How your emotions are related to Money

Everything you do around money is driven by your emotions.?

There are 5 different emotions you feel, but may not be aware of, when you purchase anything, talk about money or save for any large purchases, holidays and retirement.

The first 3 emotions are Fear in the Past, Fear in the present and Fear in the future.

The word fear can be defined in many ways such as:

Scared, worried, concerned, nervous, discouraged, terrified, anxious, punishment etc?

Politicians and the media use fear when talking about money a lot such as: 'Punishment budgets'; 'Don’t vote for them, they will bankrupt you'; 'unemployment rate increases whilst pay growth rises faster than expected', 'Prices of British food soars by up to 80%'

When listening to this it makes you feel that we are all doomed.?But this is what fear is designed to do, and this is why politicians use fear a lot

Fear is always embedded in us when we think about money.?Have you ever worried that you won’t earn enough to pay for the family holiday??Are you ever scared that your car may break down and you can’t afford to repair it but you can’t do your job without a car? Have you ever got to December and forgotten that Christmas is this month and you will need to purchase all your presents from December’s income?

Fear not, a solution is coming.

So on to the last 2 emotions which are:

Pleasure in the present and pleasure in the future

Advertisers also use pleasure when advertising products such as car ads – how much pleasure you can have driving that car.?When watching the ad, you can almost imagine and feel the pleasure when purchasing a new car.?This is a great example of pleasure in the present.?You immediately feel the pleasure when purchasing a new car or any other new product.

An example of pleasure in the future is when you are saving money for the future, you are sacrificing pleasure in the present for pleasure in the future.?This is usually a taught skill, from a parent or your #financialadviser .

The wealthiest people are prepared to sacrifice pleasure today for a more pleasurable future, they defer gratification.?This is not easy to do!

Don’t give up what you want most, for what you want now.

You are 200% more likely to be motivated to do something by fear than by pleasure.?This is why people leave their #pensionplanning to the last minute as it’s a pleasure for the future.

This is the time you take back control and by that I mean your finances.?At Lazenby's Financial Services we teach all our clients compartmentalization of their financial life, however, we like to call this the ‘Lazenby’s pots’!!

You need to remove the emotion from your purchases.?Remove your guilt

We encourage our clients to set up different savings pots, at least 5, for a variety of purchases, here are some ideas:

A Christmas pot and put money away every month; a holiday pot so you don’t put all your holiday purchases on credit, a car pot for all your car insurance premiums; car maintenance; MOT’s etc; White goods pot in case your washer, dryer or fridge/freezer breaks down and you need one urgently and a going out with your friends pot.?

You will be surprised how much money you can save over the year and you don’t need to use your monthly income to purchase any of these items.

We use Monzo for our pots which is an excellent online bank and easy to transfer money from one bank account to another.?There are many other online accounts which do the same.

Next time you purchase a product please be aware of your emotions before the purchase, when you see the product and after the purchase.?

Next time you save for the future make a note of how great this feels that you are delaying gratification for pleasure in the future.

You are on to a winner when you can recognise when your emotions are interfering with your ability to make value-based decisions.?

I will finish on this question which can help you regain control, “Will this purchase bring me closer to my goals or am I feeding an emotion?” This question has saved me countless times and can do the same for you as long as you answer honestly. Remember, there is no shame in feeling the way you do. Be honest with yourself and face your emotions head-on; they are not your enemy.