What's Holding You Back From Achieving Your Dreams?
A few years ago, I would have asked what in the world is a Financial Psychologist and what purpose would he/she serve in the industry if someone had mentioned to me there was such a thing. Fortunately, fast forward to 2021, my company contracted with an affiliate organization that was highly respected in the financial and legal world and mostly worked with the higher net worth clients. During one conversation we had doing a client presentation, our partner explained that they had a Financial Psychologist on staff who was able to come in and mediate and counsel when members of a higher net worth family were squabbling over money. Go figure, the more you have, the more families often think they need or are entitled to receive. Enter: financial psychology.
Financial Psychology is defined as the study about beliefs and money that influence our financial spending and behaviors.
Subconsciously, we have deep-seated financial beliefs from our earlier years that follow us all the way through to adulthood that impact our financial decisions to this day. I was so curious about this topic, from a personal self-exploratory perspective, that I became certified to teach a class on this subject through the Society for Financial Awareness nonprofit organization. Additionally, I found a great resource to provide to my students that I highly recommend. You can check it out here: The Psychology of Money and you can find it on Amazon.
There are a few main points I want to address, and I encourage further exploration into this subject as I personally think it impacts more of us on this planet than we ever dreamed or gave any conscious thought to.
People commonly misinterpret their “wants” as “needs.”
First: This is what leads many to make poor financial choices. We tend to spend our money on things we think we need. Spending money on things we think we need, or that we think will create happiness for us, is based on the notion that we can accurately predict how we’ll feel in the future after the item has been purchased. It’s a temporary high, and then the buyer’s remorse often kicks in and we feel terrible and must figure out how to pay the debt off.
We must change our perspective, and that’s easier said than done.
Second: Another step in gaining control of your financial life is understanding that your self-worth has nothing to do with your net-worth. Money does not make the person - it is who they are on the inside that defines their lives. Prioritizing the things that matter is important – probably the most important thing we can do, and it helps us to focus on our goals and the real things in life that matter. You must decide to change your relationship with money.
It’s important to recognize that financial choices are just that – choices.
Third: You can control your savings, expenses, and even your earnings; however, you must adopt the mindset to do so. Oftentimes, it is the unconscious boundaries we establish that limit our ability to use money to better our situation. You may have to be willing to make some sacrifices in the beginning to reach your end goal of financial freedom and becoming debt free. Knowing how to manage the use of credit, creating a realistic budget, and assessing where you can make changes and cuts, it key to moving ahead in the money game. Education is also key, because there are many options available to consumers that are not taught in the mainstream. They are sound, often risk-free, or minimal risk and can assist in regulating and minimizing taxes along the way. It is very important to educate yourself, and work with someone who is a trustworthy expert in finances.
Develop a plan and start by creating your written budget. It’s super easy to create one in Excel, and here’s a tutorial I think is great. It’s simple and straightforward and can be done in minutes. Easy Budget in Excel on YouTube. If you need help with credit and/or debt, there are numerous organizations available to assist you and get you on the right track. They can offer you one easy payment, a lower payment per month, eliminate back fees and some interest, as well as guide you in your goals through education and 24/7 support.
I believe understanding the psychology of money and finance should be taught in our schools. Some universities have entered into teaching this subject matter, and I hope it continues. With our national debt higher than ever, our inflation through the roof, job losses exploding, and people living paycheck to paycheck, something must happen to correct our course. Getting educated is a first step.
Reach out to us for a free consultation to discuss your personal situation and how we may be able to assist or point you in the right direction.
As The Society for Financial Awareness (SOFA) says, “we are eliminating financial illiteracy one community at a time.” We are proud members of SOFA, and teach these courses.
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