One of the things I learned most quickly when I started in the financial advisory business is that people get emotional about money. When the account value goes up, they are elated; when the market drops, they are panic-stricken. When they make an impulse purchase of a significant amount, they feel guilty. When they spend too much money on a guilty pleasure, they feel ashamed. You may find this difficult to believe, but I assure you it is true: many people would prefer to discuss their sex lives rather than disclosing the unvarnished truth about their money behaviors.
When you think about it, this isn’t so difficult to understand. After all, everyone needs money in order to survive. As I often tell my clients, money can’t buy you happiness, but it can give you choices. Given the importance of money in our daily lives, it shouldn’t be surprising that many of us have what might be called a “complicated relationship” with our money.
This phenomenon knows no boundaries, by the way. Some of the most intelligent, thoughtful, and creative people in the land freely admit that they face challenges in the way their money affects their emotions. In a recent interview, Brené Brown, TED Talk sensation and best-selling author, admitted that she feels conflicted between not knowing enough about her finances and not having sufficient resources to warrant a greater desire to learn. Similarly, Sarah Newcomb, author of Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind, shared that even her extensive knowledge of money management hasn’t always been enough to overcome self-defeating, day-to-day financial habits.
Many of our difficult emotions around money stem from our earliest experiences. If you grew up in a family that struggled financially, it may be very hard—for reasons you don’t fully understand—to resist buying that expensive trinket or upgrading to the latest electronic gadget, even if it’s something you don’t really need. On the other hand, many who were raised in affluent families struggle with equating their self-worth with their banking and investment accounts, because they got the implied message, early on, that financial resources are a proxy for value as a person.
If you struggle with guilt or shame related to how you use your money, the first thing you need to know is that you aren’t alone. In fact, access to trusted friends or advisors who are willing to be vulnerable about their own problems with finances is the most reliable antidote to unhealthy financial attitudes. Shame thrives on secrecy, but open, transparent conversation about money, even if it occurs with only one other person, can loosen the grip of shame and lead to transformed behavior.
Brown and Newcomb also believe that many of us need to redefine the want/need paradigm. They suggested that even if something isn’t essential to sustain life, it may still qualify as a need rather than a want. Newcomb pointed out, on the other hand, that we may need to distinguish between a need and strategy for meeting that need. That daily afternoon latté, for example: do you really need it to stay alert, or would a brisk walk around the block do just as well—and save you $4.00?
The encompassing frame to all behavior change, whether involving money, personal relationships, career strategy, or anything else, is self-awareness. The more you can step outside yourself and view your behaviors, decisions, and feelings in the context of your life, your goals, and your priorities, the more you’ll be able to reinforce those behaviors that lead to success and ask for help with those that don’t.
Stay Diversified, Stay Your Course!