your credit card spending so you’ll be able to pay the bill the moment it arrives instead of waiting for payday.
Ready to get out of debt? Whether you have $5,000 or $500,000 owed, We go over your debt-free roadmap in this short, engaging video course!
Myth #3: I’ll Be Fine Once I Get That Raise or Promotion
It’s just around the corner. You’ll make more money, you’ll get a windfall, your tax refund will hit your account. Once you get there, you’ll be fine. So you wait.
Truth: Lifestyle Creep is a Real Phenomenon
That tension and tightness you feel right now? There’s no guarantee that will go away if your income level climbs: that’s because money is so much more than just a math equation. It’s about behavior, expectations, and emotions.
That’s why one of the great ironies of wealth is that some people who make $40,000/year are millionaires while some people making $500,000/year are not.
So what can you do about it? Manage the money you have now in a way that gives you more peace, and when the windfall or promotion does materialize, you’ll already have the habits and behaviors built to manage that money well too. Find more space now between your expenses and your income.
Learn more about how to break the paycheck to paycheck cycle for good!
Myth #4: I Do Just Fine—I Don’t Need a Budget
You’re comfortable. You make enough money. You don’t worry too much about paying the bills. Budgets aren’t for people like you, right?
Truth: A Budget is a Tool to Build Wealth
What if you got a 20% raise starting tomorrow? You might just go dancing down the street! Well, with a budget, your bank account will start growing as if you’d gotten an instant raise. Your life doesn’t become more restrictive with a budget, this is not a hard-earned, sweat-and-tears kind of instant promotion. The reality is that you’re probably frittering away more money than you realize on things that don’t actually matter to you. A budget is a simple way to bring more awareness to your priorities.
And when you finally get more intentional with your spending, your big financial goals finally come into view. You could…
- Put a down payment on a house.
- Pay off your house in 10 years instead of 30 years.
- Buy a rental house (or three).
- Pay for a European vacation in cash.
- Retire early.
- Be financially independent.
Solution: Be Intentional About Your Big Financial Goals
Whatever your lofty life goal, a budget takes it from mythical dreamland far off in the distance to a clear map of exactly how to get there (and how to get there quick!).
One of my recent favorite stories is Ivan, a software engineer in Silicon Valley who uses YNAB to track his FIRE progress and was able to painlessly cut his spending overhead by 20%, just by giving himself a clearer view of his spending.
For reference, for those in a similar position making six figures or more, a 20% reduction in expenses is like handing yourself the keys to a brand-new Tesla every few years. Maybe a Tesla isn’t your thing—but take that blast of extra cash and put it toward what matters to you!
Want to see how this works in a real budget? See the incredibly detailed, dialed-in budget of this couple bringing home $12K/month.
Myth #5: I Don’t Have Enough Money
On the flip side, maybe you’re between jobs or your income just isn’t cutting it. Or, perhaps you’re going through a tough time, with lots of expenses hitting you all at once. But there you are, waiting for paychecks so that you can cover bills that are due immediately (or, worse, they’re already past due).
So, how do you budget when it’s a struggle just to cover your most urgent expenses? And, how can you give your dollars a job, when you don’t have any? It’s not a fun position to be in, but that’s exactly how tons of YNABers before you have felt—worried and powerless. That is until they started budgeting.
No matter how little money you may have, budgeting gives you back a sense of control. At first, your wins will be tiny, but they’ll give you confidence. Over time, your efforts will snowball into a life that feels so much better than it does now!As YNABer, Jaklin, said, “I used to think that money was evil because there was never enough around. Now that I’ve been budgeting and using YNAB I know that it is just a tool. The finite amount that we have at any given time can be molded and shaped to what we need it to be.”
Myth #6: Having a Budget Means I’ll Never Have Fun Again
Using a budget? You’d rather drink a smoothie made with pigs’ feet and snails. A budget seems restrictive—and like you can never have any fun ever again. Who wants that?!
Truth: A Budget Puts You in Charge
Imagine this: you are hired to be the CEO of a corporation. You are about to have hundreds, maybe thousands of exceptionally diligent employees.
On the first day, you give everyone their work assignments. After that, you check in for a few minutes every day or two—the check-in takes five minutes tops. Once the check-in is finished, you get to focus on the other parts of your life, confident that your employees are doing the work you’ve assigned them.
Some of the workers do responsible things, but others are just in charge of making life more fun for you—the CEO. They organize outings, show up with coffee, they even handle all the details to make your dream vacation a reality. Sounds like a pretty sweet gig, right? This is the feeling of running a budget. YOU are in charge.
See the true magic of a zero-based budget!
And guess what? We’re never going to tell you not to buy that latte. If you want the latte, if it’s important to you, well gosh darn it—buy the latte and enjoy every sip!
Wondering how to get your life back on track financially? You Need a Budget! We all do! Try YNAB free for 34 days, no credit card required. Start thriving with your finances.