EMOTIONS AND MONEY

“If I had more money, I would…” 

How would you finish that sentence? 

Pay down debt? Retire?  Travel? Buy a home?  Whatever your answer, it’s probably something you’ve envisioned many times.  Now, as you imagine this world with more money, think of how you feel.  Good right?  The anxiety and fear around your personal finances dissipates, you slip into a sensory fantasy of sunshine on your face, mojitos on you lips, sand between your toes, salt water in the air, and ocean spread out in front of you.  Oh so good.

Welcome back to reality.  Did you notice a major change in the way you felt from your “more money” fantasy to the present?  Probably.   While money and personal finance seem logical and mathematical, the external elements of the two are dictated by strong internal processes- emotions.

On one end of the spectrum is what we explored at the start- our dreams, and all the deliciousness they make us feel.  On the other end is fear.  Fear of loss.  Fear of success.  Fear of failure.  Fear of the unknown.  These dreams and fears shape our behavior, and the emotions associated with them directly influence our relationship with money.

So… In order to master our money we must face our fears and set goals to achieve our dreams. 

Go ahead and make a list of all your fears.  Not spiders and snakes, but fears related to money.  For instance, “I fear consumer debt” or “I fear not having enough money to cover my expenses”. 

Then identify what steps you can take to overcome that fear.

“I fear consumer debt” so  “I will cut up my credit cards”.

Or

“I fear consumer debt” so  “I will make all purchases with cash”.

“I fear not having enough to cover my expenses” so  “I will analyze my spending and see where I can cut back.”

Or

“I fear not having enough to cover my expenses” so “I will ask for a raise or find additional sources of income.”

By planning ahead while you’re in a logical frame of mind, you’ll reprogram yourself to feel confident with your cash rather than allowing emotions (like fear) take over.

Allow your newfound cash confidence to pervade your life.  Don’t let feelings of low self esteem lead you to spend cash on things to fill a void or for short term satisfaction. You can’t change your inside by buying things for the outside. Emotional spending can be expensive and destructive, pushing long-term dreams father away. 

Help yourself out by setting financial goals.  Write them down and be specific.  Some should be long term, big picture goals, like the dreams we identified at the start.  Others should be short term.  Look at them every day.  Keep them in your wallet next to your money.  Each time you open your wallet to take out cash or a credit card, your goals will be staring you in the face, reminding you to ask yourself “Is this purchase going to help me get the results I’m aiming for?” “Is this going to make me feel great in a way that improves my well being?”

By setting goals and changing the course of negative spending patterns, emotional spending becomes conscious spending.  And conscious spending is the key to mastering personal finance.