The MapleMoney Show » Money Psychology

How to Change Your Money Mindset, with Lacey Langford

Presented by Wealthsimple

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Do you often compare yourself to other people? Have previous life experiences shaped your money mindset, and not in a good way? You may not realize it, but how you think about money could be a major factor in the financial decisions that you make. My guest this week knows a thing or two about maintaining a positive money mindset.

Lacey Langford is an Accredited Financial Counsellor and financial coach who has helped many people overcome their fear of money by adopting a positive mindset. According to Lacey, our past experiences shape our relationship with money, and they affect the financial decisions that we make. That’s why it’s so important to understand the role that mindset plays when dealing with finances.

Lacey explains that there are steps you can take if you’re struggling with a negative money mindset. For example, perhaps you have a script that constantly runs in your mind, such as “there’s no way I will ever save money”, or “I’ll never have enough to retire on.” Lacey’s advice is to pick one of those scripts, or mindsets, and begin to change it for the better. Instead of focusing on the negative, think of ways that something positive could happen for you.

One activity she recommends is to write down 3 money related things that you are good at. If you’re married, you can do this together with your spouse. This will help you begin to focus on the positives. From there, play to your strengths, by thinking of ways that you can change your situation. Knowledge is power, and the more positive action you take, the more it will stick.

It’s January, which means it’s time to review your RRSP contributions for the 2019 tax year. Our sponsor, Wealthsimple, can help you get a bigger refund while helping you save on investment fees. MapleMoney readers get $10,000 managed for free by opening a new account, or by transferring their RRSP to Wealthsimple. Open your Wealthsimple RRSP today.

Episode Summary

  • Explaining the money mindset
  • Never compare your finances to other people
  • Things that can influence your money mindset
  • To change your mindset, play to your strengths
  • Looking at what other people have is a big mistake
  • Don’t just track the money going out, track what’s coming in
  • Why you should create your own personal financial avatar
  • Overcoming self doubt when it comes to finances
Read transcript

Do you often compare yourself to other people, have previous life experiences shaped your money mindset and not in a good way? You may not realize it, but how you think about money could be a major factor in the financial decisions you make. My guest this week knows a thing or two about maintaining a positive money mindset. Lacey Langford is an accredited financial counselor and coach who has helped many people overcome their fear of money. She joins us to discuss how having a negative mindset can hurt us financially and what we can do about it.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. It’s January which means it’s time to review your RSP contributions for the 2019 tax year. Our sponsor, Wealthsimple, can help you get a bigger refund while helping you save on investment fees. Maple Money Show readers can get $10,000 managed for free by opening a new account or transferring your RSP to Wealthsimple. To open your Wealthsimple RRSP today, head over to maplemoney.com/wealthsimple. Now let’s chat with Lacey…

Tom: Hi Lacey, welcome to the Maple Money Show.

Lacey: Thank you for having me. I’m excited to be here.

Tom: Before recording we were talking about this idea of money mindset. It’s something I don’t know if I fully understand so I’m glad to have you on so we can go through this. I’m a very factual, numbers, boring kind of guy. And I get that mindset probably affects more regular people than me…

Lacey: You say you’re not regular?

Tom: Well, I’m not sure. When it comes to this, one example is the whole debt snowball versus debt avalanche. I’m very much just debt avalanche. You pay down the highest interest first because it makes the most mathematical sense. But for the majority of people the debt snowball really makes more sense because you get these little wins, you’re moving on and that kind of changes your mindset. But can we hop back and start right from the beginning. What is money mindset?

Lacey: It’s how you handle your thought process when it comes to your finances. When life throws a pie at your face, you either laugh at it when you get hit in the face or you learn to duck. It means being able to pivot and move. And it’s about how you approach your financial life. And I agree with you that the debt avalanche definitely is the way I would coach people on finances. Becoming a financial coach is where I really started to learn that before I could get into numbers or fixing problems a lot of times I had to help people get their mindset right because they weren’t ready to receive the information at that moment. And a lot of times I had to go back to start to try and make it better for everybody by making a plan and coaching them through it. I would tell them their mind was not where it needed to be to handle this problem or solution. That’s where I really started to focus on working on people’s mindset and improving it in order to ultimately help them with their financial success.

