Do you ever feel like you know what you should be doing with your money but you have trouble actually doing it?
Have you ever wondered why? Why don’t you have more money saved? Why do you have debt? Why aren’t you as wealthy as you want to be?
Well, you actually make money decisions based on your environment and how you feel instead of what you know is right.
There are 6 factors that affect how you make decisions about money.
Money is a symbol of socioeconomic status. If you have money, you appear to have power and you appear more appealing to other people. And who doesn’t want to be liked on some basic level? But this can turn into “keeping up with the Joneses” and make your life much harder than it needs to be.
- Related: Real Life Money Plan
Money provides us with a sense of security. We think we are safer and have fewer fears with more money. Everyone naturally wants to have enough money to solve their problems (and then some).
The need to want to earn enough money to feel secure can make money stay constant on our minds. To overcome this, I think about the worst case scenario and play it out all the way to the end. Usually, the worst case scenario isn’t as bad as it seems.
Money can be stressful – especially if you don’t have enough of it. The stress of trying to change or maintain a certain financial reality can be very extreme.
Money is satisfying. There is satisfaction in having enough money to live the life you want for yourself (and that looks different for each person, but will take money for every person).
If you’re living paycheck to paycheck or not making ends meet, then you may feel really unsatisfied and feel like a personal failure. The key to overcoming this is to disconnect your personal worth from money.
- Related: Budget Spreadsheet Bundle
Money makes us think that we deserve it. We rationalize financial success by saying that we deserve the money we’re making (or whatever we’re spending it on). We may in fact deserve it or we may not. But either way, it’s not good to associate the money you make with deserving to make it. The result is entitlement.
Lots of people deserve lots of things. Some broke people deserve to be rich, and some rich people deserve to be poor. But making money is not a reflection of what you deserve – it’s just money that you’ve found a way to get (whether by working at a job, or from selling something you created, or something else). Money doesn’t define you. Your personal worth is separate from money.
Money is one measurement of success. It’s a measurement of financial success (and nothing else). It’s a report card of how you’re doing in the market.
But we often view money as more than that – we view it as a measure of our worth. Money is not a measurement of how successful we are as a people. Money does not make you good nor does it make you bad.
A Final Note!
Money can affect you in many ways. Your relationship with money is completely separate from the day-to-day tasks of budgeting and saving. How you think and feel about money matters.
Money affects us when it comes to: 1) status, 2) security, 3) stress, 4) satisfaction, 5) selfishness, and 6) success.
To start practicing your money mindset and improve your financial life, join my money mindset training below!