8 Self-Sabotaging Beliefs About Money You Must Overcome

This article is an excerpt from the Shortform book guide to "Unscripted" by MJ DeMarco. Shortform has the world's best summaries and analyses of books you should be reading.

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What role does mindset play in financial success? How do you identify and overcome financial beliefs that hold you back?

According to MJ DeMarco, the author of Unscripted, the state of your finances depends on your financial mindset, that is, your beliefs about money. If you want to get rich, you need to cultivate an entrepreneurial mindset. To do that, you must first dismantle your limiting beliefs about money.

Here are eight unproductive beliefs about money you must overcome if you want to build serious wealth.

Identify and Overcome Unproductive Beliefs About Money

According to DeMarco, the first step to cultivating the entrepreneurial mindset is to become aware of the unproductive beliefs you hold about money so that you can free yourself from their influence.

(Shortform note: Like DeMarco, James Allen (As A Man Thinketh) argues that you must identify your beliefs to understand why you behave the way you do before you can change your behaviors. Without this understanding, you’re more likely to believe that you have no control over your mindset, and you won’t feel motivated to improve the way you manage your finances.)

He explains that, if you’re not as wealthy as you want to be, it’s because you’ve adopted limiting beliefs about money. DeMarco identifies eight such beliefs:

  1. Only lucky people get rich
  2. Your innate capabilities determine your level of wealth
  3. Frugality creates wealth
  4. It’s okay to spend more than you earn
  5. You can make money without creating value
  6. The rich prevent you from acquiring wealth
  7. There’s a shortcut to wealth
  8. Relying solely on compound interest makes you rich

According to DeMarco, though these beliefs are pervasive, they’re surmountable: You can remove their influence, cultivate an entrepreneurial mindset, and achieve financial success. 

We’ll explore his practical advice for overcoming each of these eight beliefs throughout the rest of the guide.

How Changing Your Behaviors Changes Your Beliefs

DeMarco suggests a series of actions that could help steer you away from each of the eight unproductive beliefs. But he doesn’t suggest a set of alternative entrepreneurial beliefs to replace them with. This raises the question: Can changing your behaviors change your beliefs? According to Tony Robbins (Awaken the Giant Within), it can.

Robbins argues that making beneficial changes to your behavior sets in motion a series of beneficial changes that ultimately improve your beliefs. He explains that when you effectively focus your energy on changing your behaviors, you inevitably produce successful results. These positive results empower you to maintain your improved behaviors and to make even more beneficial changes so that you can continue to feel good about yourself. 

The more you practice your new behaviors, the more you rewire your brain and weaken its reliance on the beliefs that supported your earlier, unwanted behaviors. As a result, your brain naturally replaces the unproductive beliefs that don’t support your new and improved behaviors with ones that do.

Unproductive Belief #1: Only Lucky People Get Rich

The first belief, “Only lucky people get rich,” implies that wealth is entirely dependent on random and uncontrollable forces. DeMarco argues that this belief convinces you that you’re not accountable for your finances by disregarding two important factors:

1) The many failures entrepreneurs face before they acquire wealth:  For example, DeMarco failed several times before building a company that made him millions.

(Shortform note: Many entrepreneurs not only face failure before they acquire wealth but also after they acquire it. However, they often fight back to regain the money they lose. For example, James Altucher founded a web-design company, sold it for $10 million, then lost all his money through a series of bad investments. Instead of giving in to failure, he clawed his way back to wealth by becoming a popular author, blogger, and podcaster.)

2) The role your thoughts, behaviors, and choices play in creating your financial circumstances: For example, the reason DeMarco overcame his failures was that he chose to learn from them and take persistent actions to achieve his financial goal.

According to DeMarco, because you don’t feel accountable for your finances, you fail to see what you can do to improve them. This creates a feeling of powerlessness that prevents you from moving toward your financial goal.

