The Emotional Needs That Drive Your Financial Decisions

WHAT EMOTIONAL NEEDS DRIVE YOUR FINANCIAL DECISIONS?

Identifying which of our emotional needs are not being met, can assist us resolve many of our financial challenges or habitual behaviours.

Emotional needs are?feelings or conditions we need, to feel happy, fulfilled, or safe.

When our emotional needs are met and responded to appropriately, they keep us in balance and are essential for financial and overall wellbeing.

When an individual faces the same financial challenges repeatedly, it’s most likely their behaviour is fulfilling an important emotional need.

Maslow's Hierarchy of Needs, a theory in psychology developed by Abraham Maslow in 1943, illustrate the most basic human emotional needs. ?In his theory of human motivation, he states that five categories of human needs dictate an individual's behaviour.?

This framework that can help you understand the motivation behind your financial decisions and behaviours.

For every category of needs there are behaviours we adopt to meet them.?

By identifying the motivation and ‘emotional payoffs’ for sometimes, irrational behaviour, individuals can then work through the origins of those needs and then develop alternative strategies to get their needs met, without adverse financial consequences.

The psychology behind our relationship with money is?very?rarely examined but vital for true financial wellbeing.?

We all see and use money in different ways.

Here are three examples of clients who were able to successfully resolve their perpetual financial challenges by identifying their emotional needs:

1.Despite a wanting to buy a nice house, Paula could never seem to save enough money for the house deposit. She got close several times, but then lost the money (uninsured car accident, expensive obligatory holiday and a medical condition requiring funding).

She couldn’t understand why she would get to around $60,000 in savings then it would literally all disappear. Upon deep examination she recalled growing up hearing his parents constantly complain about the “filthy rich people” who lived in beautiful homes while owning and renting out run-down rental properties where she and her family lived over several decades.?There were also stories of the “the other half - rich” who profited from families struggling to get into the property market.?Home ownership for her signified becoming like those “filthy rich people.”?She couldn’t tolerate being this way, so subconsciously sabotaged herself.?This insight and awareness allowed her to challenge her old messages and belief system about homeowners.?Within 18 months, she managed to keep her next round of savings and purchased a home.

2. Tom was nearing retirement and was constantly giving away his money to other family members.?His financial adviser had warned him this would significantly impact his ability for him and his wife to retire comfortably. Even though he knew he was becoming financially stressed and caused a strain on his marriage, he couldn’t stop financially rescuing his family. Through coaching, he recalled from the age of 8 yrs old, regularly having his money box and savings raided by his parents, who were not responsible with money.?Whenever he saved birthday, pocket or Christmas money to a reasonable sum, one of his parents would ask to ‘borrow’ the money and never give it back.?He developed a strong sense of financial responsibility for his family, at the cost of his own needs and wants.?He was also shamed as a child and called ‘selfish’ if he ever asked for anything for himself or for his 'loans' to be repaid.?His emotional needs to feel loved and belonging with his family, and then his self-worth became deeply interwoven with financial giving and self-sacrificing.?Through emotional strategy work, he was able to set new boundaries and disconnect these old emotional ties, while still feeling helpful and generous but in a healthier, more financially responsible way.

3. Linda, was struggling to get ahead financially, despite earning a good income. She spent excessive amounts on herself and her children buying expensive clothes, toys, experiences, and holidays.?She discovered that because she was financially deprived growing up, she vowed that her children would have everything she didn’t have, at any cost. Surprisingly, that insight had not been obvious to Linda and realizing it made it easier for her to consider what did and didn’t value for herself and her kids – one value was financial freedom and autonomy. She then created ‘family values’ and became more conscious of what she spent money on and how it met their values. As a result, she spent differently and found ways to give to her children without the high costs.?Linda’s spending was more focused, and they started accumulating significant savings, without feeling deprived or giving important things up.

In each of these situations, a logical reason to change behaviours were overwhelmed by the reinforcing emotional needs and payoffs.?To be as effective as possible, financial professionals would be well served to encourage conversations that help clients see the connection between their persistent financial behaviours and their emotional messages and desires.?

Anything important in our lives has an emotional connection.

Our relationships are emotional, our work is emotional, and so is our money.

If you'd like to learn more about Money Coaching and whether it may be the solution you're looking for - DM me for a chat.

Warmly,

Karen