Tom: So as a planner, where they just completely ignoring your plan? As another example, suppose you’re a compulsive spender or something like that, does that mean working that out of them?

Lacey: Yes. I think everybody has what I call a “backpack full of BS.” It’s their past experiences, things that have been done wrong to them, the way they saw their parents maybe manage money. There are a lot of these hang-ups that have led to why their mindset is the way that it is. A lot of mindsets, though, is people having self-doubt. They think they’re not good at managing money or they’ve made a mistake where they tried to invest in their 401k and messed it up. So they’re not really willing to let go of that stuff in their backpack in order to move on to making better financial decisions or opening their mind to realizing they can do these things. I think it really has to do with past mistakes and your personality. Do you see a glass as half full or half empty? That type of person. How you approach things is your mindset. It’s that backpack full of stuff. But it’s also whether you are a negative or positive person; are you really trying to go into a situation looking at it with the best possible outcome from the beginning? I think that yields better results.

Tom: Fair enough. And I notice you slipped in a 401k. Just for our readers, that would be an RRSP here.

Lacey: Yes. My bad, my bad.

Tom: We’re talking mindset here so, obviously, it applies to everyone. But yes, you are from the US.

Lacey: Darn it, I gave myself away.

Tom: My first thought with this money mindset idea… Is this too much like the book, The Secret, where I’m just going to think of abundance and it’s all going to happen? Or is there something different?

Lacey: No. For all those who believe in, The Secret, yes, whatever helps get you through. I think you do have to change your mantra, those things you’re saying over and over again, because if you’re saying you’re horrible with money, that’s probably what’s going to happen. I do think you should change your mantra. But there are also other things that go into your mindset like not comparing yourself to other people, getting some perspective because we often get caught in our own little bubble. Let’s say after you’ve had kids or you are in a new job and you’re uncomfortable, you’re in this bubble. You’re not able to see clearly. Let’s say you have $5,000 worth of debt. There are some people that have $80,000 worth of debt. But $5,000 is something that may upset you greatly because you’re in debt. But when you’re comparing it to other things it’s more manageable if you step outside your bubble and get some perspective. Stop comparing yourself to other people. I think there’s more that goes into it than just the mantra.

Tom: But what are some of the negative things that people are thinking? You mentioned this idea of things getting in their own way. What are some of the thoughts you hear from people?

Lacey: Well, one is past hurt. I’ve dealt with a lot of people where their spouse, boyfriend or girlfriend has stolen money from them. Maybe drained their accounts and left town. They find themselves at fault for that. They think they weren’t paying enough attention or should have been watching their bank accounts more closely. They should have opened the mail. But it really has nothing to do with them. It had to do with that person. So now moving forward, they’re thinking they’re not good at having a joint bank account when, in fact, if someone is trying to do you wrong, they’re going to do you wrong so it doesn’t matter. I had a guy whose wife stole all of his money and also took out debt in his name. She actually went and got a different mailing address so he couldn’t find the mail. It wasn’t there. She had opened different bank accounts he didn’t know about. This woman went above and beyond to hide what she was doing. So that had nothing to do with him. There is also bankruptcy. A lot of people have gone through that and they… Is that a Canada thing?

Tom: We have bankruptcy, yes.

Lacey: So they think, “Okay, I’m going to make another mistake. I’m going to be in debt. I’m going to be scared about money. Am I going to have enough money to cover the roof over my head and put food on the table?” They’re really going into every financial decision after that without the proper mindset. And that is going to lead to making mistakes because you’re focused on the past. You’re focused on the wrong things instead of finding the good in yourself. Everybody has something they’re good with, even if it’s opening the mail and facing a bill. Some people don’t do that. If you’re good at paying your bills on time, some people don’t do that. If it’s saving money, some people don’t do that. So it’s finding your strengths and playing into those and keeping a good attitude about it.