Unproductive Belief #2: Your Innate Capabilities Determine Your Level of Wealth

The second belief, “Your innate capabilities determine your level of wealth,” implies that you have intrinsic, fixed skills that influence how much money you can earn. DeMarco argues that this belief discourages people from improving their chances of achieving financial success in two ways:

1) Convincing those who’ve easily achieved success before that they’re talented and that acquiring wealth will be equally easy: For example, as a child, you got perfect grades without applying effort. You grew up assuming that you’d acquire wealth just as easily and you don’t see the need to improve your skill set.

2) Convincing those who’ve struggled to achieve success that they aren’t talented enough to acquire wealth and never will be: For example, you lost money due to a poor investment decision. Instead of educating yourself on making more profitable decisions, you assume that you’ll always make unprofitable decisions and give up on your plan to invest.

Unproductive Belief #3: Frugality Creates Wealth

The third belief, “Frugality creates wealth,” implies that you can build wealth by working a low-paying job and saving every cent. DeMarco argues this belief cripples your chances of acquiring wealth because it prevents you from focusing on the myriad ways you can proactively increase your income. Instead, it restricts your focus to your outgoing expenses in the hope that sacrificing pleasures and budgeting every cent now will magically grow your savings into sizable wealth in the future. However, DeMarco insists that if your income is small, you won’t be able to save enough to create wealth. Further, inflation will reduce the value of any money you do manage to accumulate. 

(Shortform note: While DeMarco argues that frugality restricts your focus to outgoing expenses and meager savings accounts, David Bach (The Automatic Millionaire) argues that this approach improves your quality of life now and gives you the freedom to make profitable choices for your future. This is for two reasons: First, savings help you face unexpected events, such as job loss, without diminishing your financial security. Second, extra money in the bank gives you space to make decisions about your lifestyle and financial goals. For example, when you don’t have savings, you’re forced to stay at your job. On the other hand, having enough money to support yourself allows you to quit your job and work on developing your business.)

Unproductive Belief #4: It’s Okay to Spend More Than You Earn

The fourth belief, “It’s okay to spend more than you earn,” implies that you can rely on credit to buy things you can’t afford without suffering any consequences. DeMarco claims that this belief underpins a consumer mindset—because it disregards the persistence required to create wealth in favor of the quick fix of using credit to impersonate wealth. However, relying on credit results in debts that destroy your chances of creating actual wealth—because instead of funneling money toward your financial security (a business, investments, and savings), you must commit all future income toward paying off your loans.

(Shortform note: It’s well known that relying on credit creates debts that restrict financial freedom. However, DeMarco’s conclusion that people rely on credit because they’d rather appear rich than put in the work to be rich is arguably reductive because many people can’t survive without credit. According to one survey, 37% of low-income and middle-income households rely on credit cards to cover basic living expenses, such as groceries and utilities. Further, people who rely on credit tend to work longer hours or take on a second job just to cover their debts and survive. So, while DeMarco argues that credit users are motivated by the need to look wealthy, many credit users are in fact motivated by the need to survive.)

Unproductive Belief #5: You Can Make Money Without Creating Value

The fifth belief, “You can make money without creating value,” implies that all money-making opportunities are equal, regardless of how much value they create. DeMarco argues that this belief disregards one important fact: The amount of money you make is directly tied to the amount of value you create. Because you don’t understand that massive wealth depends on creating massive value, you waste your time pursuing activities that create little to no value and offer no chance of generating wealth—for example, by switching to jobs that pay more or jumping from one get-rich-quick business to another. 

(Shortform note: If you’re unsure how to distinguish between low-value and high-value activities, Josh Kaufman (The Personal MBA) offers useful advice. He says that we find value in products and services that fulfill five basic needs: to feel good about ourselves, to connect with others, to grow and learn, to feel safe, and to avoid effort. Further, the authors of Business Model Generation claim that your product or service is more likely to be perceived as valuable if, in addition to fulfilling a need, it differentiates itself from what’s already on the market. Therefore, if you’re working on a unique product or service that effectively fulfills one of these five needs, you’re creating value.)

