How Being Cheap Is Keeping You Broke

Everyone talks about how the solution to money problems is to make more money.

The opposite of this idea is to stop being cheap. Being cheap unconsciously screws up your life in spectacular ways. And none of us is immune. Not even you.

To stop being cheap sounds easy. It’s not because it’s psychological. But if you can overcome this mental demon, you will go on to make ungodly amounts of money.

Here’s how I overcame being cheap (and have helped others do the same).

The simple philosophy of being cheap

Your mind tells you to be cheap because it’s a survival mechanism.

If you run out of money, your survival is at risk. Being homeless is difficult and so is begging for food. So it makes sense that our 100,000-year-old brains want to protect us from this tragedy out of love.

I wouldn’t wish being homeless on my worst enemy.

My family faced this reality several times when I was a kid. And one of my good friends has been homeless for ~5 years while raising two children. Anyone who underestimates this reality is deeply mistaken.

While your brain loves to jump to worst-case financial scenarios, most of them are fantasies that will never play out.

When you focus too much on your survival you assume everyone is out to rob you. You become overly skeptical. You say “That sounds like a pyramid scheme.” And you may become so toxic you start blaming rich people for your problems, which is a slippery slope into hell on Earth.

At its core, being cheap seems smart.

“If I pay less for this thing, then I will have more money to spend on other things.” What no one talks about, though, is the more something costs you, the more you value it—and the more likely you are to use it fully.

Take consulting as an example. I’ve been doing it for 12 years. Without a doubt, the most successful people I’ve worked with have coincidentally also spent the most money with me. Bar none. It sounds wild to say that, but the data doesn’t lie.

It’s not because I’m great. It’s because money focuses the mind.

It makes you do the work and get the help you need, so you can justify the investment. In that new frame of mind, you bizarrely want things to cost more, not less, because that’s how you get the most out of spending the money.

Being cheap secretly pisses people off

I used to be a hard-nosed negotiator.

I learned this tactic by watching the TV show American Pickers like a junkie. I applied their way of life to every purchase I made.

A lot of things went wrong.

People ghosted me. I got yelled at when I tried to negotiate. I got banned from groups, masterminds, and conferences. For a while, I couldn’t figure out why. Then I learned the hard way.

When you’re cheap, nobody likes you.

You become a giant pain in the ass that everyone just wants to get the hell away from. Being cheap fools you into thinking it helps your survival, but at the same time, it takes money away from someone else who is also trying to survive.

The best opportunities in life have a premium price tag and a screening process.

There is likely an application. You’ll likely be judged. And only the right people will get access. Acting cheap guarantees you’re excluded.

“A bad psychological relationship with money will absolutely ruin your f*cking life”

(Dan Koe)

The money game is psychological.

It’s why the best-selling money book of the last decade is called “The Psychology of Money.” You don’t make a lot of money by working hard or getting lucky. You get wealthy based on your relationship with money.

I had a bad relationship with money for a long time. My family has been bankrupt multiple times and my 104 year old grandma grew up in The Great Depression. She turned her wedding dress into clothes for my mother because times got so tough.

She accidentally taught me to have a bad relationship with money.

She saved every dollar. She saw everything as an expense to avoid. She never had any real fun. She never went on an airplane in 104 years. She never even left Melbourne, Australia. She died at 104 with regrets.

I miss her deeply.

On the opposite side, it wasn’t all bad. She knitted clothes for children in Africa for multiple decades. She won several awards for it.

This demonstrates that people’s psychological relationship with money is complicated.

On the one hand, she had an incredible scarcity mindset. On the other hand, she had no issue giving away time and money to make clothes for people in extreme poverty.

If you don’t sort out your relationship with money, it’ll ruin you. I found it hard. I went to therapy which helped. And I lost a lot of money multiple times which helped retrain my brain. I’m now a cheapskate in remission.

How you think about money determines how much money you’ll have.

Don’t you dare become obsessed with the price

When you sell something expensive the common sales advice is to avoid telling people how much it costs until you speak with them 1-1.

This seems deceptive on the surface. It can even seem illogical.

