“If you cannot control your emotions, you cannot control your money.” – Warren Buffet
Whether it’s because we’re aware of how others perceive us when spending on luxury items, or if it’s a constant juggle to stay afloat and make ends meet. We cannot separate our emotions from our finances; we need to learn how to manage them.
All of us have an emotional relationship with money, whether we realise it or not, and whether it is good or bad. According to financial expert Suze Orman, the most common emotions surrounding money are fear, shame and anger. But those aren’t the only emotions; we can quickly become overly confident or excited when we see an investment performing well and be tempted to overload our portfolio and reduce our diversification.
In today’s world, money is considered a valuable asset in determining one’s success and status in society. This is an example of an ingrained belief, referred to by psychologists Bradley Klontz and Ted Klontz as a “money script”. They say that “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”.
Findings show these unconscious beliefs drive many positive and negative financial behaviours. As they are directly impacted by our families and how our parents handled and discussed their finances, it is a good incentive to be conscious of how we talk to our children about money and try to impart good financial skills early on in life. As adults, it’s also our responsibility to explore and understand our own emotions around money and how they affect our behaviour.
Money should enhance our lives, not be the centre point. It is all about where our values lie and about finding the balance between money, time and peace-of-mind.
We should be striving to develop a healthier relationship with money and give it less power over us and our emotions. Our challenge is to find peace-of-mind regardless of how markets are performing and have clear life goals that are all-encompassing.
At WellsFaber, we would like to assist you in achieving this, untangle your emotions about wealth, and guide you in developing strategies for a future in which you can enjoy both emotional and financial control.