Unproductive Belief #6: The Rich Prevent You From Acquiring Wealth

The sixth belief, “The rich prevent you from acquiring wealth,” implies that wealthy people block your access to money-making opportunities because they’re inherently corrupt and selfish. According to DeMarco, because it convinces you that wealthy people are to blame for your lack of wealth, this belief makes you feel like a victim. Because you feel like a victim, you waste time complaining about your finances and feel powerless to improve them.  

Overcome this belief and cultivate an entrepreneurial mindset by shifting from blame to appreciation. DeMarco argues that rich people aren’t to blame for your lack of wealth, you are—because you haven’t created sufficient value to acquire the income you want. However, each time you blame others for the state of your finances, you get caught up in a negative mindset that prevents you from coming up with constructive money-making ideas.

On the other hand, if you focus on all of the different ways rich people have made your life easier or more enjoyable, you’ll realize that they deserve to be rich because they’ve contributed something valuable to society. For example, Jeff Bezos deserves to be rich because he makes online shopping more convenient for millions of people. DeMarco claims that this realization will make it easy for you to shift your thoughts from blame to appreciation—creating a more positive mindset. As a result, you’ll feel more empowered to come up with your own ideas to make a valuable and profitable contribution to society.

Unproductive Belief #7: There’s a Shortcut to Wealth

The seventh belief, “There’s a shortcut to wealth” implies that wealthy people are born rich or have access to a secret weapon that quickly and easily creates riches for them. According to DeMarco, because it disregards the time and effort required to create wealth, this belief convinces you that you shouldn’t have to work hard and make sacrifices to achieve the wealth you want. As a result, instead of taking constructive actions to improve your finances, you waste time and energy pursuing get-rich-quick schemes that fail to generate the income they promise.

(Shortform note: DeMarco’s opinions on get-rich-quick schemes are warranted—they not only fail to generate the income they promise but often result in financial loss. This is because these schemes are designed to get people to hand over their money in exchange for something that promises to make them even more money. However, while the schemers rake in profits, unsuspecting followers rarely enjoy any financial benefits. Therefore, stay wary of schemes that require upfront payments, make grandiose claims about how much money you can expect to earn, or suggest that you don’t need any experience to create massive wealth.)

Unproductive Belief #8: Relying Solely on Compound Interest Makes You Rich

The eighth belief, “Relying solely on compound interest makes you rich,” implies that you can create massive wealth by funneling small amounts of money toward pension and investment accounts. DeMarco argues that, because it encourages you to depend on unpredictable market forces to generate wealth for you, this belief convinces you to risk the money you do have.

He explains that in theory, investments create wealth by providing a predictable and healthy rate of return over the course of decades. In reality, however, the markets are unpredictable and the rates are too low to make a significant impact on the small, capped sums of money the government allows you to contribute to your investment accounts. You also can’t guarantee that financial managers won’t make poor decisions that lose you money or that the rate of inflation won’t reduce the value of your investments. 

(Shortform note: David Bach (The Automatic Millionaire) offers a contrasting perspective on compound interest. He first explains that you’ll earn far more from investing small amounts of money than from not investing at all—the impact isn’t insignificant, as DeMarco suggests. Then, Bach suggests that diversifying your investments (by putting money into a combination of cash, bonds, and stocks) ensures the overall health of your investment portfolio, even when faced with unstable interest and inflation rates. Further, he claims that anyone can learn how to automate and manage their own investments, so you don’t even need a financial advisor to manage your money—meaning you won’t risk someone making bad decisions on your behalf.)

8 Self-Sabotaging Beliefs About Money You Must Overcome

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Darya Sinusoid

Darya’s love for reading started with fantasy novels (The LOTR trilogy is still her all-time-favorite). Growing up, however, she found herself transitioning to non-fiction, psychological, and self-help books. She has a degree in Psychology and a deep passion for the subject. She likes reading research-informed books that distill the workings of the human brain/mind/consciousness and thinking of ways to apply the insights to her own life. Some of her favorites include Thinking, Fast and Slow, How We Decide, and The Wisdom of the Enneagram.

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