MONEY MYTHS FROM MIKE MICHALOWICZ #themoneyhabit #money #getrich #moremoney #moneymanagement #cash

15 Jan 2026 · 1 min

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In this segment, the presenter challenges the common budgeting myth that deprivation is a disciplined approach, explaining that it triggers psychological reactance—people resist imposed restrictions. Instead, the speaker proposes a more sustainable method: create a dedicated bank account named after a fun activity (e.g., dinner, movies). Allocate a set percentage of income to this account, and only engage in the activity when the account balance is sufficient. This guardrail balances enjoyment with financial control, preventing impulsive spending while avoiding the frustration of strict deprivation.

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Deprivation is not a discipline, it's a trap. When it comes to your finances, we're told you can't do that. But when you're told you can't do it, your mind says, I won't adhere to that. It's called psychological reactance. We resist and retaliate against restriction. So there's a better way. Allow yourself to have fun, but you've got to set up guardrails around it. This is the exact technique to use at your bank. Add one additional account. Give it the name of the activity that gives you fun. Going out to dinner, enjoying a movie, whatever it may be. So call it a dinner account or a movie account. Then allocate a percentage of your income into that account. When it has enough funds to do activity, you can go do it. When you look in it and there's not enough money there, it's not time to do it yet.