I have always said that personal finance is 10% math and 90% emotion. This statement could not be more true. However, many people don’t understand this statement and many of those who do understand still question the 90%, saying it is too high. But it is not too high. The emotions involved in personal finance can be crippling if not acknowledged and controlled. I tried to better my financial situation right after my bankruptcy and still failed, month after month, and the emotional part is what stymied me.
Once I discovered this secret, however, my life changed forever. Let’s take a moment and talk about these emotions and how you can acknowledge them and turn your situation around. The math is easy – your monthly income is $4000, your monthly expenses are $3800, which leaves $200 extra every month. Simple right?
So why do you have a low balance in your savings and retirement accounts? Because of the emotions of money. I am going to list just a few examples with a brief explanation, but this doesn’t even begin to cover everything.
- Expectations – Are you expecting an awesome life and a life of prosperity or are you believing you will always be where you are? Odds are what you expect to happen will happen – good or bad. Believe in yourself.
- Habits – This was a big one for me. If you have bad money habits, they will not go away just because you want them to. You have to work very hard to replace bad money habits with good ones.
- Attitude – Attitude is a lot like expectations. You control them and they are your choice. And what path you choose will decide your results.
- Perspective – Do you see the glass half empty or half full? How you look at your situation and your solutions will dictate whether or not you succeed in the area of your money and your life.
- Keeping Up With the Joneses – This one can destroy you – always do what is best for you and not what everyone else is doing. Make the right financial choices for your goals and dreams and stop worrying about everyone else. If you need to rent or drive an estate sale car for a little while, do it. Other people don’t have to live with your choices.
This is just a small sample for this blog post. This is the main reason I wrote my first book “The ABC’s of Personal Finance“. This was a major lesson that I learned in my financial comeback and I wish I would have known how important it was sooner. If you are struggling to make your finances work, but believe you are making all of the right decisions, take a few minutes and consider some of these emotions and how they are holding you back from your success. You are awesome!