We’re living in a volatile world, and many of us are experiencing more stress and anxiety than in the past. The responsibilities of everyday life, coupled with the events of recent years, have created a perfect emotional storm. Emotions aren’t bad though. In fact, they’re a normal part of the human experience. But in times of stress and uncertainty, they can have a negative impact on your finances if not managed well.
Whether you’re an individual working toward greater financial health, or an entrepreneur growing a business, your success will largely be determined by how well you manage the financial resources at your disposal, and your emotions in times of stress. A study conducted by Bond University professor Cynthia Fisher showed there are five common emotions people experience in the workplace: worry/nervousness, frustration/irritation, disappointment/unhappiness, dislike, and anger/aggravation. It doesn’t matter if you’re typically a calm person, or highly emotional, you’re going to feel these emotions at some point in your professional life. Like I said, emotions aren’t bad, but when unmanaged emotions enter into your financial decisions, you’re more likely to come out on the losing end of things. This is why it’s so important to understand the role your emotions play in your life, and how to manage them so they help rather than hinder your progress.
Why is Money an Emotional Topic?
Anything you consider important in life will be wrapped up in a lot of emotion. Your relationships, career, health, and money, are all important things that you feel strongly about. This is perfectly normal and a good thing. Money isn’t just math and cold hard facts. Money is a tool that allows you to live where you want to live, and do things you want to do. Your money and emotions are inseparable, so there’s no need to resist that truth. Just learn how to manage and use your emotions to make sound choices that benefit you in both the short-term and long-term.
Understanding Your Emotions Can Affect Your Judgement
The goal isn’t to become an emotionless robot, but understanding how emotions are driving your decisions. Be clear about where your emotions are coming from. This is what Swiss analytical psychologist Carl Jung called, “Making the unconscious conscious.” In other words, bring your emotions and beliefs into the forefront of your mind so you can better understand their influence on your decisions. For example, you might get angry because of what someone did. If you look closely, you might find that your anger is the secondary issue, and whatever triggered your anger is the real culprit. You might be triggered because of a past experience (or trauma) or because someone violated a belief you hold dear. Notice that none of those things were directly caused by the person who angered you in the present moment.
That’s just one example, but the same truth applies to all of your emotions: What you’re feeling in the moment may have less to do with the present situation, and more to do with a core belief or past experience. That’s some deep stuff, but it’s crucial to know where emotions come from and how they affect your decision making. Emotions are temporary, but the impact of your financial decisions can be permanent or difficult to change.
Here are a few more tips to help you make better financial decisions:
Identify Your Money Beliefs
Humans learn primarily through example, at least in our early years. When you were growing up, you likely learned about money from your parents, other family members, and eventually society. All of that information created scripts in your mind that heavily influence you in financial matters. Because the scripts, accurate or not, were reinforced repeatedly over time, they became beliefs. By identifying these scripts, and how they’re driving your behavior, you can begin replacing them with positive ones that help you instead of holding you back.
Use these questions to help you identify your scripts:
- What are your earliest memories about money?
- What did you learn about money from your parents, family members, society?
- What is your biggest financial fear?
- Why do certain emotions or behaviors show up when money is involved?
- What core values do you believe in? Are your financial decisions supporting those values?
Pause, and Take a Breath
It’s a cliché for a reason—it works. Slow, conscious breathing will calm you down in tense situations. Have you ever lashed out at someone in anger, only to later regret what you said? Imagine if you had paused a moment, took a deep breath, and allowed the “heat of the moment” to pass. Things would’ve turned out a lot better. The same is true with your money decisions. If you get stressed and overwhelmed, and begin to panic, the decisions you make in that moment may not be the best ones. Step away, breathe, and come back to it when you’re feeling calm.
Birds of a Feather
You know the old saying, and it still holds true. It was the well-known speaker Jim Rohn who famously said that we’re the average of the five people we spend the most time with. When it comes to your financial decisions, you’re going to adopt the personalities and behaviors of the people you frequently associate with. The key is surrounding yourself with the right people. Look for those who think differently, but are known for making good decisions. They’ll probably be strong in areas you are weak, and vice versa, and the relationship will be mutually beneficial. The right people will challenge and motivate you to be the best you can be.
Shift Your Mindset
While you may not be able to completely reprogram your thinking overnight, you can initiate a positive shift in mindset rather quickly. The aforementioned tips create a great foundation to build on, and help bring your ideas and feelings about money to the front of your mind. When that recognition happens in an emotionally charged moment, it means you’re getting better at identifying sabotaging thoughts and redirecting your mind onto constructive ones. Most people operate from a scarcity mindset, which is focusing your thoughts on what you do not have, or fear that there’ll never be enough. The thing is, thinking that way won’t change even when you’re doing well financially. Because you’re being driven by the fear of running out, you’ll only want more, and that becomes a never-ending cycle. The good news is that you have control over your mindset, but it won’t change unless you specifically work to improve it. Your mindset and state of mind is determined by what you’re focusing on and the story you tell yourself about whatever it is you’re focusing on. Shift your focus, change the script, and your mindset will follow.
Here’s what I want you to know: You don’t have to wait a decade or more to change the way you feel about money. Change your thinking, and your feelings will follow. It won’t happen overnight, but it will happen. It’s all about understanding who you are, what you want in life, and being courageous enough to make the necessary changes.