4 Lies Money Gurus Tell You

4 Lies Money Gurus Tell You

You might be avoiding your financial issues because of the lies money gurus tell you. Maybe you think that rescuing your financial dignity is going to be the equivalent of crawling across broken glass rather than the amazing adventure that it is. Here are the 4 lies money gurus tell you and real truth about rescuing your financial dignity once and for all!

Here are 4 Lies Money Gurus Tell You

Lie #1 – You need a budget to make yourself behave with money.

Like extreme diets, budgets come with high rates of failure. Why? Because they are focused on deprivation – what you can’t do and what you can’t have. How do you feel when you even hear the word “budget”? If you’re like most people, it conjures up dread and you haven’t even started! You don’t need a budget, BUT you do need a plan, a Prosperity Plan.

TRUTH: A Prosperity Plan motivates you to take action in support your financial goals without feeling deprived. Doesn’t a Prosperity Plan sound SO much better than a budget? That’s because it is! A Prosperity Plan focuses on what you want MORE of in your life and business. When you’re clear on your preferred financial future, it becomes easy to redirect spending away from things that are unimportant to you and towards goals that excite you. A Prosperity Plan is more like a healthy eating plan, rather than a crash diet. It definitely has room for portion-controlled fun as you pay off debt and build up savings.

Lie #2 – Follow this exact formula and get these results.

You’ve heard it a thousand times, “If I can do it, you can do it!” and “It worked for me and it will work for you!” Money gurus like to prescribe a formula or a list of steps to take you from money chaos to financial success. But here’s the thing… their formula might NOT work for you. I facilitated a financial literacy course of a well-known money guru for 10 years at my church. I noticed that the guru’s formula worked for some people but not for everyone. Here’s why: two people can have the exact same problem but require different solutions because their emotional drivers aren’t the same.

TRUTH – Money management really isn’t about math; it’s emotional! Scientist have recently proven that humans make decisions emotionally, not logically. This is why a formula approach to personal finance doesn’t work. Most money gurus give one answer to a particular problem, as if that’s the only answer. Here’s an example: Kate and Betsy are both overspending on restaurants. Most money gurus would give both women the same advice, maybe to use cash instead of a debit or credit card, without exploring why they’re overspending. After talking with Kate, I discover that she is single and hates eating at home by herself because it makes her feel lonely. On the other hand, Betsy is an attorney with three kids who doesn’t have time to cook. These women need two totally different solutions to the same problem.

Lie #3 – Exercise your willpower to save money and get out of debt.

“Just make yourself do it!” We have a limited amount of willpower each day and it is drained by multiple sources: walking past the plate full of donuts, resisting the urge to tell off a co-worker, trying to remain civil in rush hour traffic, and avoiding the urge to click and buy on your favorite website. This is why it’s harder to resist retail therapy or the extra glass of wine after a tough day. The good news is that you need very little willpower to save money and pay off debt.

TRUTH – Utilize the power of emotion and habit to easily save money and pay off debt. Emotions and habits are much stronger than willpower IF you learn how to harness them to your advantage. I teach my clients how to emotionally charge their savings and debt reduction goals, which makes them want to do the right thing. By using a small amount of willpower, you can put good habits in motion by setting up automated transfers to pay extra on your debt, invest in your 401(k), and pump up your savings account balance. That’s much easier that counting on willpower, which may or may not be there when you need it!

 Lie #4 – Cut up your credit cards to keep from overspending.

Some money gurus come after your credit cards with a pair giant scissors or an industrial shredder. Not so fast! I know plenty of people who overspend with debit cards and cash. I also know individuals, like my husband, who are smart spenders whether they use cash, debit, or credit. Yes, credit cards do make it easier to rack up purchases because it doesn’t really feel like you’re spending money… until the bill shows up! But this doesn’t mean you have to kiss your SkyMiles credit card goodbye forever.

TRUTH – The payment method is rarely the problem. If someone is committed to rescuing their financial dignity, they can do it with or without a credit card. It’s important to know yourself and your particular temptations. I do have some clients who know they CAN’T trust themselves with a credit card so they choose not to have one. I recommend that if my clients do decide they can handle a credit card responsibly, they keep one card with a reasonably low limit and pay it off in full monthly. The problem with having no credit cards is a possible negative impact on your credit score, which can affect your mortgage interest and insurance rates.

Did I miss anything? What are other lies money gurus tell you?

Comments 8

  1. I like this list. I do agree, in particular, on the fact you don’t need a budget. I would add though that what lots of people need, to begin with, is awareness of how they spend their money. I imagine you haven’t mentioned it specifically as it’s such a basic concept. And yet, it seems many people would benefit from a simple way of tracking expenses. That’s the beginning of everything: “what gets measured, gets managed”.

  2. Some great money myths busted. And I especially love the one about the budget. Any wise person will tell you that a budget can never be followed completely. It’s the elements of a budget – emergency fund, investment flow, and frugal spending – that makes you successful and FI.

  3. I do not like your post because you have missed the mark on almost all points:
    1. “Prosperity Plan” is actually a budget. It is pointless to invent a new name and not add anything of value to it. Yes, a “budget” is a plan where you will redirect your money. If you see a budget as a restriction – you are not budgeting correctly.

    2. “Scientist have recently proven that humans make decisions emotionally, not logically” – this is false. Which scientist is that? If you have read proper scientific literature (like “Thinking Fast and Slow” by Daniel Kahneman) you would know how people are really making decisions.

    3. “We have a limited amount of willpower each day” – this is also refuted by scientific research. Read “When” by Daniel Pink to understand how willpower fluctuates during a day.

    4. Credit card miles did not make anyone rich. Find me one person who profited by using a credit card. It is just too convenient to overspend using credit cards and reward points just don’t compensate. You have a point regarding credit score. However, eliminating debt is one of the “gurus” main thing, so credit score should not be of concern.

    My point is that you really need to eliminate emotion from handling money. Money is just a number and math indeed has a final say. Do not buy stuff you can not afford, that’s my “guru” advice.

    1. Post

      Money is indeed emotional. Here is my source: “A few years ago, neuroscientist Antonio Damasio made a groundbreaking discovery. He studied people with damage in the part of the brain where emotions are generated. He found that they seemed normal, except that they were not able to feel emotions. But they all had something peculiar in common: they couldn’t make decisions. They could describe what they should be doing in logical terms, yet they found it very difficult to make even simple decisions, such as what to eat. Many decisions have pros and cons on both sides—shall I have the chicken or the turkey? With no rational way to decide, these test subjects were unable to arrive at a decision. So at the point of decision, emotions are very important for choosing. In fact even with what we believe are logical decisions, the very point of choice is arguably always based on emotion.” Source: https://bigthink.com/experts-corner/decisions-are-emotional-not-logical-the-neuroscience-behind-decision-making

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