What’s the essence of a healthy relationship with money
“Financial health is a conscious, purposeful relationship with money that is satisfying and not too stressful,” says financial psychologist Brad Klontz. It includes understanding that you’ll need the funds not only now, but also in the future. As well as being able to distinguish between what you really need and what you just want.
You have a healthy relationship with money:
If you spend based on your intrinsic values.
Have little or no debt.
You save to achieve your goals.
Have a financial cushion or insurance for emergencies.
Accordingly, if you spend a lot of money on nonsense, constantly owe someone, do not save for important goals and for a rainy day, your relationship with money can not be called healthy.
What prevents a healthy attitude to finances
Attitudes towards money originate in childhood, that’s when we develop “financial scripts”. These are beliefs about money that later guide our economic decisions.
They are formed through personal experience, family stories and parental attitudes. And more often than not, we don’t even notice them.
According to Klotz, some scenarios become the cause of low lifetime income. Most notably, these scripts are:
avoidance: “Money corrupts”, “Love of money is the root of all evils”, “Honest people do not think about money”.
deification: “Money decides everything”, “Money will make me happy”, “There is no such thing as a lot of money”.
Statusism: “Success is determined by how much you earn”, “You should only buy the best”, “Not everyone deserves to be rich”.
“They all correlate with unfortunate financial consequences,” Klontz emphasises.
For example, people with avoidance scripts turn down potentially lucrative offers, unconsciously trying to get rid of money (by spending it or donating it), just to keep it out of their control. These study participants earned less.
People with the money deification scenario are prone to unjustified financial risks, wanting to earn as much as possible (e.g., through gambling or a steady job). They want to buy a lot and often accumulate debts. Those who consider money to be an indicator of status constantly compare themselves with others. They try to keep up with successful people and spend a lot on expensive things.
Public opinion also affects the perception of money.
Sometimes it creates a feeling that it is impossible to achieve financial prosperity in a certain field of activity.
If you are used to hearing that everyone in your profession makes very little, you are developing a deficit mindset.
Its carriers constantly notice what they don’t have and envy others. They get used to thinking that it is impossible to achieve something better in their position. Scarcity thinking affects all the decisions we make. People stop believing in the possibility of change and stop dreaming. They don’t look for new opportunities or they give up on them.
What to do to make a difference
1. Identify your financial scripts
We usually follow them unconsciously. To change these scripts, you need to consciously bring them out into the light. Otherwise, they will continue to influence your actions without your knowledge. Here’s what you should do.
Ask around to your relatives. Every family has a money story, and scripts are often “inherited.” Chances are, by talking to your loved ones, you’ll notice common trends. Pay attention to repeated phrases in stories (e.g., “Money should be saved, not spent,” “You can’t buy happiness with money,” “Money is freedom”). Think about which ones you would repeat yourself.
Analyse your experience. What is your happiest memory related to money? What is the most painful? The earliest? What financial lessons did you learn as a child? The answers to these questions will clarify a lot: you’ll see how your scenario played out and how it influenced your decisions. Let’s say you saw from childhood that money is nothing but trouble: people fight over it, commit crimes. In this case, you might have developed an avoidance scenario.
2. Sort yourself out
Dissatisfaction, envy, jealousy, sadness often make you spend extra: purchases temporarily drown out these feelings. But it is important to understand that purchases will not help to get rid of them. But they can easily lead to debt and even more dissatisfaction with life.
Think about what you’re missing that you’re trying to make up for by shopping.
For example, you can’t go to the shopping centre without buying a lot of unnecessary things. Perhaps it’s because you’re lonely, jealous of others, or trying to drown out insecurity with things. Identify the root and look for healthier ways to deal with it.
