Tuesday, July 14, 2009

Psychology of Money: Where Money Meets The Mind

Have you ever wondered why money seems to work so well in some people’s lives and so destructively in others? Why some people control money while others allow it to control them? Or why some of us can manage it so effortlessly to fulfill life’s plans and goals, while others never stop to question how they want it to serve them?

Questions like these are not typically explored. Why not? I believe it’s because the answers do not lie in cold financial facts. One must look at both the financial and psychological factors involved in money matters to make sense of why people do what they do with money. This blog, as well as others on this site, attempts to do just that.

For most of us, money and our feelings toward it tend to veer to extremes. We love money or we hate it, we fear it or we worship it—but we certainly never ignore it. And yet, we know so little about why we experience these emotions toward money and the effects they have on our very existence.

As a psychologist specializing in money-related issues, I confront these money emotions every day. I have worked with hundreds of men and women from all backgrounds and income levels: company presidents who make million dollar-decisions in the board room but make disastrous personal financial decisions; couples who never cease arguing over “my”, “your”, and “our” money; parents who know better but spoil and indulge their children, never giving them a chance to enjoy the connection between effort and reward.

I’ve learned that most of us fail to realize how our feelings about money affect our financial habits and the degree of satisfaction we get from the money we have. There is an inseparable link between our unconscious attitudes about money and the way we relate to money in our lives. Like it or not, money can enhance happiness and prosperity, or it can destroy them. No one simply drifts to the pinnacle of success—you have to climb.

Not only do we have a physical self, an emotional self and a social self, but we have a financial, or money self. This money self influences the way we interact with our money. You have a healthy money self-concept when you know how you affect money and how money affects you. You have a healthy money self-concept when you like how you deal with money more than you dislike how you deal with money. If you have a negative money self-concept, you can alter your attitudes and formulate a new money style that provides richness instead of deprivation.

Ultimately, money success comes from self-validation: as you think about money and yourself, so you become.

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