Scared of Money? (Why & How to Overcome Your Fear of Money)

Do you have a fear of money? The more I see people talk about money, the more I see how SCARED we are of it.

How we let others poison our views of money.

And how easily we use negative words to describe it.

Here’s an email I got from someone who read my book, I Will Teach You To Be Rich. What do you notice?

My response:

His response (notice the skepticism):

6-10 IN A SHORT-ASS EMAIL. (Well, compared to the kinds I write…) Finally, my response:

This guy didn’t even notice his reflexive negativity with money. Its become like a dull toothache, something he gets used to. And since negativity is his worldview — the lens through which he views everything — I guarantee its an invisible drag on his entire life.

I asked him to rewrite his email to be POSITIVE instead of negative because sometimes, it takes someone pointing out your pattern to shake you out of it.

When I talk to people about money, here are the most common words they use to describe it:

Anxious

Stressed

Is it too late

(What words come to mind for you?)

But its even more revealing when you listen to the ways they talk about money.

What they say: What’s my Rich Life? Well, I just want to go on vacation with my kids a couple times a year, nothing fancy…

What they really mean: Notice those last two words — nothing fancy. When people talk about their Rich Lives, they almost always minimize their own dreams. When you’ve spent your entire life worrying about what can go wrong with money, its almost impossible to dream.

What they say: How do I KNOW your programs will work? OR Will this book work for me if I live in Bolivia and I have a lazy left eye and I only eat mussels on Mondays?

What they really mean: I have a finite amount of money. If I spend it here, I need to know it will absolutely work, otherwise, I will have wasted my money and there’s no way for me to ever earn more

What they say: Even if I made $250,000/year, I wouldn’t eat out at a nice restaurant like that. What a waste!

What they really mean: I have never eaten at a place like that and I don’t want to be the kind of person who has to go there to enjoy food. I’m simple. (One level deeper: I’m nervous that if I ate there, I might actually like it. I don’t trust myself to avoid going there every single week and spending all of my money)

What they say: I shouldn’t get a credit card.

What they actually mean: I don’t trust myself to control my spending, therefore I need to restrict myself

What they say: I went to [ANY FOREIGN COUNTRY] and they tried to rip me off because I was an American

What they really mean: Well, yeah, I could have afforded an extra $5 for those postcards but I HATE BEING RIPPED OFF. If someone else is winning and I am losing, I HATE IT

So many of us make day-to-day money decisions, never understanding the invisible scripts that actually guide these decisions. And in America, money is driven by FEAR.

FEAR that well never have enough.

FEAR that we cant make more of it.

And FEAR that someone will judge us for our spending — or even what we want to spend on.

I hate this. That’s why I show you how to identify your Money Dials, the things you LOVE spending on, then I show you how to spend MORE on it.

I also show you how to get psychologically comfortable with the idea of changing your identity. People say Money changes people, in disgust, as if its a bad thing. Money should change you! It should let you dream bigger, it should let you live an easier or more adventurous life, and it should let you bring others with you.

But you cant do that if you’re stuck thinking about money as a source of anxiety and fear.

An interviewer recently asked me what I would change from my 20s. I said, I would have more FUN. I was too rigid. But the times where I had the most fun and I was the most successful was I just loosened up and tried a bunch of new things

With money, try these different approaches.

Table of Contents

• Know That You Can Trust Yourself
• Know That You Can Create More Money
• Stop Being Afraid of Waste
• 3 Things We Noticed From PeopleWho Don’t Worry About Money
• What Else Can You Do to Stop Worrying About Money?
• What are You Going to Do Today?

Know That You Can Trust Yourself

Know that you can eat at a really nice restaurant once for the experience and truly enjoy it but trust that I’m not going to trip and fall and end up going there every single week.

You can also use credit cards without overspending (follow the systems in my book). You can pay off your debt and stay out of debt. You can become Rich and do good. Trust yourself.

Know That You Can Create More Money

You can negotiate your salary — or find an entirely new job. You can start a business, even if you don’t have an idea. You can build your network to sidestep people with 10 years more experience than you — and get perks you’ve never dreamed of.

All of those things can dramatically increase your income. Above all, your money is not a fixed pie that you have to exhaustively guard and protect. You can also expand the size of your pie.

Budgeting is outdated. Build your conscious spending plan to take control of your finances and spend guilt-free on the things you love. Find out how in our FREE guide.

Stop Being Afraid of Waste

In puritanical America, one of the biggest no-no’s is WASTE. Oh no! Ramit, if I start spending more on the things I love, I might waste some of my money!

How do I KNOW that your book will solve my exact, highly specific problem that I worry about every fucking day of my life? If it doesn’t, I’ve wasted $10!!!! Scammer!!!

