Exploring the Emotional Side of Money

You can easily pull up a million articles telling you to budget and build up an emergency fund. There’s absolutely no shortage of financial advice on the internet. But do you ever find yourself completely disregarding some (or all) of those recommendations even though you know you should really follow them? Like, logically they all make sense, but emotionally you want to splurge on the tropical vacation anyway???

Trust us, you’re not alone. The financial decisions we make are driven more by our emotions than most of us would care to admit. But maybe if we recognize and accept that, we can learn how to wrangle our moods and fleeting feelings so, in the end, we satisfy them while still making smart money choices. Let’s discuss.???

How Does Money Make You Feel??

By the time we become adults, most of us realize that our upbringing plays a significant role in how we view and manage money. Were your parents super frugal, always socking away funds and rarely buying anything new? Was someone in your family a lavish spender, on the other hand, who lived by the idea that you can’t take it with you when you go? As a child, you were like a sponge, absorbing these varying ideas, rules, and perceptions about money until you eventually formed your own.?

A great place to start as we examine this topic is to think about how you tend to feel in different financial situations (like when you pay bills, shop, open up your bank or credit card statement, get paid, pay back friends, etc). Do you, for example, experience feelings of happiness when you buy things, anxiety when bills are due, or hesitancy when you’re expected to fork over your portion of the rent? Becoming aware of the emotions you feel and the baggage you carry in relation to money is the first step.?

Does Budgeting Lead to Feelings of Shame??

Almost every personal finance article you’ll read suggests that you create a budget and then stick to it. And don’t forget the oft-repeated advice to skip your daily latte so you can cut costs and save more money. But what if that latte makes you happy? And what if a lot of budgeting recommendations (like the idea that you should only spend 30% or less of your income on housing) are actually outdated and totally unrealistic in certain parts of the country? And, finally, what if overspending in one or more budget categories sends you down a spiral of shame???

It’s important to ensure that you’re spending less than you’re bringing in, but overemphasizing the need to stay within certain category percentage limits might in fact be detrimental to both your emotional and financial wellbeing. Consider using an app like Mint that will automatically categorize your expenditures and enable you to review them over different timeframes. Then you can set realistic financial goals based on what you’re actually spending.?

Do You Remember to Celebrate Your Wins??

In much the same way that blowing one of your budget categories can cause feelings of shame or guilt (although we just learned that it shouldn’t!), paying off a credit card, for instance, can leave you feeling empowered, invincible, or excited - if you allow those emotions to manifest, that is. The fact is that we don’t always make it a point to congratulate ourselves when we achieve our financial goals. But we should.??

Celebrating our financial wins - no matter how big or small they are - will help us establish a more positive mindset about money, in addition to motivating us to keep progressing towards our goals. So if you’re burdened with lots of negative money associations, fears, and worries, remind yourself that it’s okay to experience good money emotions too and make every attempt to feel those feelings every time you make a smart financial decision. And use your money sometimes to reward yourself - even a small expenditure (like a weekly latte, for instance!) can emotionally be very beneficial.?

Whether or not you always realize it, your emotions impact a lot of the decisions you make about money. Examining your upbringing and thinking through how you feel in varying financial situations can shed light on which emotions currently drive your financial life. Eliminate feelings of shame and form good associations with money by thinking outside the box when it comes to the financial advice you repeatedly hear and making it a point to celebrate your financial milestones and wins. Learn more about how your emotions affect your financial life with Money Masters, an easy-to-use financial literacy app that will teach you the fundamentals of finance.?