Can the Language You Use Impact Your Wealth?

Changing a few words can make you wealthier.

What causes the major swings of the stock market? Interest rates? The federal budget? Company revenue? While these play a big role, market psychology, or the emotions of investors, is one of the most important factors that contribute to the movement of the stock market. Emotions such as fear and greed significantly influence the market every day.

Just like how psychology impacts the movement of the stock market, psychology plays a large role in how we build and view our wealth. Dr. Tracy Thomas, a psychologist and author, has spent the last 12 years coaching celebrities, CEOs, professional athletes, and other high-performing individuals. According to Thomas, reframing our language can help us build wealth.

Reframe the concept of saving and budgeting

Thomas says she doesn't use the word "saving." Why? She states that the word denotes "deprivation of the things you really want to do in the moment. It's not very attractive or glamorous."

What word should you use? Instead of "saving" money, you want to tell yourself that you are "accumulating wealth" or "building wealth." Reframing your thinking and using "wealth language" has a greater impact, according to Thomas.

She also recommends reframing "budgeting" to "allocating." Budgeting insinuates having to cut stuff out of your life or limiting yourself. You want to instead frame it as allocating money toward future purchases and goals. Thomas says of her clients, "They're not 'budgeting' their money -- that's a scarcity mindset. They're allocating or investing their resources. They're allocating resources into some of their monthly entertainment; they're investing into their wardrobe; they're investing into their future lake house."

How language affects net worth

Subtle language changes can help promote financial decision making. Dr. James Grubman, a neuropsychologist and financial expert with more than 20 years of experience, states that there is a psychological difference between the people who maintain wealth and those who do not. "What I have seen," says Grubman, "is that those who make the transition from thinking about money in terms of income to thinking about money in terms of assets are the ones who successfully adapt to wealth, and maintain it."

The words "income" and "asset" are very different. Income is a flow word, connoting the movement and flow of money from one person to another. Asset, on the other hand, is a root word. It is concrete and something material. The thought of spending an asset triggers a stronger feeling of loss than the thought of spending income. In addition, reframing also helps one better understand the source of income, which flows from an asset.

Jen Sincero, author of You Are a Badass at Making Money, offers similar advice about how language can impact our views on money. Here are common terms she says can hold people back and what they should use instead.

• "I want" is another way of saying "I lack"
• "I wish" is another way of saying "I'm not in control"
• "I need" is another way of saying "I lack"
• "I can't" is self-explanatory
• "I hope" implies it might happen or it might not
• "I should" implies maybe you won't or don't want to

What language should we use instead? Sincero recommends we replace them with:

• "I have"
• "I create"
• "I'm grateful for"
• "I enjoy"
• "I can"
• "I choose"

These nuanced changes in language and reframing words may seem small, but they can make a large difference over time. It can help shift from a scarce mindset to one of abundance. These psychological tips can help you save more money and change how we view our wealth.