Oh no! Ramit, what if I hire someone and they don’t handle my SEO, my WordPress uploads, design all my graphics, triple my conversion rates, write my entire email funnel, and create a new webinar system? I might have Wasted the $13/hour I tried to pay them!!

Oh no, there’s so much government waste! We should ONLY focus on cutting government waste. Especially that one thing I really hate. What? It only represents 0.03% of total spend? No, that cant be right. Anyway, we need to handle WASTE. Also, don’t talk about raising my historically low taxes, you socialist.

If you spend your entire life worrying about waste, you miss a simple fact of life: In any system of sufficient complexity, there will always be waste. Yes, you should take measures to control it, but you should also accept that there will be a certain amount of waste — and move on!

I know that I’m going to buy courses and attend conferences that wont be perfect for me. I know I’m going to eat at a restaurant that’s unmemorable. I know I’m going to make bad hires.

SO WHAT?

Id rather try new experiences and learn with each one than to sit back and let the bogeyman of waste scare me from doing anything at all.

So much of personal finance advice take your latent fears and heightens them.

NO! Don’t use a credit card, you might overspend a little!

NO! Don’t eat out at that restaurant, what a waste!

NO! Don’t try to negotiate your salary, you should just be happy you have a job!

If you spent the last ten years worrying about your waste and all the bad things you might do, you’ve accepted the message that you should be SCARED. That you’re an organism that simply reacts to whatever’s around you — that you have no agency or control.

Meanwhile, the people who have gone on offense have taken control of their own finances, their own psychology, started to earn more, and happily spend on the things they love. No anxiety. Just confidence and the systems to back it up.

You listen to these fears and end up frightened and anxious, sitting around worrying about all the things that can go wrong with money.

Or you can go on offense. You can take control of your money.

You can build a plan to spend extravagantly on the things you love.

You can EMBRACE making mistakes, knowing you’ll waste a little money, but its fine, because over the long term, those mistakes are minor, and you can create more wealth for yourselves.

You choose.

In my book, I wrote this:

Play offense, not defense. Too many of us play defense with our finances. We wait until the end of the month, then look at our spending and shrug: I guess I spent that much. We accept onerous fees. We don’t question complicated advice because its given to us in a language we don’t understand.

In this book, Ill teach you to go on offense with your credit cards, your banks, your investments, and even your own money psychology. My goal is for you to craft your own Rich Life by the end of Chapter 9. Get aggressive! No ones going to do it for you.

1. They are Prepared for Everything

Earlier this year, the New Yorker ran a fascinating article titled Doomsday Prep for the Super-Rich. In the piece they described how some of the smartest, most successful people from Silicon Valley and Wall Street are preparing for the apocalypse (yes, you read that correctly).

They are buying remote property, building self-sustaining bunkers, and sometimes even stockpiling ammunition to prepare for the eventual breakdown of civilization.

When asked the simple question of Why? here’s what Yishan Wong, the former CEO of Reddit, told the New Yorker:

Maybe you’re not ready to drop a few million on a bunker in rural Kansas, but that doesn’t mean you can’t be prepared for the future.

In speaking to our students who worry about money, I’ve noticed that a lot of people are afraid of unpredictable things that might happen in their future. Some people refer to these as the things you don’t know that you don’t know or unknown unknowns. Here’s how one student described his fear:

This type of fear can be incredibly powerful, because your imagination runs wild with worst-case scenarios. It’s like when you are walking down the stairs into a pitch-black basement of a rickety old house. It’s terrifying. Anything could be lurking in those shadows.

But there’s a simple solution: Turn on a light.

You can do the same thing with your finances. Instead of being afraid of unknown unknowns, you can shine a light on your financial future by learning from people ten years older than you who can tell you exactly what to expect.

2. They Protect the Money They Already Have

Ever see a news story about a rock star or athlete going bankrupt and wonder, How is it even possible to lose that much money? ESPNs documentary Broke investigated the phenomenon of very rich athletes going completely broke. The statistics are shocking:

One of the primary causes of financial problems for these athletes was not extravagant spending. It was mostly due to bad investments, ranging from real estate to restaurants to car washes.

Its an interesting cautionary tale because one of the most common questions I get from students who have mastered the basics of personal finance is How do I make my investments grow faster?

As your wealth grows, you’ll find the investing opportunities start to grow as well. Instead of just a boring target date fund, now you can buy real estate, invest in start-ups, and take sizable positions in individual stocks.

At a certain level, the world of hedge funds and private equity starts to open up as well. It’s tempting to throw your money at these exciting opportunities and promises of outsized returns and it’s easy to develop an obsession with growth and moving faster.

I find this fascinating, because the research I’ve done revealed that the most successful wealthy people have the opposite approach. Instead of asking what can I gain? their #1 question is how can I avoid losing money?

