Emotions of money
Nikita Trainin

Nikita Trainin

Financial Adviser

The Psychology of Money: Understanding the Emotional Aspect of Personal Finance

 

Money is a topic that can evoke strong emotions, both positive and negative. Some people feel excited and empowered by their finances, while others feel overwhelmed and anxious. Understanding the emotional aspect of personal finance is crucial for achieving financial success and well-being.

Let’s take a closer look at some of the ways that our emotions impact our relationship with money:

  1. Fear: Fear is a common emotion when it comes to money. We might be afraid of losing our job, running out of savings, or not being able to pay our bills. This fear can lead us to make irrational financial decisions, such as selling stocks during a market downturn or avoiding necessary expenses out of fear of spending money.
  2. Guilt: Many people feel guilty about their finances, whether it’s because they have debt or because they feel like they should be doing more to save for the future. This guilt can lead to self-sabotaging behaviour, such as overspending or avoiding taking action to improve their financial situation.
  3. Excitement: On the other hand, some people feel a sense of excitement and achievement when it comes to their finances. They might enjoy investing, saving money, and watching their net worth grow. However, it’s important to keep this excitement in check and avoid taking unnecessary risks or making impulsive financial decisions.
  4. Shame: Shame is another powerful emotion when it comes to money. People might feel ashamed if they are struggling financially, or if they perceive that they are not as financially successful as their peers. This shame can lead to isolation and avoidance of seeking help or support.

By understanding these emotions and how they impact our relationship with money, we can take steps to improve our financial well-being. Here are a few tips to get started:

  1. Recognise your emotions: Start by acknowledging your emotions when it comes to money. Are you feeling anxious, guilty, or excited? Understanding how you’re feeling can help you make better financial decisions.
  2. Take action: If you’re feeling guilty or ashamed about your finances, take action to address the underlying issues. For example, if you have debt, create a plan to pay it off. If you’re not saving enough, set up automatic contributions to a savings account. Taking action can help you feel more in control of your finances and reduce negative emotions.
  3. Seek support: If you’re feeling overwhelmed or unsure about your finances, don’t be afraid to seek support. This might include talking to a financial advisor, attending a workshop or seminar, or joining a support group.
  4. Create a plan: Finally, create a financial plan that aligns with your goals and values. This can help you stay on track and feel more confident about your finances.

In conclusion, understanding the emotional aspect of personal finance is key to achieving financial success and well-being. By recognising our emotions, practicing self-compassion, seeking support, and creating a plan, we can improve our relationship with money and build a better financial future. Feel free to contact me for a chat.

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