Keeping track of your finances and building wealth is difficult enough in the current situation. Self-sabotage doesn’t have to make things harder.
Self-made millionaire and film star Ramit Sethi says you need to get out of your way to make sure you reach your financial goals. upcoming Netflix shows “How to get rich”. Eliminating three “toxic” money beliefs puts you on a solid financial path, he told CNBC Make It.
In fact, even a small change in the way you think about investing can “literally change your life,” he says.
Here are three red flags that might be blocking your thinking.
Many Americans are raised to avoid conversations about money, but if you want to be successful, it’s something you need to be comfortable doing, Sethi says.
“Whether solo or with a partner, how can you expect to succeed if you’re not actually talking about money?” he says. “Money is a regular topic in financially successful families.”
The reason is that you can’t start being proactive about your finances until you have clear goals for how much money you’re bringing in, where it’s going, and your future growth goals. Questioning your financial habits regularly is part of having a healthy relationship with money, says Sethi.
“Hey, what do you think about this? What should I do? Are you interested in this? I’m not sure if there’s a suitable savings account. Let’s discuss.”
Your relationship with money grows in some way from what you were taught as a child. Sticking to these lessons without question can lead you down the wrong path.
“In my podcast, I ask couples, ‘Do you remember what your family said to you about money when you were a kid?’ One of the most common things I hear is, ‘We “I can’t afford it,” says Sethi.
Developing an “invisible script” about financial decisions that can affect you as you manage your money as an adult, Sethi says. In this case, you may start feeling guilty about buying coffee even though you have saved enough for the future and your budget allows.
To reset your mind, write down a script you wrote as a child, says Sethi. “You have to acknowledge them, ask them, and decide. What script do you want to follow or create for the next phase of my life?”
You may be avoiding investing, thinking it’s only for the wealthy. But you’re doing it the other way around, says Sethi. “The way to get rich is to invest.”
If you have an entry-level income, “Even if you can only invest $20 a month, it’s wise to invest as much as you can. That’s the first way,” says Sethi.
Set up automatic transfers from your paycheck to your investment account instead of forcing yourself to let go of your money each month.
“You can often change the entire socioeconomic trajectory of yourself and your family by starting one thing as simple as investing automatically,” he says. “This is exciting because it means that for the next 20 years, we can actually start living a rich life without worrying about money.”
That’s because your money is growing slowly and steadily at compound interest while you live your life.
“Creating real wealth takes time. It’s tedious and methodical,” says Sethi. “And when you think about what you’ve accomplished over a long period of time in your life that you’re really proud of, whether it’s fitness or learning a language, it’s the ability to work on it every day. You know what it’s like. It’s a little bit better. That’s wealth creation.”
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