The more I write about finance and coach people around their money issues, the more I realize that emotions and money are intricately linked.
Emotions cause us to spend money. They cause us to make stupid moves with our investments. They even cause to get into fights about money with our significant others.
The reality is that paper and coins are just things, but money as a concept is far more psychological. This means we need to practice more self-awareness and mindfulness with our money - and it's especially true now that money is less paper cash we can touch and more numbers on a screen.
Deal with your self-worth issues.
Some of my colleagues are self-proclaimed financial therapists. Even my Certified Financial Planner friends are realizing that they have to know how to deal with their clients' emotions when they come up with financial plans.
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One thing we've all come to notice is that a lot of money issues stem from self-worth, or more specifically, lack of self-worth.
For example, I recently interviewed Sarah Li Cain who is an expert on the topic. She told me how used to buy CDs as a teenager because she thought she wasn't good enough to fit in. She assumed the CDs would make her fit in, so she would spend all this money on records she didn't even like.
As an adult, she got herself into a bad relationship and she would actually spend money on the guy. Because of her lack of self-worth, she chased a relationship she knew was bad for her and ended up jobless, homeless, and $9,000 in debt.
Once she made the connection that she was filling an emotional hole with her spending, she was able to address her lack of self-worth and cut it out.
Have conversations with yourself when shopping.
Don't worry, I'm not implying that you stand in in the grocery aisle and literally talk to yourself out loud. The header was just to get your attention.
What I am going to say is that you should mentally check in with yourself when you're shopping. The problem most people have with spending - and specifically emotional spending- is that they are unconscious about what they are actually doing. By interrupting yourself, you'll save yourself.
For example, the next time you're shopping and you're about to add something to the cart, ask yourself why you're buying it. If you can't come up with a good answer, you should remove it from your cart.
And by the way, "I had a bad day at work so I deserve this" is not a good answer. That would be an example of you filling an emotional void by shopping away your feelings.
Find healthier ways to release emotions.
If we don't find healthier ways to deal with our emotions, we run the risk of spending money to avoid them. Or, another example, is when there's a fear running the stock market. People become afraid of what's going on globally or politically and then they start selling securities. Sometimes this turns into a full-blown sell-off and the market dips.
The truth is we can't just walk around avoiding our feelings. We need to acknowledge them and find better ways to release them, otherwise, we're going to make stupid financial decisions. Here are some examples of release:
- Support Groups
By finding ways to deal with our emotions, we provide the release we're truly looking for. We're no longer putting a band aid on them by screwing up our finances, we're tackling them head on. As a result, our bank accounts also start to look better.