“What can I afford?”
Sometimes it feels like you can’t afford much of anything. I’ve been using the phrase, “I can’t afford that,” for so long that it’s become a tough habit to break — even when I can afford something.
Now that I study personal finance for a living, I’ve learned how detrimental it is to use the word “afford” all of the time. So, if you find yourself asking “What can I afford?” more often than not, listen up: That phrase is doing you more harm than good.
Getting to know your money mindset
When you think about money, it’s easy to forget that you actually have some control over it. And if the phrase “What can I afford?” runs through your head every time you want to buy something, then you’re relinquishing that control.
But you don’t have to.
Your money mindset dictates your money decisions. Therefore, getting to know your money mindset can help you make the best decisions possible. I’m talking decisions that put you in the driver’s seat.
There are a few different money mindsets, but let’s dig into those that will most likely lead to the usage of the phrase, “what can I afford.”
Dangerous commonalities between some money mindsets
The money mindsets to watch out for are:
- scarcity mindsets
- powerlessness mindsets
- mindsets that make you think more money will fix your problems
So what do these mindsets have in common? When it comes to improving your financial situation, they remove the burden from you.
Scarcity mindsets and powerlessness mindsets can lead to a feeling of hopelessness.
“I can’t afford that. And who knows if I ever will be able to.”
The more money will fix problems mindset can lead to thinking the only solution is more money, but if you don’t have it now then you can’t do anything about it.
“I can’t afford that. But maybe later I can if I get a raise/bonus/tax return.”
If you have these mindsets, you aren’t thinking about how you can change the situation. You’re either thinking about how it might never change or you’re hoping for a time when outside circumstances might lead to change.
Using the psychology of money to your advantage
Dr. Susan Chanderbhan is a psychologist who works with new graduates who are stressed about their finances.
“When you say you ‘can’t afford something’ it communicates a way of viewing money as something that controls you,” says Chanderbhan. “This can lead to feeling helpless and demotivated.”
But while this is a problem, it can be solved with a simple emotional shift. “Emotions shape behavior,” she says. “Approaching money as a resource that you control helps you feel empowered and free to create the life you want.”
So how can you do this? Simply by viewing your mindset as “software” that can be reprogrammed, according to CPA Michael Kay.
Kay lists a series of questions to ask yourself to find out if you feel the way you would like to feel about money. And if you don’t, he explains that you can change the way you feel by believing change is possible and “upgrading your software” to one that empowers you.
You really can use the psychology of money to your advantage — as long as you flip the script to one that focuses on you being in control.
Ditch the ‘what can I afford’ thought process
If you’re living paycheck to paycheck, the idea of feeling in control of money might seem impossible. I know the feeling. I’ve spent most of my life feeling like my finances were a house of cards that could blow over with even the tiniest gust of wind.
But it doesn’t have to be this way. Yes, having money saved in an emergency fund can help ease your financial fear. But I’ve found that over the course of my life, having more money never actually made me feel in control of my finances.
The only times I’ve ever felt empowered have been when I reminded myself that I have a choice — even if I don’t like the choices I have. I have to be the one to actively shift my mindset.
How to put yourself into a better money mindset
When you look at something and think, “I can’t afford that,” you’re giving away your power. Yes, your funds may be limited, but even with limits, you still get to decide how to manage the funds you have.
When you find yourself needing something that is truly out of reach, think proactively. Ask yourself:
- Can I purchase the same thing somewhere else for less?
- Can I take something else off my budget for the month to purchase this?
- Do I need this today? If not, can I save a few dollars a month for it?
- Can I take on a side hustle to save up for this faster?
- Is this the thing I really want to spend my money on?
We all have a choice. If you ditch the “What can I afford?” thought process for a “How can I make that happen?” thought process, you can shift to a more empowered money mindset. And finally be in control.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.81% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|