After years of helping hardworking Americans achieve financial freedom, we’ve seen how a person’s money mindset (translation: how they think about money) can hold them back or propel them forward. Financial fallacies about what matters, how to invest, and who to work with can damage your chances of success.
By shifting your thinking, you can get back on track. Here are eight money mindset myths that could impact you (plus what you need to know instead.)
1. “Finances just aren’t a priority right now.”
It’s a simple principle: Priorities are a tradeoff, so leaning into something pulls resources from something else. That’s why discerning what is (and is not) important is considered wise.
However, your financial health cannot be reduced to a priority decision, because your finances aren’t just about money; they are about your Great Goals of Life (the things that matter to you and the things you want to accomplish.)
When you say your finances aren’t a priority, you might also be saying your career, your relationships, your legacy, and how you spend your time aren’t a priority either.
Financial freedom can change your life — all parts of it. It can help you leave your job, build your family, get healthy, or see the places you’ve always wanted to see. Deprioritizing your finances will have broad ramifications, so rethink the time, energy, and resources you invest.
2. “Only the wealthiest among us need a financial advisor.”
When people say they don’t have any wealth to manage, they might mean, “I’m not a multimillionaire, so why would a professional help me?”
At Credent, we believe all Americans should have access to independent and affordable advice.
Yes, those with more wealth tend to have more complex situations requiring professional input. However, anyone can benefit from a plan, a second opinion, and a thoughtful approach to using their resources to support their lifestyle and goals.
You would probably disagree that only unhealthy people require a doctor. Preventative care is dedicated to helping people build healthy lives (and stay healthy). In the same way, a financial advisor can help you build wealth, not just work with you once you have an abundance of it.
3. “Financial success is all about the accumulation of assets.”
Believing financial success is nothing more than the accumulation of assets is a narrow view focused on amount over impact.
True financial success ties back to the American Dream, and we believe the American Dream is alive and well.
As our CEO, David Hefty, says, “The American Dream has never been about the accumulation of assets… It’s always been about how [you can] work and provide for yourself and others. That is the actual American Dream.”
Making money is not wrong, and we aim to help our clients do so. But financial success is about what your accumulated assets help you do — breathe a sigh of relief, spend and give money away with confidence, and retire deeply satisfied with your life and work.
(For more on this, check out our article, “Financial Planning for a Meaningful Life.”)
4. “It’s only the portfolio that matters, not the plan.”
We believe in setting financial goals, developing a written plan, and working with a partner toward those goals. It seems simple, but not everyone agrees. Some think the only thing that matters is their investments.
Your investments are essential to your financial picture, but a portfolio-only approach overemphasizes the accumulation of assets (see the previous point).
Balance your portfolio with a plan — the roadmap that says, “Here’s where you are, here’s where you’re headed, and if needed, here’s how to change course, using the assets you accumulate.”
If you’re unconvinced, review our article, “5 Reasons Why Financial Planning is Important.”
5. “Financial advisors are in it for themselves.”
Trust us, we know the underbelly of the finance industry. It’s one of the things that compelled our CEO and President to do something different.
Many professionals outside Credent are more about themselves and their bank accounts than you and your goals. But don’t let this put a bitter taste in your mouth — not everyone operates this way.
At Credent, our fiduciary obligation (who we work on behalf of) is to our clients and NOT Wall Street. That’s the kind of advisor you want on your team — a professional focused on advising to the best of their ability, not an opportunist distracted by the goal of making money at your expense.
6. “XYZ strategy is the only thing you need when investing.”
If only it were that simple. There is no one right investing strategy to make all other strategies irrelevant. In reality, all investment strategies work some of the time, and no investment strategy works all the time.
Investing is nuanced. It requires analyzing the markets and economy, knowing when to pivot and when to stay put, and tailoring a client’s portfolio to align with their goals.
The wisest investors don’t follow whims. They spend time in the market.
7. “Everyone should manage their finances on their own.”
We respect independent self-starters — the kinds of people who fix their own sinks, grow their own gardens, and plan their own travel.
But independence becomes illogical when it hinders your success. Managing finances solo isn’t impossible or even impractical for some people. But there is power in partnership.
A professional second opinion can keep you from a costly mistake, give you confidence, and provide a sounding board for your questions and concerns.
We’ve seen the power when we help clients stay invested, show them they can spend more money than they thought possible, guide them through financial decisions they don’t feel qualified to make, and answer their questions about the complexities of the market and economy.
8. “Investing is too risky because there is so much we can’t control”
Knowing what you can and can’t control is key to financial confidence.
You don’t control the economy and market or what happens in and between governments. Even parts of your career and health are beyond you.
However, your decisions about saving, spending, and investing are within your grasp, and they matter.
You also choose how you think about money. A mindset of fear and greed will be a roadblock to your financial independence, and if you let those forces keep you from investing, you may end up hurting yourself more than a smart investing strategy ever would.
If you have questions about your finances, reach out to a team member using the form below.