What most people don't know is that emotions play a significant role in how we make, grow, and spend money. If you think using a budget will solve your spending issues, many of you will be sorely disappointed or feel like a financial failure.
What most people don't know is that emotions play a significant role in how we make, grow and spend money. If you think using a budget will solve your spending issues, many of you will be sorely disappointed or feel like a financial failure.
Getting to the emotional root of your money problems can be the key to making significant positive changes.
Most of our 'money problems aren't really financial problems at all; rather, they're self-esteem or confidence, trauma recovery, or scarcity mindset problems.
Here's what some of your financial problems could really be about.
The 7 reasons we regularly overspend without thinking about it
Shopping allows women to visualize themselves in a ‘better’ life, where they're dressed in nice clothes or surrounded by nice things. Purchases makes these visualizations a reality.
Buying something gives you a dopamine (feel-good hormone) hit, which lifts your mood and makes you feel more in control of your life, or provide a sense of excitement that may be missing in your life. Feeling stressed, tired, upset, sad, or bored are uncomfortable emotions to sit with. Hence, our bodies learn coping strategies to move away from these feelings: that is, to buy something which changes our emotional state, even though it's normally short-lived and turns into shame or guilt a week or so later.
Overspending and impulsive financial decisions are emotional coping mechanisms.
Spending is all about pleasure and reward. Making a purchase activates the same part of the brain that lights up when people drink alcohol or take drugs. Spending all month working hard(perhaps in a job you don't love or feel unappreciated), shopping can serve as a type of emotional therapy. Hand’s up if you’ve ever referred to your spending as ‘retail therapy’?
As humans, we're biased toward our present selves and obtaining the things we want right now. So, when payday arrives, we can move into the feast-or-famine dynamic where we feel justified in buying ourselves something or spend more than we should on entertainment or eating out.
We all have an invisible(because it sits in our unconsciousness), self-imposed container for how much money or wealth we are comfortable having in our life. We're accustomed to certain states of being when it comes to money. Once we get close to that limit, we will find creative ways to get rid of any money that comes into our life. It’s internally uncomfortable to have more money than we unconsciously feel worthy of having. A typical outlet is to spend, whether it be for ourselves or others.
Suppose you grew up in poverty or were deprived of having things you wanted as a child. Such as the same doll all the other girls at school had, or were made to wear hand-me-down or homemade clothes when you longed to be able to wear the trendy things other kids at school had. In that case, we can go down the path of giving our 'wounded child' the things she never got.
Treating ourselves becomes a default strategy. The problem is we can’t change the past or what we missed out on, using external solutions like overspending on ourselves. Is it time to ask yourself … am I truly healing by buying myself new things? What do I really need to do to heal my childhood deprivation?
Understanding our past relationship with money and what we had and didn’t have, helps us understand and heal our current relationship with it.
What if getting yourself into debt or chronic overspending has nothing to do with your love of shoes and clothes but with low self-esteem? If you don't feel good about yourself, feel like you’re not enough, maybe you may buy stuff to look better or feel more worthy, or we spend on others to get their acceptance and love.
We can have a belief that having the right clothes, on trend makeup and the right look will earn people’s respect and admiration. At some stage we need to learn that esteem and confidence is an inside job because until you feel like you are enough, you’ll never have enough.
Being on holiday gives you a license to relax — physically, mentally, and …. financially. The thing about holidays is you can feel like you're on holiday from real life, so you aren't thinking rationally about finances.
You should be able to indulge a bit more than usual on holiday but do you intentionally plan for it before you go and have a cash buffer, or do you fly home with credit card debt?
Us human beings (although I think women are super-human beings) are very susceptible to social pressures. ‘Keeping up with the Joneses’ is literally hard-wired in our DNA as it relates back to the caveman era. Being marginalized by your tribe was one of the biggest threats to survival so the fear of being kicked out or dismissed by your social group is still part of our instinct today. When your friends are ordering $24 cocktails and carrying LV handbags, it’s natural to want in on that to be part of the group.
Strategies for keeping your spending under control are more effective when they work with your psychology and biology, rather than against it.
How many of these resonated with you?
Getting to the emotional root of your money problems is the key to overcoming your overspending.
I know as a financial adviser for over 14 years that telling you to stick to a budget is more damaging than good.
The first step is uncovering the emotional reasons you overspend, understand what you’ve been ‘protecting’ yourself from and then developing step-by-step internal and external strategies to earn, save and grow your money.
Are you ready to replace your feelings of guilt and financial failure, with financial freedom and creating more money than you ever have before?
Let me show you how.
Take your first step today and book your 15 min - no obligation, chat with Karen today
BOOK NOW - your new relationship with money starts here
Your current financial position is the result of many factors. But a major influence in your financial life is your psychological relationship with money. We call this your ‘money story’.Read More
All good relationships need to be nurtured and have time and effort invested in them to grow and thrive. The same is true for your money. Love is an emotion we have access to, but it’s also something we can learn. This means that even if you don’t have the greatest relationship with your finances, you can choose to change it by practicing these 10 actions. Here’s my 10 ways to love and get closer with your money. Read More