But when you look deeper it makes sense. If a person comes to you for help and jumps straight to “how much does this cost” without any context on how you could help them, there’s no way they will buy.

High prices without context scare us.

Before you’re presented with a high price, you need to be presented with the outcome and ROI of your investment. Otherwise, the price alone will automatically make your brain shut it down.

There’s never a day in your life, no matter how rich you are, when $100K will sound cheap to you. Expensive purchases always mess us up psychologically by design. I’m going through this right now. I want to buy a new home for my family because the current house is one bedroom short.

I’m looking to spend $2M. There’s never a time when this won’t feel like a face-ripping amount of money. But if that’s what I focus on, then my two daughters won’t have their own bedroom and will suffer because of my scarcity mindset.

The best way to avoid being cheap is to focus on the ROI and the outcome of an investment – and not the price tag.

Because the price is relative. $50K to get help from a doctor sounds expensive without any context. But $50K to have chemo when you’ve got stage 4 cancer that’ll save your life sounds like the deal of the century.

Believe that everything is going to work in your favor

Now, when I make a financial investment, I assume everything will work in my favor. There’s a key reason why this works.

I’ve reprogrammed my brain to understand that when I invest money, I am the one in control of whether that investment was a good one. I’ve stopped outsourcing blame to other people for my financial mistakes.

This approach gives you unlimited power to bend the world to your desires.

Trying to get the bargain of the century while looking like an idiot

Asking for discounts is offensive.

Without realizing it, you’re basically telling someone “I don’t value your work.” Or you’re saying “based on your price, I think you’re dishonest.”

This is a terrible way to live. It makes you look like an idiot. Through the filter of price, you’re basically punching people in the face who are trying to help you.

After decades of looking like an idiot, one idea changed everything for me:

You don’t want to buy the cheapest product or get the highest discount. You want to save the most time and get results ASAP.

Every time I’m tempted to be cheap, I remind myself of this powerful idea.

A different lens to see the world through that’ll make you a badass

A few years ago, a stranger said something to me that I’ll never forget:

“People are just trying to feed their families. Remember that every time you buy anything.”

Since then I’ve adopted this idea. It’s made me way more compassionate and helped me reconnect with my humanity.

When you stray too far from this idea, you can become a deeply transactional person devoid of all emotion. A robot. A corporate drone who says “kind regards” or “thoughts and prayers” but doesn’t mean it.

One solution I’ve found is to gently tell people about your family when you ask them for money or to take action.

For example, I tell people that when they are kind enough to leave me a testimonial, it really helps my family business which is how I feed my two daughters. Every time I say this it completely changes how someone responds.

Instead of them believing they don’t have time, they now see a testimonial as part of a higher purpose. And I like showing up like this because it ties nicely to my daddy-first approach to modern freedom and business. Try this yourself.

One area to invest insane amounts of money in

Having a budget in each area of life is probably a good idea.

There’s one area this can trip you up though, and that’s investing in new skills and self-learning. Your skills determine your income. If you’re cheap in this area, you’ll limit your income without even realizing it.

I’ve spent $500K+ on my skills over the last few years. I credit this one financial decision for most of my successes online.

Yet this is not the norm.

Most people will still see acquiring new skills as an expense, except, bizarrely, the average person doesn’t blink twice when it comes to investing hundreds of thousands of dollars into a university degree which they have to go into debt for with zero promises of results, a job, or a business after they graduate.

Being cheap with self-education guarantees you’ll be broke.

The weirdest money idea you’ll ever come across

Let’s finish here.

I did the opposite of being frugal with money the last few years. I spent money like it didn’t really matter. I didn’t obsess over every purchase. And I assumed things would work out when I paid people.

Bizarrely, when you live like this, money finds its way back to you. I can’t quite explain why. Maybe it’s woo-woo. My best guess is that when money leaves your bank account, you have the motivation to help it come back again.

I also think part of it has to do with how you show up in the world. If you show up as a helpful person who inspires others and is generous with their skills, the right people will find ways to pay you and the wrong ones won’t.

People who operate from abundance and are generous… have an aura. This helps you attract more money into your life.

Bottom line: Stop being cheap. Start living as if you’re already wealthy.

If you found this helpful:

— Tim