Tom: This idea playing to your strengths, how do you change that? If you’ve got this negative mindset, how do you flip that? Is it just over time? How does that start to go in the other direction?

Lacey: You can’t just flip a switch and automatically you’re not going to think bad of yourself or talk bad to yourself or have a different mantra or manage money differently. It’s something you have to work on. And there are going to be times that you’re going to revert, but you have to try to catch yourself. I think one thing is changing your mind or trying to catch yourself and say, “Hey, if I wouldn’t talk this way to somebody I love so I sure as hell shouldn’t be talking that way to myself. I should give myself some credit, know it was a mistake. I can learn from it and move on.” So, don’t be mean to yourself.

Tom: Another thing you mentioned was this idea of comparing in a positive way where the other person is in a worse situation so yours isn’t that bad. What about comparing in a negative way like the classic, “keeping up with the Joneses?” Does that come into play?

Lacey: Yes, it really does, because they’re not going to help you pay your bills. As a coach, I have seen behind closed doors, what people are pulling up into the parking lot driving and what they’re actually really able to afford. A lot of times it’s just a mirror, a façade they’re not able to back up financially. So I wouldn’t worry about if somebody has a nicer car or a newer iPhone. Not everybody can afford those things. That’s okay. That’s just for right now. It’s not forever. You can improve. You can save your money, get a higher paying job. There’s ways to get to those things if you want your lifestyle change. But don’t force your hand. Don’t force yourself into that situation. And looking at what other people have financially is a huge mistake because, again, they’re not going to help you pay your bills and they’re not going to be in the bad times.

Tom: It’s a New Year and as much as I hate New Year’s resolutions, how can someone get motivated into making these changes?

Lacey: Well, I think doing a couple of activities might be helpful to start taking action. One that’s so easy to start with is thinking of the positive. So often when we’re talking about money management, we’re tracking everything that’s going out. Making sure our bills are paid on time or automated. But often we’re not tracking what’s coming in. And I find that to be very helpful, especially if you’re in a situation where you feel austere with your money or just beat down where you have no quality of life, to really start tracking what’s coming in. So if you find a dollar on the ground, if somebody buys you a Starbucks, if your grandma sends you five dollars… Is it dollars in Canada?

Tom: Yes. We have five dollars in Canada.

Lacey: So if your grandma sent you five dollars, you just start tracking that. I just use a simple Excel sheet or notebook paper. And one month of writing that down really changes your mindset so you know you have money coming in. You’re obviously tracking your salary, your paychecks—those types of things. But it’s all the other little value items you receive and don’t really think about that are often taken for granted. And they’re positive things. So tracking the money coming in is an activity people can take action on to start their year off right. Instead of tracking everything that’s going out, track what’s coming in. Also try the activity of writing down what your ideal financial avatar is. This might not be up your alley, Tom, but in business people talk about it all the time; what’s your ideal customer? What do they look like? How do they dress? Where do they buy? To help you get motivated to reach the quality of life that you want, you should write out your own financial avatar. What does that look like for you? How much money do you have in savings? How much do you have in your retirement accounts? What kind of vacations are you going on? What type of car are you driving? What does it feel like after all your bills are paid? Those are things you should be writing down for your avatar so you can really start to focus your goal. That will help things fall in line and kind of get your mindset right. The third thing I would recommend is for people to write down three things that they’re good at with money. That could be paying your bills on time, doing automation for your retirement accounts, and again, opening your mail. Looking at those things and really writing them down. And if you’re married or in a serious relationship where your money is together, that’s a great activity to do together so you can really see what each other’s strengths are. If that’s not on your list but it’s on your spouse’s list then you see where you can pick up some of the slack.

Tom: I want to go back to the first one first, I guess. Had this idea of tracking everything coming in is interesting. I never really thought of it because I hear a lot of people say they’re living paycheck to paycheck. Is this breaking that mindset? There are other things like tax refunds or maybe rewards on your credit card. There’s something coming back.