For example, Warren Buffett has two rules of investing:

Rule 1: Never lose money.

Rule 2: Never forget rule 1.

So what does this mean for you?

This is more a matter of mastering your own psychology than any new tactic or fancy asset allocation. There’s a reason at IWT we consistently recommend boring, simple investments like lazy portfolios and target date funds.

But we’ve also spent enough time studying the psychology of personal finance to know that being a 100% disciplined monk with your investments is near impossible.

No matter how much you read about the merits of basic index investing and why stock picking never works, there’s still a little voice in your head saying, Yeah, but what if I find the next Amazon stock? Id be a millionaire in five years!

Here’s what we recommend: instead of suppressing that voice in your head, embrace it. Take 5% of your portfolio and put it aside for whatever crazy idea you have for making your money grow faster. Invest in Bitcoin. Buy $5,000 in Tesla stock. Invest in your cousin’s car wash if you want.

Do whatever you want, because while you might lose that 5%, you can sleep well at night knowing 95% of your money is still safe and protected.

3. They Don’t Do it Alone

There’s a great scene in Entourage where the agent Ari Gold is introducing the management team of actress and singer Mandy Moore.

It’s kind of eye-opening as he goes down the line introducing this super-team of six people who are required to manage the career of just one person: manager, music agent, publicist, attorney, music manager, theatrical agent, etc.

It’s also possible to develop the same type of super-team to manage your finances and literally outsource your worry to someone else. Attorneys, accountants, life insurance specialists, financial planners, investment advisers, and even a psychologist or psychiatrist could all be part of your financial super-team.

Want to build a business that enables you to live YOUR Rich Life? Get my FREE guide on finding your first profitable idea.

You might be thinking, Wait, what? I thought Ramit hated financial advisors. Doesn’t he spend an entire chapter in his book telling me NOT to hire a financial advisor. So what’s going on here?

I asked Ramit about this incongruence, and he pointed out a really interesting and counterintuitive insight: Once you reach a certain point, the basic personal finance rules no longer apply.

Normal people with ordinary financial needs don’t require an advisor. That’s why we tell most people its not worth their time. But once you’ve conquered the basics, then the basic rules no longer apply.

Here are a few scenarios where it DOES make sense to pay an advisor:

• When you have a lot of investable assets (~$1MM+) and have much more to lose if you make a mistake.
• If you have complex situations (imagine having three kids, planning for college, and buying a house at the exact same time).
• When you just want a second set of eyes to make sure you have everything done right and aren’t missing anything.
• When you’re short on time and want to pay for convenience (e.g., you can hire a bookkeeper who you forward bills to and who pays them for you).
• When you run your own business, an accountant is a no-brainer who can cover your ass and also look out for things you don’t know about.

Is hiring an advisor expensive? Yes, of course. But ask yourself, how much is constantly worrying about your finances costing you?

If you’re looking at getting help with your finances from a professional, then we recommend beginning your search at the National Association of Personal Finance Advisors (www.napfa.org). These advisors are fee-based (they usually have an hourly rate), not commission-based, meaning that they want to help you, not profit off their recommendations.

What Else Can You Do to Stop Worrying About Money?

If you’re still not sure you’ve done everything right with your finances, you can implement the 10-year saving strategy.

The 10-Year Strategy involves asking people ten years older than you what they wish they’d saved for, and starting to save for that.

Sounds obvious, but it requires admitting that despite your superior financial abilities, you’re still going to have the same expenses as everyone else. Young people love to pretend were going to be millionaires, work from the beach, and somehow magically make money and have low expenses all our life.

Here is what will happen to you as you get older:

1. Yes, you WILL have a nice and very expensive wedding (even if your’e a hypocrite and think you’ll have a small, beautiful wedding)
2. Yes, you WILL have kids and want to buy them nice stuff
3. Yes, you will need things like family health insurance and life insurance and homeowners insurance and family vacations and other things that you can’t predict right now because you’re not in that life situation

So reach out to someone older than you and ask them what they wish they’d saved for. I guarantee their answers will be surprising.

What are You Going to Do Today?

If you’re not earning more than you spend, automating your money, and maxing out your accounts, that can be your first goal. This is the majority of iwillteachyoutoberich readers.

If you’ve done all that and are looking for the next step, try implementing the 10-Year Savings Strategy.

One more thing: You cant just scoff at this for being too easy and do nothing. You have to consciously choose:

1. 1. I’m going to do this within the week
   2. I’m not going to do this because I’m going to do another strategy within the week

1. I’m not at this stage yet I’m going to pick up your book (or another book, or just do it) and get there

Note: There is no #4 (I’m not going to do this at all I’m just going to do nothing) because that is a cop-out. Get it done.

Learn to take control of your finances and spend your money GUILT-FREE with our free Ultimate Guide To Personal Finance below: