What Is a Toxic Money Mindset—and How Do You Get Rid of It?

Do you have toxic money habits in your life or is the money itself toxic? To tackle financial toxicity, first acknowledge it and then work to change your money mindset.

Have you wanted to quit your job with every fiber of your being, yet volunteered to work overtime? Have you waited years for a legal settlement, and then felt like the payout didn't compensate for your lost time and suffering? Have you ever fought so hard for alimony or child support that finally receiving it felt like a slap in the face?

If so, you know what it is to receive income and resent every single penny or, in other words, toxic money. According to Margaret M. Lynch, author of Tapping Into Wealth, and Gull Khan of The Money Mindset Podcast, toxic money comes from a source you despise and, no matter how much you get, you never feel good about it. The first step to addressing a toxic money mindset is to determine if you have toxic money habits or toxic money.

Do you have toxic money habits?

Toxic money habits are more about bad financial behavior rather than your literal money. Toxic habits come in many forms, but the most common are: lying about how much money you have, shopping away your feelings via retail therapy, and relying on credit cards rather than cash in hand.

In short, a toxic money habit is any patterned behavior that is ruinous to your finances. For some, that means overspending, but for others it could mean under-earning. According to Underearners Anonymous, "Under-earning is many things, not all of which are about money. While the most visible consequence is the inability to provide for one's needs, including future needs, under-earning is also about the inability to fully acknowledge and express our capabilities and competencies. It is about underachieving, or under-being, no matter how much money we make." Toxic money habits can be remedied by recognizing the pattern and forming newer, better habits.

Or do you have toxic money?

Toxic money is income you begrudge, often from a source you once loved or appreciated. It's the result of a negative shift in your feelings—while everything else about the relationship has ended, the financial tie persists. We mentioned alimony and child support, but it could be something like a loan your estranged parents gave you to send your kid to the private school of their dreams.

Lynch explains that toxic money is usually associated with a prolonged battle that forces you to "play small, to live by somebody else's rules, to stay wounded or sick or broken—just not stand fully in your power." Whether it's a cash settlement or a regular paycheck, toxic money comes into your life through a painful process that makes you feel like a victim. It can be particularly damaging when it makes it less lucrative elsewhere (like child support that bumps you into a higher tax bracket) or it's allocated to a toxic purpose (like alimony you have to hand over to pay that parental loan).

Once you realize you have toxic money, you have a decision to make: Keep it, give it back, or donate it. There is no right answer, and every choice has a consequence. Khan says that toxic money makes you feel stuck, but it's your emotions that "dictate how much money you can have... the more negative you feel about the place you're getting money from, the [more] toxic the money gets."

If you can survive without the money, it's best to consider walking away. The resentment from accepting it can bring self-deprecating feelings like guilt or shame. If you need the money, the first step to finding freedom is to acknowledge your financial dependence. The next step is to manage your mindset, form a better relationship with your finances, and find new income sources. Here's how.

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Monetize something you love and would do for free.

The popular adage, "Your job controls your salary, not your income," is priceless when it comes to overcoming toxic money. If this thorn in your side is just one of several income sources, its sting is less painful. To swap out toxic money for money you're proud of earning, think about what brings you positive energy—like selling knitwear on Etsy or offering classes online.

No matter how much this positive endeavor generates—whether it's $5 or $500—it'll diminish the importance of that toxic money and, in doing so, reduce your resentment toward it. Earning income from an activity you enjoy helps you build financial independence and, in turn, a positive relationship with your income.

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Change your money mindset.

Author and financial expert Rachel Cruze explains that much of our psychology about money comes from the models we grew up with. When you were a kid, did you watch someone else in your life suffer with toxic money and never shake it loose? Growing up, did someone you love normalize never having enough? You may have picked up some of these thoughts and made them your own. Seeking new models means looking outside of yourself to find comeback stories that mirror the future that you want.

Cruze offers a number of ways to change your money mindset, and there's an army of empowering books and practical financial plans to help you alter your money script. By challenging yourself to make new assumptions about who you are and what money means to your self-worth, you can really turn the tide on toxic money.

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Identify mental and spiritual money blocks.

According to Katherine Hurst, author and leading figure in TheLawOfAttraction.com, limiting beliefs can keep you from what you want most. Subconscious assumptions about yourself, your situation, and your money can stand between you and joy, but mental and spiritual work can change your thought patterns and energy around money.

Releasing yourself from a scarcity mindset can put you in a more even-keeled frame of mind to combat toxic money. Strategies for achieving this work range from practical financial planning and talk therapy, to more esoteric practices such as working with an energy healer to release tension and blockages in your body. Khan stresses that if toxic money has been in your life for a long time, don't hesitate to call in a professional to help you exterminate it for good.

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  1. Ramsey Solutions, Understanding the Psychology of Money and What It's Costing You. Accessed December 11, 2022.

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