Lacey: There is value. Again, all of this goes back to coaching and just having a problem giving people the results they want and figuring out how I can help the situation. A lot of people are really beaten down when it comes to their money where they’re living paycheck to paycheck. It’s for right now though, and not forever. Start focusing on those things that are coming in. I put a dollar value on it. If somebody buys me a coffee, then I write that dollar amount down. If somebody buys me lunch, I write that dollar amount down. If I find that dollar on the ground, I’m writing that down. I usually give coaching clients a document telling them to track it in for one month to see how it feels. Most people come back to me and say, “Hey, this was actually very helpful. It started to get me thinking about the value that I do receive,” and it doesn’t make it feel so austere or that they don’t have any quality of life. And that’s the problem; you get into this mindset that you have nothing and you can’t do anything. You can’t go out to eat. You can’t enjoy your life. You just go to work and come home. But, if you look closely enough, there are some other things.

Tom: Have you seen examples of people wanting to build on that momentum? Maybe it motivates them to start a side-hustle or something like that where they can say, “Oh, okay, I made $10 here. Let’s make more.” Just the fact that they’re tracking that?

Lacey: Yes. Especially if people are doing garage sales, yard sales and something of value came from that tracking. For instance, they may have bought two things and were given a third thing for free. If you’re writing that down in value, you would see you could resell that item. In some cases, I think it goes to the person and driving them to improve. It’s the kick start. But if they have a goal that’s in line with what they’re going to do with that extra money; are they going to use it to get out of debt? Are they going to use to save it for an item they want? I do think that it does kick start it for some people.

Tom: Yeah, instead of it just disappearing into the bank and then disappearing again in the spending.

Lacey: Or for them to just see that you don’t have as much money going out as you thought. You’re actually holding some of that value. You did get the enjoyment of not only the free lunch, but you went out with family or you got that coffee while hanging out with friends. I think it puts people in the perspective where they do have quality of life as well as value.

Tom: The other thing I wanted to go back to was the Avatar idea. It’s not as bad as you might think it is. Going back to the keeping up with the Joneses idea, people look at their neighbor and see they’ve got a bigger house and a fancier car. But they can’t see their debt. No one’s going to come up with an avatar that looks like. They might still want the bigger house or something like that so avatar sounds like they’re keeping up with the Joneses, but in a better way. It’s sort of end-to-end perfection.

Lacey: Yes. Okay, good. I’m glad you’ve got one of my points. Good! I’m trying to spread the word. But it makes sense. If you are planning and trying to set goals, if you want two Mercedes, then you’re going to have to put your money where your mouth is. You’re going to have to start putting more money into savings. You’re going to have to cut back in other areas. There is give and take so I think it plays into goal setting.

Tom: What are some other examples of money mindset, especially the negative side where we’re trying to change something? I’ve got to think spending is probably the hugest, but is there something else or a different angle on that?

Lacey: Well, for some people, their mindset is, again, austere. For example, a coaching client that even though they had the money in their bank account, they couldn’t part with all of it at once because they were too scared. They had this mindset of scarcity thinking something would come up—some problem. So even though they had the money to pay, their electricity bill in full, they would go to the office and pay part of their bill even though they had the full money. They would go and pay part of their phone bill. They would always try to withhold, even though they could pay it in full because they always thought the other foot was going to drop—that life was going to punch them in the stomach and they wouldn’t have the money in their account. So I suggested working on building up their emergency savings and that will be a self insurance policy. That way we could adjust this mindset so they didn’t have to be scared all the time. I think that comes with money; mindset of mistakes is big mindset of self-doubt. Is this the right thing that I’m doing? I don’t know about investments so I can’t make this decision. Or I have to have somebody else help me with it. I think a lot of people don’t have the confidence in themselves. And that really is a mindset issue to know that if you’ve done some research, your homework, your due diligence, that you know enough to make that decision. And if there is a mistake, you’re confident you can adjust that and fix it. It’s not going to be forever. So I think confidence is another one.

