Mind Traps and Your Money
Your mind is incredible. But it’s not perfect. It makes mistakes. And those mistakes can wreak havoc on your finances.
This isn’t to talk bad about your brain—it’s like a supercomputer that’s constantly trying to make sense of the world and keep you safe. The trouble is, sometimes it does this by coming up with shortcuts, or rules of thumb, that lead to errors.
These mistakes are sometimes called mind traps. They derail your train of thought and lead you astray. And they can have a big impact on your money.
Here are some of the most common money mind traps, and how you can avoid them!
1. All or nothing thinking.
This is a classic example of the great being an enemy of the good. Unless you can go all out on saving and building wealth, you’ll do nothing. Go big or go home, right?
It’s an obviously flawed line of thinking. Saving a little is always better than saving nothing. But it’s still very, very powerful. Why? It might be because of anxious or perfectionist tendencies. Anything short of perfection seems like failure. And that sense of failure is so uncomfortable that it seems safer to not even start.
But here’s the truth—you’ll never go big unless you start small. Waiting for the stars to align, or even to get all your ducks in a row, will result in permanent inaction.
The solution? Start small. Save $20 per month. Read one blog article about money. Follow just one money influencer. You might be surprised by the difference that even just a little move can make!
2. Magical thinking.
For example: “I’ll start saving when I get a raise.” Spoiler—you won’t.
Why? Because you didn’t start saving after your last raise. What would make this new one any different?
This is magical thinking. This time will be different, even if you do nothing different. It’s the hope that circumstances will change on their own, and with them, your behavior.
The solution is to be proactive. If you want to save more money, you have to take action. That might mean setting up a budget, or automated transfers into savings. It might mean looking for ways to make more money. But whatever it is, do it now. If the present you won’t do it, neither will the future you.
3. Catastrophizing & personalizing.
Have you ever opened your bank account and thought “This is the end of the world?” It’s happened to everyone at least once. Suddenly, you realize you’re far closer to zero than you realized. Worst of al, you’re not sure why.
To be clear, that’s NOT the end of the world. There could be plenty of good reasons for why you’ve spent more this month, and there are plenty of ways to get your financial house back in order.
But that’s not how it feels. It feels like defcon 3. Surely this means that you’ll default on the mortgage, lose the car, and ruin your future.
And that catastrophizing almost always leads to personalization. You start blaming yourself. How could you let this happen again? What’s wrong with you? Those negative voices are off to races, and it can feel impossible to get them back. And it’s all because you’re looking at your bank balance.
The solution is to step back, take a breath, and remember that this is just a number. It does not define you. Sure, you need to take responsibility for your actions. But follow your train of thought. Where are you making mental leaps? What are you assuming? If you can catch yourself in the moment, it’s a lot easier to calm those anxious thoughts before they get out of control.
In conclusion, mind traps are dangerous because they’re so believable. They seem like rational thoughts, but they’re really just mental shortcuts that often lead to costly errors.
The good news is, once you’re aware of them, you can start to catch yourself in the act. And with practice, it gets easier and easier. So next time you find yourself thinking you have to go big or go home, or that your finances will magically fix themselves, or that you’re a failure, take a moment. Write down your thoughts. And then ask yourself—is this really true? Or is it just a mind trap?