Money can trigger strong emotional reactions, which can lead to unimpressive decisions, such as missing payments or overspending. A new wave of books is urging people to explore their emotional connections with money in order to make better financial decisions.
“Eighty-five or 90% of our financial decisions are based on our emotions,” says Barry Tesler, a financial therapist in Boulder, Colorado, and author of “The Art of Money Workbook” this month. “We need to understand what our financial emotions are so we don’t feel overwhelmed or try to escape.”
Tesler went through this experience several years ago, when she felt herself breathless while at a car dealership with her husband. She excused herself to the restroom, wondering why she was so worried. Tesler realized that she strongly disliked making quick decisions about money. So she and her husband took more time to discuss the purchase.
As a result, “we made the best possible decision.”
Consider your financial story
When Los Angeles-based writer and producer Rebecca Walker began requesting stories for her essay collection Women Talk Money: Breaking the Taboo, she discovered that many people feel ashamed for having money, guilt for having more than their parents, and regret about it earlier financial decisions.
“A lot of the women in my life have had painful stories about money — confusing and unsettling experiences with money,” she says. “A lot of us were trying to solve all of this on our own, and that was preventing us from getting support.”
Walker encourages readers to explore their own financial stories — those experiences, often in childhood, that influenced the way they think about money. “I want them to find at least one story they keep about money, one memory or key idea that shaped their lives around abundance or scarcity, and go from there. How do you want to change that story now?”
Changing this story could lead to significant spending shifts. For example, if you grew up watching your parents spend too much without saving, you may have to teach yourself how to save With a tool like a 50/30/20 budget. He suggests putting 50% of the income you get from home to meet needs, 30% to wants and 20% toward debt payments and savings.
Think about the latest money experiences too
In her book, Tesler encouraged readers to think about her last three financial interactions. “When you were checking out at the grocery store or exchanging money for goods or services in some other way, what feelings did that come up?” She asks.
Shame, anger, fear, guilt, joy, sadness, and happiness are common reactions. “Maybe it reminds you of a previous financial mistake you made. Let’s bring some awareness and understanding to it,” she says.
Do a body check
Giving yourself a personal check, as Tessler did at the car dealership, is something that Tessler encourages, especially when talking about money with a partner or making big purchases. Focus on the physical sensations, including your breathing, and notice the feelings or memories that surface.
If you notice that you’re feeling stressed, for example, you can take a break or go outside before continuing. “Financial sentiments don’t go away completely, but we can reduce them in both magnitude and intensity,” she says.
Find your own calming techniques
In her book Finance for People, Los Angeles-based financial and music educator Paco de Leon suggests making a list of strategies to help you calm down and using them before making a big financial decision, such as buying a home. She lists ideas such as walking, reading a book, and playing a musical instrument.
“We make our decisions based on feelings and then justify them,” she says. “But if we can deal with our emotions first, you can say, ‘I felt my feelings, now I can be rational. “
De Leon took this approach when deciding whether to take out large student loans. Putting stress aside, she made a spreadsheet to crunch the numbers and decided that law school wasn’t for her.
deal with your religion
Taking on debt, whether it’s credit card debt or student loans, says de Leon, often makes people feel ashamed. She suggests changing the story we tell ourselves about debt by writing a letter to her, an idea I took from DearDebt.com. “Express your feelings; you will see that they are complicated. Think about thanking your religion for what it allows you to do.”
Once these feelings are addressed, it becomes easier to deal with the debt itself. You may decide to apply the debt snowball method, where you pay off smaller debts first.
Leave yourself to past mistakes
Self-compassion is a powerful tool, says Michael J. Thomas Jr., a financial advisor based in Athens, Georgia and founder of Modom Solutions, a financial coaching platform. “We are more likely to give compassion and courtesy to others when they make a mistake,” he says. Forgiving ourselves for past mistakes can help us move forward.
In her book, Walker writes about forgiving herself over past choices to flaunt purchases rather than learning how to invest. “I gave up on the idea that I had done this horrible thing and extended my self-compassion, which was liberating,” she says. “It allowed me to move forward in a healthy way.”
This column was provided to the Associated Press by personal finance site NerdWallet. Kimberly Palmer is a personal finance expert at NerdWallet and author of Smart Mom, Rich Mom. Email: firstname.lastname@example.org. Twitter: @KimberlyPalmer.
NerdWallet: How to save money https://bit.ly/nerdwallet-how-to-save-money-22-proven-ways
Dear Deen: https://deardebt.com/