Tom: That’s a great one, actually, the idea, self-doubt. How does someone overcome that? They’re listening to a personal finance podcast right now, so I’m sure they’re taking a step in the right direction. We’re not blind to this, but how do you get over some of that? Is it just educating yourself or just trying it out?

Lacey: Well, I think everybody’s always going to have a little bit of self-doubt. I would be lying if I said I don’t have any self doubt. I do. But I try to catch myself and change my mantra of how I’m talking to myself. But I think knowledge is power when it comes to doubting yourself. And getting that knowledge base and starting to apply it to build that confidence—the more you do it and create muscle memory and a habit out of something, I think really builds your confidence. For me, when I started podcasting, I didn’t really know I had this money expertise so I had no idea how to be a podcast until I started doing it all of the time. I had a lot of self-doubt. I mean, I still do. But how I’m interviewing somebody, the topics I’m discussing and the tech side of everything—the more I did it, the more confident I became in it. I think the same thing applies to money. The more you save and get in that habit of it, it becomes easier for you. The more you learn about your retirement accounts, the easier that’s going to be for you. And look at it every month. A lot of people just avoid the discussion or avoid looking into it. They avoid looking at their retirement account or deciding about how to handle debt. Looking at it, I think, is a big step to actually building that habit of building your confidence up.

Tom: If someone is ready to make a change, listening to this show thinking, “Yeah, I probably have some mindset issues,” what is that first step? Are there any tips or tools you can think of?

Lacey: I would say, write down some of the things you’re thinking when you go into money situations. If I’m saying the word “savings” what are you thinking of? Write that down. When I say “investments” what are you thinking? You’ll start to see what your mindset is. I would pick one and work on that first. So if your mindset is that there’s no way that you can save money; there’s no way you’re ever going to be financially independent and it’s never going to happen for you, I would start there. Change that mantra by thinking, yes, this could happen for you. Say that over and over again and then write down five ways that could happen for you. If you save more money, cut down on your expenses or get a different job that’s higher paying. Maybe you change career fields, whatever… It could be something that’s a long-term goal to get you to that mindset that’s negative for you, write them down. Then you can slowly start working to them. And if you have them written down, it’s clear that you can keep working on them. I’m really big about setting a calendar reminder. I use Google calendars. You can put them in your cell phone as well. I put goals in there and I also put mindset things in there. I’m always trying to do new things. And when I’m starting to self-doubt, I put in there something about the tasks that I’m trying to do. So that might be a great way to work on your mindset is to put that reminder in and it will ding on your phone or come up in your calendar saying, “Hey, you can do this with money. You can do this with your savings. You can get to $10,000… those types of things.

Tom: So the reminders are kind of like an affirmation?

Lacey: Yes. I really do think that. But write it down first so you’re aware of it. Make your list and then you can set your reminders to sporadically come in, in order to get your mindset in that habit.

Tom: Perfect. This has been great. I think it’ll help people a lot with getting past just deal with the numbers so they can get over some of these roadblocks I’m sure we all have. Can you let people know where they can find you online?

Lacey: Yes, laceylangford.com is a great place to find me. Or, laceylangford.com/podcast is my podcast.

Tom: Thanks for being on the show.

Lacey: Thanks for having me.

Thanks Lacey, for showing us how we can overcome a negative money mindset. You can find the show notes for this episode at maplemoney.com/laceylangford. I want to take a moment to thank you for listening to the Maple Money Show. I appreciate your support in helping us grow. If you have the Apple Podcast app on your phone, would you mind pulling up Maple Money to give it a quick rating? Even better, leave a review and let everyone know what you think of the show. Don’t forget to tune in next week as Doug Hoyes joins the show to discuss consumer proposals and bankruptcy.

I think everybody has what I call a backpack full of BS. Past experiences, things that have been done wrong to them, the way they saw their parents manage money…a lot of these hang ups have led to why their (money) mindset is the way that it is. - Lacey LangfordClick to Tweet

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