Jul 27, 2017

Some of you know that I am a Certified Professional Coach, and help people and their businesses become who and what they want not just to “do,” but to “be.” I’m also an Accountant and all around Financial Professional. From that, I understand a bit of the psychology of money.

People tend to have different relationships with money. Some want more and more, because unless you know how much you actually need, you can never have enough.

Others disdain money as the root of all evil, and/or believe that if they somehow accumulate a large amount, it will somehow change them negatively.

When we do save money, we don’t accumulate it simply because of we want lots of green pieces of paper with dead notables on them. We save money — and spend money — because of how it makes us feel.

So, really, this comes down to being a matter of the heart. How we feel determines what we do.

It’s so easy to pull the trigger on more expensive choices because we convince ourselves that “we deserve it”, or that rather than wanting this nice thing (whether it’s as simple and perhaps-trivial as a clothing item or a dinner at a fine restaurant) — that we *need* this new thing.

The too-recent financial crash of the late 2000’s wasn’t just a pure “Wall Street” phenomenon. The fact is that people who live in the real world of “Main Street” sometimes convinced themselves that the house with the jumbo mortgage (and on a 3/1 ARM) was absolutely necessary … when the more modest house could have been just as sufficient, and, even, enjoyable.

So, I’ve compiled a short list of ideas on how to address these matters of the heart, as it relates to our finances … and some simple ways to put guardrails in place.

The goal here is that we would train our hearts to more clearly align with good stewardship and wisdom, when sometimes we aren’t used to practicing it.

Here are some ideas that might stir your thinking…

1) Understand why you are purchasing what you are purchasing.
Sometimes the real reason we are buying something isn’t actually the reason we might think we are buying something.

Are you buying your child a new bike because they need a new bike? Or … are you feeling guilty because you don’t feel that you are devoting enough time to spending with that child? Is that piece of jewelry you are purchasing for your wife because you simply love her … or are you wanting to show her something about who YOU are. How we feel determines what we do….

These are hard questions, but they need to be asked. Which leads to the second idea…

2) Decide on (and actually operate from) a budget.
All the budgets in the world might align themselves into your family computer, but they are worth absolutely zero if you don’t actually use it. There are loads of great apps and utilities to choose from (like YNAB, or PowerWallet, among others), and they can make it much simpler to determine whether or not you actually should buy something.

Sure, it may be that Macy’s is running a killer sale … but if you go past your budget, you could be doing damage to not only your wallet, but your heart.

3) Ditch the bad (expensive) habits and add ones that work even better.
Too often, shopping is used to ameliorate and numb our feelings of distress or pain. Recognize this within yourself when you have the space to realize it (i.e., when you are NOT facing immediate distress or pain!), and look for ways to encourage your own heart and soul to re-program your response to pressure.

Instead of popping into the car over to Kohl’s on a rough day, go out for a jog or take a walk. Read a book to your children, or even pop over to the local coffee shop for a spell. Sure, those $4 lattes are expensive … but they’re cheaper than a new set of golf clubs or a new dress.

The point is to create new neural pathways for our brain when under pressure. How we feel determines what we do….

4) Give yourself a limit for each purchase.
It’s a great idea to establish parameters with your spouse for what you can term a “slush spending amount”; i.e., an amount of money that you agree you can spend without calling each other and checking in. Obviously, this doesn’t apply to things such as gas, groceries and other necessities, but it can provide exactly the kind of trigger and accountability to retrain your heart into healthier spending habits.

5) Practice the art of gratitude.
The ancient Greeks called this practice eucharisteo — and it can be a powerful remedy for the unhealthy practice of buying more “stuff” as a way to feel better about oneself. The fact remains that you have much to be grateful for, no matter your current life circumstances. It mostly requires a willingness to see. How we feel determines what we do….

Dealing with our hearts when it comes to our finances is a tricky proposition. But it’s a necessary first step to a healthy family financial picture.