Are Financial Prejudices Standing in the Way of Your Success?

Jun 28, 2016 | Be First to Comment!

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When I was little, I didn't know that we didn’t have a lot of money. I had a beautiful wardrobe, ate every day, and took ballet and gymnastics lessons. As I got older, I began to get an idea that maybe, just maybe we weren’t as well off as I thought we were. I realized that maybe, just maybe we were closer to cash poor than rich.

My mom economized with a ferocity that I didn’t understand. For example, she began preparing for winter in June. She'd buy our clothes at thrift stores or stores like Kmart. She worked harder than anyone I'd ever seen. So hard, in fact, that in a fit of teenage rebellion I told her I never wanted to work as hard as she did.

I've internalized the financial lessons of hard work, thrift, and sacrifice my mom modeled. But instead of utilizing those lessons, I developed financial prejudices that block the good habits I should have developed.

Not only have these financial prejudices negatively affected my finances, they've instilled bad financial habits that have taken me years to recover from.

I'm not the only one to run into this issue. Financial prejudices are something we all carry with us. And if we're not careful, they can do some serious damage to our financial success.

Do you know what financial prejudices you carry? Here's a list of some that I've noticed over the years. This is not a complete list by any means, but hopefully, it will help you spot instances like this in your life. When we break down these walls, we can reach a greater success than we ever imagined.

Financial Prejudice #1: Thinking You ALWAYS Need the Latest Tech Upgrade

Surprisingly, I haven't struggled in this area. I may be a millennial, but I act more like a grandma holding on to her TV from the 70s until it literally can't function anymore. And even though I don't do things like put tin foil or rabbit ears on my old TV to get better reception, I have been known to resist upgrading my tech tools for as long as possible.

It costs money to upgrade. One at a time doesn't seem so bad. But if a year goes by and I've upgraded my phone, laptop, and TV...well, suddenly it costs a lot. And that's money I could use for something I really enjoy, like a trip. I love technology as much as the next millennial, but is every upgrade worth it when the previous version still works?

How to Fight this Financial Prejudice

If you're thinking of a tech upgrade, ask yourself some of the following questions to make sure the timing is right:

  • Is this product still functional?
  • How much would it cost to do an upgrade?
  • Do I have the cash or would the upgrade go on credit (or a locked-in contract)?
  • Do I actually want the upgrade? Or do I feel like you have to get it?
  • Does the newer model save or cost money? (Sometimes an upgrade costs more than you realize - and sometimes running the older model can end up costing more in the end.)
  • Could I switch service providers and save money on the same product / upgrade with them?

We all love technology. But over the past few years, it's long surpassed just being useful and since turned into a status symbol. Don't let your tech tools define you. Pay for the tools and upgrades that will make your life function better - and forget about the rest.

And don't forget that switching providers can make a huge difference. I bought out my cell phone contract and bought a smartphone with a different carrier. While my new setup isn't perfect, I went from spending $105 a month to $30 a month (unlimited). That's a pretty huge savings! And even though I'll have to pay for my phone in full at upgrade time, I'm still saving $900 per year. That's the equal to a plane ticket to Europe - something I'd much rather spend my money on.

Financial Prejudice #2: Banning Public Transportation

I don't have a problem with public transportation, but I have a lot of friends that do. As an adult just learning to drive, I've had no other choice but use public transportation. And this has saved me a great deal of money over the years.

Does your company give you a free bus pass? Don't skip it just because driving is more convenient (and less smelly). Riding the bus will not only save you on parking and wear and tear on your car, but it will also save you a ton on gas.

Many Millennials are jumping on the public transportation bandwagon to save money. The American Public Transportation Association (APTA) released a report and found that some millennials even prefer public transportation because they can stay connected while they travel around town. Many buses are offering free wifi nowadays, so riding the bus can help you get a head start on work or whatever else you want to do as you make your way to the office.

Even now that I have my license and a car, I still struggle to break my transportation habit. But in the end, I get to save money and help my car last longer.

How to Fight this Financial Prejudice

If you don't like the idea of riding public transportation, ask yourself these questions:

  • Do I refuse to ride because it takes longer?
  • Do I refuse to ride because it's embarrassing?
  • Do I refuse to ride because it's scary?

As with all financial decisions, crunch the numbers. If the ride takes longer, can you hop on wifi and be productive at that time? If so, it might still be worth it. If it's scary, take a look at your city's crime statistics so you can find out for sure if there have been any incidences that have happened on public transportation.

There are no right or wrong answers here - just questions to help you ensure that you're making thoughtful decisions and not succumbing to financial prejudices.

Financial Prejudice #3: Refusing to Buy Used

Most people don't like to buy used. We want to spend our money on things that feel special, that we know are clean, that we know their origin story.

This is especially true when it comes to used clothes.

We've all been to a slightly smelly thrift store before - or one where everything seemed to be strewn about at random. The very thought of it could make you wrinkle your nose in disgust.

I used to be one of these people. The thought of buying used clothing was a freaky thought…who wore this shirt before I did? What happened to them?

Part of this prejudice occurred because I wore thrift clothing as a kid. I wanted to be in beautiful new clothes that were trendy and fabulous. Who cares if they were expensive?

This financial prejudice of mine turned into an out of control shopping habit. Finally, I was able to kill the habit by embarking on a no year shopping challenge. During that year, I saved $4000 by simply using the clothes that I had. And when I finished, I developed a love for thrift store shopping as a way to obtain new clothes without a hefty cost.

Thrift stores aren't what they used to be. They've become organized and clean, they have 50% off days, and you can even sign up for rewards programs. There are even online secondhand stores that you can use to buy high-end clothing you wouldn't be able to afford otherwise.

By incorporating thrift shopping into my life, I've managed to save thousands of dollars per year even after I completed the shopping ban.

This same idea goes into buying cars. Many people prefer to have a brand new car, but the minute a car rolls off the lot it dives in value. Even buying a one-year-old car can make a huge difference in your budget - and will come with very little mileage.

I bought my very first car last year for $1500 in cash. It's not new, but it runs like a dream, and I don't have to pay a dime in monthly car payments.

The amount of money I save every month compared to someone who buys a new car (or worse, leases a car) adds up. Even if you don't want an older car like mine, you could consider going for a slightly used model to decrease your overall spend.

How to Fight this Financial Prejudice

Again, do the math. How much could buying used save you versus buying new? There may be times when you need to buy new for practical reasons, but more often than not a used or slightly used version will work just as well.

Also, think about your reservations. If buying used just plain feels gross to you, start small. Try buying used with one item to see how it feels, to see if you use it, to see if you can do it again. That way you're at least facing your financial prejudice head on before deciding whether or not to indulge in it.

The Importance of Acknowledging Your Financial Prejudices

Ultimately, we are who we are. If you have concerns that you can't get past - with or without the help of numbers - then those concerns are legitimate. As long as you try, as long as you explore other options, then you're doing what you can to surpass these barriers.

Just remember to evaluate your choices. Can you make some pragmatic, short-term choices that will save you money in the long run? Could this money savings add up to a major change in your financial picture?

My mom saved thousands of dollars by thrift shopping and hand-me-downs when I was a kid. Funny enough, I recently ran into one of my former teachers, and she told me she thought I was one of the best-dressed kids she'd ever seen. It just shows that it's not about what you spend, but how you use what you buy.

I've spent a lot of time analyzing my financial prejudices and how I can get in my own way. That has enabled me to become more comfortable embracing short-term solutions that lead to long-term gain, even when that means buying used or losing a little time on the bus.

So, what about you? Are there financial prejudices that are holding you back?

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