Why Ramit Sethi Wants You to Stop Saying You're Bad With Money

Are you hurting your efforts to improve your finances with your self-doubts? 

Have you ever described yourself as being bad with money? If you have, you aren't alone. Lots of people say this about themselves if they have a hard time getting a handle on how best to manage their cash flow, pay down their credit cards and other debt, and build wealth.

But, while you may think it's harmless -- and even accurate -- to say that you aren't very good at money management, finance expert Ramit Sethi thinks this is a bad habit and something he'd wave a magic wand to stop people from doing if he could.

Here's why Sethi has a problem with this phrase. 

Believing you're bad with money could have real-world consequences 

Sethi explained in a video on Twitter why he doesn't want people saying they are bad with money any more. 

"We give ourselves these labels and then they become self-fulfilling prophecy," he said.
"I'm bad with money and then we overspend one month. See, we tell ourselves. I am bad with money."

In other words, by simply stating that you aren't good at managing money, you could end up dooming yourself to continue making poor financial choices over the long term because you believe that this is just a part of who you are, with no option for change. 

Rather than ending up with this as your fate, Sethi wants you to adopt a different belief if you don't yet have a handle on your finances. "Let's reframe it," he suggested. "I haven't yet learned the skills of money or investing. But I'm making a plan to do it."

How can you follow Sethi's advice?

Sethi's advice that you should stop saying you are bad with money is advice that everyone needs to read if they feel like they're struggling.

If you simply accept being "bad with money" as part of your personality, then this doesn't motivate you to make positive changes to improve your situation. In fact, you may simply believe that you're just going to be bad with money forever so there's no real effort in trying to get things under control and grow your bank account. 

Instead of assuming being "bad with money" is an inherent personality trait, you should follow Sethi's suggestion to make a plan to learn how to be better at it. And this doesn't have to be hard, since managing money is simpler than most people think. In order to do it successfully, you need to:

• Spend less than you earn
• Devote some money to your savings account
• Avoid carrying high-interest credit card debt

You can take a lot of different approaches to that. You can increase your income so it's easier to spend less than you earn. You can look for ways to cut spending. You can automate your savings so money transfers right to your brokerage and high-yield savings accounts each month. And you can budget to pay your credit card bills in full or avoid credit cards entirely if you don't think you can use them responsibly.

The important thing is to just start with the basics and instead of saying you're bad with money, start focusing on getting better at it. Soon enough, you'll be able to say you're good with money and will have the growing bank balance to prove it.