The Psychology of Money

Why is it that many feel they will forever struggle financially? Why is it that most feel they need an extra 10% or more income each month just to meet their monthly obligations? How did they survive when they made 10% less? The answer is often found in their perceptions about money and how that plays out in their financial habits


I have told my clients for years that it is not about how much income we earn. Rather, it is the habits that we develop. I know many people who would fit most people’s definition of having achieved financial success who are so incredibly in debt that they struggle to meet their obligation with their seven figure income. On the other side, I have clients with one income and several children who live very comfortably on what most would consider a low income. How can both extremes exist? Shouldn’t their situations be reversed? Not necessarily. It is not about the income earned, it is about the habits.


For many, the topic of money and spending is far too difficult a subject to discuss with their spouse. All it leads to is a fight. The reality is that change is hard. There will be decisions that must be made. You will have to give up something in order to improve your finances. Either you add income, or you take away expenses. This is a simple balance sheet equation.


How can people change their habits? Prepare for the storm. You can either change by choice or you can change by force. Overspending will eventually catch up to you. If you are in trouble, face the reality of your situation, and commit to change. Then, seek help. There are many resources to help. If you need budgeting help, we can help you with simple tools. Most of us must also deal with our perceptions of money, and change the way we feel about money and how that plays out in our lives. If you are looking for resources to deal with your psychology of money, call me and I can make suggestions to you.


As I look at my own life, I realize that there are areas in which I need to change my own psychology. I am continually “eating my own cooking,” so to speak. I frequently go through books and financial programs so that I can increase my knowledge and financial understanding. It is not an easy road, but together we can make the journey as we strive for financial freedom.

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