Money And Your Mind: Five Concepts
The “psychology of money” is all about understanding how our thoughts, feelings, and behaviors related to money can affect our overall financial well-being. It’s about taking a closer look at how our attitudes and beliefs about money can influence the way we make financial decisions.
Here are five concepts that will help you understand your money better and guide you along your own money journey:
1. Money scripts
These are unconscious beliefs and patterns of thought about money that we develop in childhood. They can be positive, like “I better save money to afford the things that bring me joy,” or negative, like “The rich are greedy and selfish.”
These money scripts can affect how we think and feel about money and can shape our financial behavior. For example, someone with negative money scripts may have a hard time saving money, while someone with a positive money script may be more likely to invest or save.
2. Financial behavior
Our attitudes and beliefs about money can also influence the way we spend, save, and invest. Someone who has a positive relationship with money is more likely to make responsible financial decisions, and save for the future, while someone with a negative relationship with money may be more likely to spend impulsively or rack up debt.
3. Money and emotions
Money can be a very emotional topic for many people. The way we feel about money can influence how we spend, save, or invest it. For example, someone who has a strong emotional attachment to money may find it hard to spend it, while someone who has a negative emotional relationship with money may be more likely to spend recklessly.
Additionally, people might have different emotions based on their circumstances, like feeling guilty when spending money on themselves or feeling proud of themselves when they save money.
4. Money and identity
Our relationship with money is closely tied to our sense of self-worth and identity. Someone who sees money as a means to an end, may have a more positive relationship with it, and may use it to achieve their goals, while someone who sees it as an end in itself may be more likely to experience negative financial outcomes.
For example, someone who sees money as a means to achieve their dream of traveling the world, may save and invest more, while someone who sees it as an end in itself, may constantly compare themselves to others or feel pressured to maintain a certain lifestyle.
5. Money and social influences
Our financial behavior can be greatly influenced by the people around us, like our family, friends, and culture. For example, someone who grew up in a household where money was not discussed openly may find it difficult to talk about money or make financial decisions as an adult, while someone who grew up in a household where money was discussed openly and emphasized as important, may find it easier to talk about money and make financial decisions.
Summing it up
By being aware of these concepts and understanding how they influence our behavior, we can take steps to improve our relationship with money and make it work better for us.
It’s important to remember that everyone’s relationship with money is unique and that changing our habits and beliefs takes time and effort. Hopefully, this article has allowed you to explore some of the ways in which different aspects of your life impact your decisions and feelings about money and that way, help you take informed decisions towards improving your money relationships.