Distorted Beliefs Can Negatively Influence Us

"Our core beliefs about ourselves and the world impact our mood, our behaviors, and our physiology."

-Mind Over Money, by Brad Klontz and Ted Klontz

Talking with a friend, he asks me what I do for a living. I tell him I work at the intersection of psychology and money, which kicked off a discussion about how the two are related. That leads to a conversation about apply mindfulness techniques to our finances and how it's beneficial to observe and feel our feelings without judgment, rather than try to push them away or ignore them.

Interested by that idea, he asks about our inner-critic. Specifically, he says he believes we all have an inner-critic that nags us to always do better. We have to embrace the critic, he believes. This is the critic that always tells him he's not good enough, he's not ready, things aren't going to work out, or he's not special - he just got lucky. He believes our goal in life should be to learn to dance with our inner critic.


I believe many of us feel this way, but I want to offer a different point of view. I do believe we all have an inner dialogue (well, not everyone). While it's true that our default setting is to partake in negative self-talk, with practice our inner-thinker doesn't have to be a critic.

Our Core Beliefs Matter

What and how we think matters. Our core beliefs impact our mood, our behaviors, and even our psychology. If we see the world in a negative way, we'll see things much differently than if we see the world in a positive way. These core beliefs act as the filter through which we see the world and how we see the world dictates how we react.

Distorted Beliefs

It would be one thing to simply say that our beliefs drive our behaviors and leave it at that. For most of us, some of our beliefs are distorted. Unfortunately, from our seat, we have no reason to think anything is wrong. When we carry around beliefs that are distorted, we can find ourselves under emotional distress and that stress is part of what leads to our problematic money behaviors.

It's important to note that this is not our fault and we don't do this intentionally. By showing examples below my hope is to bring awareness, not judgment.

Automatic Negative Thoughts

The belief that we have an inner-critic, or that our self-talk is usually negative, steps from something I've learned of as ANTS. ANTS stands for Automatic Negative Thoughts. That is, when something happens our first reaction is that something bad is happening. Often we can talk ourselves out of that after we think it through, but sometimes the negative thought is all we have. Negative thoughts feed the inner-critic and lead to negative beliefs. Negative beliefs lead to negative emotions and feelings like anger and fear. That, in turn, leads to survival mode; where we automatically engage in a fight, flight, or freeze response. Modern-day versions of this are criticism, eye-rolling, name-calling, pouting, leaving, ignoring, or changing the subject.

It's as though there are both positive and negative thoughts out there, but negative thoughts run a lot faster.

Once the negative thoughts get into our heads the door slams behind them. There is only enough room at one time for one type of thinking. Positive thoughts are left outside all alone - and we suffer because of it.

It's not just automatic negative thoughts that distort our view of the world. There is a concept called negative filtering, where our minds filter out all the negative aspects of what's happening in front of us. As a reminder, this is not something that we consciously do. When we look at a situation and only the negative enters our mind, we literally don't see any positive.

Harmful Exaggerations

In addition to negative thought filtering, there are other harmful exaggerations that keep us from seeing objectively and being better versions of ourselves. These include overgeneralizing, magnifying and minimizing importance, and labeling. If your beliefs are skewed by too many harmful exaggerations it can lead to doomsday thinking that the future will always be bad. It's like a permanent state of pessimism.

The first example is overgeneralization. This is when we do something that might be considered a mistake - even if it's just us who considers it a mistake. Instead of recognizing the mistake and learning from it, someone who overgeneralizes will automatically apply that failure to her or his ability. For example, if you accidentally miss a credit card payment, you might tell yourself that you are bad with money. That is an overgeneralization.

Another example that shares some similarities with what we've already talked about is maximizing and minimizing the importance of events. First, we encounter negative events all the time. Some are quite small, while others may seem to be large. In either case, maximizing the importance of a negative event is to assign a lot of importance to something that doesn't deserve a lot of importance. Often, this is stuff that is outside of our control and our heads go to doom and gloom. It's jumping to conclusions about how bad something is.

Sometimes panic is helpful, but the distinction here is that it's our default setting, is misleading us, and doesn't help us in the long run.

The opposite is minimizing the importance of positive events. This happens when something good happens to us, but because we have a negativity bias we downplay it. We might say it was simply lucky or fully believe that