“Your beliefs become your thoughts, Your thoughts become your words, Your words become your actions, Your actions become your habits, Your habits become your values, Your values become your destiny.” – Mahatma Gandhi
Money matters. But often, we overlook the influence our thoughts, attitudes, and beliefs have on our financial behaviours. At WellsFaber, we want to change that by integrating a strategy inspired by Cognitive Behavioral Therapy (CBT), a psychology-based approach that asserts we can change our thoughts, thus influencing how we feel and behave.
CBT, used extensively in therapeutic environments, uses various techniques to identify, challenge, and change negative thoughts. In the context of financial planning, we adapt these methods to address unhelpful financial beliefs that might impede your journey towards financial success.
A helpful tool we recommend to our clients is the thought diary, an effective way to track your thought processes and understand their influence on your financial decisions.
Consider how emotions influence your financial decisions – a surge of joy leading to impulsive shopping, a tinge of regret following a bad investment, or perhaps a sense of dread when considering retirement savings. Our thoughts dictate our emotions, which in turn, control our behaviour. By consciously recording these thoughts in a thought diary, we can better understand our financial behaviour, highlighting patterns and allowing us to intervene constructively.
This diary acts as a mirror, revealing patterns and emotional triggers influencing your financial actions, empowering you to replace these negative thoughts with positive, constructive ones. It’s not just about numbers and spreadsheets but also your mindset and how it shapes your wealth space.
How do you create a thought diary that works for you? It’s simple. Create a four-column layout:
- Date: Note the day and time of a significant financial decision.
- Situation: Describe the circumstances around this decision. Were you online shopping? Discussing investments with your partner? Paying bills?
- Emotion: Identify your emotion during the decision and rate its intensity.
- Thought: Write down any thoughts you had at the time. Were you worried about the future? Felt the urge to splurge?
Over a week, note down these moments as they occur. With time, patterns emerge, highlighting negative thought processes or emotions that might lead you to make impulsive or unwise financial decisions.
After capturing these moments, it’s time to assess. Review your thought diary and look for the instances that caused you distress. Then, challenge these thoughts. Is there a valid reason for these thoughts? Are there alternative ways of understanding the situation?
If you’d like, we can help you brainstorm more constructive thoughts to replace the negative ones. For example, if you feel stressed about retirement, change this thought to “I am taking active steps to secure my future.” This simple reframing can be powerful.
Incorporating a thought diary into your integrated financial planning isn’t merely about the tactical, but rather it provides a robust framework for exploring, challenging, and reshaping beliefs that might impact your financial health. This process echoes the wise words of Mahatma Gandhi, recognising how our beliefs eventually shape our destiny.
At WellsFaber, we advocate for an integrative approach to financial planning that appreciates the potent link between psychology and fiscal conduct. It’s not only about managing your wealth but thriving in your wealth space. Indeed, it’s a process that begins with a single thought and culminates in an authentically-yours financial destiny.