Do you have toxic money in your life? Or just toxic money habits? The first step to tackling both is acknowledging the issue—and working to change your money mindset.

By Nafeesah Allen
June 22, 2021
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Have you ever wanted to quit your job with every fiber of your being, yet you worked overtime anyway? Have you ever waited years for a legal settlement, but felt like the payout was no compensation for the lost time and suffering? Have you ever fought so hard for alimony or child support that receiving the money felt like a slap in the face? If so, you know what it is to receive income and resent every single penny.

Margaret M. Lynch of TappingIntoWealth and Gull Khan of The Money Mindset Podcast say that's because the money you get from a source you despise is toxic money. No matter how much of it you get, you'll never feel good about it.

The first step to addressing your unhealthy money mindset? Figuring out whether you have toxic money-or just toxic money habits.

Do you have toxic money habits?

Toxic money habits are less about your literal money than your bad behaviors with your finances. These toxic habits come in many forms; some of 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 people, 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 money that you begrudge. Usually, it comes from a source that you once loved or appreciated, but there has been a negative shift in your feelings; while everything else about the relationship has soured, the financial tie persists. This is that aforementioned alimony or child support-or it could be, say, a loan your estranged parents gave you to send your kid to the private school of her dreams.

Margaret 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 alimony, a cash settlement, or a regular paycheck, this money is toxic because it comes into your life through a painful process that makes you feel like a victim. This kind of toxic money can be particularly damaging because it can make it more difficult to earn money elsewhere (i.e., if your income goes up your child support would go down) and it can be really hard to keep whatever you earn (i.e., if you're receiving alimony but need to hand it all over to that parental loan).

Once you realize you have toxic money, there are many decisions to make. Keep it, give it back, donate it-there is no one right answer, but every choice has a consequence. Gull 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, then it's best to consider walking away. The resentment from accepting it can bring about other self-deprecating feelings, like guilt or shame. If you need the money, then acknowledging your financial dependence is the first step to finding freedom. Then, you'll need 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 that you love and would do anyway, for free.

The popular (at least on social media) adage, "Your job controls your salary, not your income," is priceless when it comes to turning around toxic money. This thorn in your side can be just one of many income sources, making its sting a lot less painful. Making a change to swap out toxic money for money you're proud of earning might not be so simple as going out and getting any ol' job or hocking your old jewelry; instead, you'll need to think about things that bring you positive energy. If that's selling knitwear on Etsy or offering classes online, no matter how much this positive endeavor generates-$5 or $500-it'll help you remove that much of the "necessary" toxic money, and in doing so, diminish your feelings of resentment toward money. Seeing yourself earning in areas that you enjoy will help alleviate financial dependence and build a more positive relationship with your income. 

Change your money mindset.

There are a lot of career coaches who would say that you can make as much as you think you're worth. The problem is, that you might not know your worth. After whatever betrayal or bad fortune has come your way, even you might not see your own value. Rachel Cruze offers a number of ways to change your money mindset, but it's also worth noting that much of the psychology about money comes from the models you 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. There is a laundry list of empowering  books and practical financial plans available to change your personal money script. Challenging yourself to make new assumptions about who you are and what money means to your self-worth can really turn the tide on toxic money.

Identify mental and spiritual money blocks.

According to Katherine Hurst of The Law of Attraction, limiting beliefs can keep us from what we want most. Those subconscious assumptions about yourself, your situation, and your money can be standing between you and joy. Some of that requires the mental and spiritual work of changing your thought patterns and energy around money.

Releasing yourself from a scarcity mindset-through practical financial planning as well as talk therapy or even more esoteric practices such as working with an energy healer to release tension and blockages in your body-can put you in a more even-keeled frame of mind to tackle the formidable opponent that is toxic money. Khan repeatedly shares in her podcast The Money Mindset that if that toxic money has been in your life for a very long time, you shouldn't hesitate to call in a professional to help you exterminate it for good.