How your feelings affect your finances

Money and Life
(Financial Planning Association of Australia)

Does it sometimes seem like money is standing in the way of your happiness? How we feel about money can really have an impact in the role it plays in our lives, how we spend it and how secure we feel about our future. Find out how our emotions positive or negative can influence money habits and what you can do about it.

Our feelings about money can be as strong as they are volatile. One day you're elated because you got the mortgage to buy your first property. A month later you're stressed out from unexpected maintenance bills on your perfect new home. Or perhaps you experience this cycle of excitement and anxiety from everyday retail spending on clothes, gadgets, or a night out with friends.

It's only natural for people to seek satisfaction from spending money. After all, money is an essential tool for meeting our needs for shelter, food, transport and many other things that make our lives comfortable and complete. But we all place different value on these various needs and our feelings about money can be just as wide-ranging. So we each have a money story that's fairly unique.

What's your money story?

Researchers Bradley and Ted Klontz coined the term 'money scripts' to describe the feelings and beliefs we have around money and how these affect our financial behaviours. According to their research, these scripts tend to be inherited from the family and culture you come from. "Money scripts are typically unconscious, developed in childhood, passed down from generation to generation within families and cultures, contextually bound, and often only partial truths.[1]"

Patterns you might recognise

While yours might seem absolutely true to you, money scripts for different people can be quite opposite, but still lead to the same behaviours. According to Brad and Ted Klontz, there are four main categories our money beliefs fall into.

1. Money avoidance - feelings of shame about having money and that you don't deserve it are the hallmarks of the money avoider. You may assume people with wealth have either inherited it or used deceit to get it.
2. Money worship - you basically believe money can solve all your problems. If only you could have more of it, you'll stop worrying and enjoy life more, instead of feeling stressed and working too hard.
3. Money status - spending money shows the world who you are. Your sense of personal worth and value is demonstrated by your wealth and the things that go with it. Spending more than you earn is an easy trap for you to fall into.
4. Money vigilance - money is your security blanket. Having it makes you feel safe and protected and spending it feels like putting yourself in the path of danger, even when you still have plenty to live on.

Your own personal money relationship may be a combination of two or more of these identified scripts. According to the research, the first three can all lead to negative behaviours such as compulsive spending or gambling, overwork and financial dependence or denial. While having a 'vigilance script' can certainly keep you from being reckless with money, it isn't necessarily any better for your wellbeing to avoid spending money because it scares you.

Acknowledge how you feel

Findings from the Klontz research suggest it may not be necessary to actually change your money script. It's more a case of acknowledging what your feelings are and looking for practical ways to disrupt the behavior they cause. Being a money worshipper, for example, often comes with feelings of envy when faced with the trappings of a life that seems better than yours. If this sounds familiar, remember to take regular breaks from social media feeds, like Instagram and Facebook that remind you of the upgrade to your home, wardrobe or holiday your money script has you longing for.

Switch to a new feeling

Another way to disrupt money feelings that make you feel bad when you spend it or don't spend it is to substitute a positive feeling for a negative one. Perhaps trading envy for gratitude is a way to break the cycle of dissatisfaction. You could do this by practicing gratitude as you pay for your food shopping, mortgage and electricity bills to remind yourself that a secure, comfortable life is already yours.

Team up

When you're trying to work against something as powerful as your money beliefs, the last thing you need is to be surrounded by people who aren't supportive of the change you're trying to make. As some of your money feelings are likely to come from family, they may not be the best ones to look to as a sounding board for your new money goals.

Finding yourself a money buddy can be a great way to get support to change financial behaviours that hold you back. Whether their script is similar to yours or completely different, you can get to know each other's weaknesses when it comes to money. Then you rely on each other to call out old negative money feelings and encourage you to act on positive new ones instead. 

Looking for ways to overcome negative financial behaviours, one step at a time. Discover 7 little ways to be better with money and find out how other Aussies feel about their money.

[1] Journal of Financial Planning, How Clients' Money Scripts Predict Their Financial Behaviors, Bradley T. Klontz, Psy.D., CFP® and Sonya L. Britt, Ph.D., CFP®