We each have a unique relationship with money.
Though not everyone recognizes the connection, there is a direct line between how you feel about money and your financial tendencies.
Not only does your relationship with money influence financial decisions but it also plays a role in your self-worth. Thus, making it a topic worth exploring. Especially since money affects most areas of your life.
When you understand your relationship with money, you can then begin to change it, allowing money to have a more healthy impact on your life.
Consider these ideas for understanding your relationship with money and changing your financial future.
Reflect on What Influences Your Relationship Money
We’ve all had people and events in our lives that influence our relationship with money in both positive and negative ways.
For example, did you have a parent that always seemed to be spending money, without any limits? Or did you experience an event that caused financial distress in your life?
One event that has had a big impact in this regard is the 2008 financial crisis and recession. Research is showing that Millennials now make more conservative financial decisions because of the influence of the financial crisis.
This can be both positive and negative. It means that many of us are more likely to save money. But we also may be more averse to taking major life steps such as buying a home or starting a family.
Consider Your Philosophy Towards Money
Once you have done some mindful reflection on your financial influences, locate within yourself some basic information, such as whether you’re a saver or a spender.
This is actually an easy answer to retrieve. Simply open the books and analyze your saving and spending patterns.
- Review your credit card statements to understand what you choose to charge.
- Log into your 401k/Roth IRA to see how much money you have saved.
- Assess your status regarding debt. (Home, car, student loans, etc.)
- Examine where your cash is going. (Eating out, shopping, tech gear, etc.)
If this all sounds overwhelming, don’t worry. Plenty of online tools are available now that help you do this.
For example, use a tracking tool to take note of what you spend and how much per month. After three or four months, you will have enough information to find patterns in your spending.
These spending patterns are a window into your relationship with money. Making the effort to understand these habits will help change your financial future.
How Emotions Affect Your Relationship with Money
Another thing to consider in regards to your relationship with money is how much your emotions play into your decision-making.
Granted, you’re probably well aware of that emotions influence your spending habits and your spending habits influence your emotions. And the two are continually in flux. Nevertheless, it’s vital to acknowledge the connection.
For example, do you feel afraid that you will lose all of your money? Hence, you scrimp and save every nickel and dime.
Or are you the kind of person that makes impulsive purchases? You see something you want and you buy it without thinking about the consequences.
Before making your next purchase, pause and reflect. Whether it’s a candy bar at the gas station or the newest phone model, try to acknowledge how you feel before making your decision to buy or not.
What an Ideal Relationship with Money Should Be
Ideally, when we consider our relationship with money, it helps to think in holistic terms, such as balance.
Much is written about finding balance in our lives, such as work/life balance. The same can be said when it comes to money.
On the one hand, it’s important to save for the future or a rainy day. On the other hand, there are some things that you simply need to spend money on, such as clothes, food, heat, electricity, etc.
However, it’s also helpful to see money as a tool towards pursuing experiences that you enjoy. Instead of using the money to keep buying possessions, consider it as a way towards having fulfilling experiences that last a lifetime.
Clearly, it’s beneficial to understand the role money plays in your life. By reflecting on this unique relationship, you can learn how to make better choices for your personal and financial future. Meeting with a professional counselor can help you sort through your emotions and life circumstances that can impact your relationship with money.
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