“Eighty-five per cent or 90 per cent of our money decisions are based on our emotions,” says Bari Tessler, a financial therapist in Colorado, and author of The Art of Money Workbook, out this month.
“We need to be understanding of what our money emotions are so we do not feel overwhelmed or try to run away.”
Ms Tessler had that experience several years ago, when she felt herself hyperventilating while at a car dealership with her husband. She excused herself to the restroom, where she questioned why she was feeling so anxious.
Ms Tessler realised that she strongly dislikes making quick decisions about money. So, she and her husband took more time to discuss the purchase. As a result, she says, “we made the best decision we could”.
Consider your own money story
When Los Angeles-based author Rebecca Walker started soliciting stories for her essay collection Women Talk Money: Breaking the Taboo, she discovered that many people felt shame for having money, guilt at having more than their parents and regret over earlier financial decisions.
“So many women in my life were holding painful stories about money — confusing, troubling experiences with money,” she says. “So many of us were trying to work all this out on our own, and that was keeping us from getting support.”
Ms Walker encourages readers to explore their own money stories — those experiences, often in childhood, that influenced how they think about money.
“I want them to find at least one story that they are holding onto about money, one memory or fundamental idea that has been shaping their lives about abundance or scarcity, and go from there. How do you want to change that story now?”
Changing that story could result in concrete shifts in spending.
For example, if you grew up watching your parents overspend without saving, then you might have to teach yourself how to save with a tool like the 50/30/20 budget. It suggests putting 50 per cent of your take-home income to needs, 30 per cent to wants and 20 per cent to debt payments and savings.
Reflect on recent money experiences
In her book, Ms Tessler encourages readers to think about their last three money interactions.
“When you were checking out at the grocery store or exchanging money for goods or services in some other way, what emotions popped up?” she asks.
Shame, anger, fear, guilt, joy, sadness and happiness are common reactions.
“Maybe it’s reminding you of a past money mistake you made. Let’s bring some awareness and understanding to it,” she says.
Conduct a body check-in
Giving yourself a body check-in is something Ms Tessler encourages, especially when talking about money with a partner or making big purchases.
Focus on physical sensations, including your breathing, and observe feelings or memories that are surfacing. If you notice you are feeling tense, for example, then you can take a break or go outside before continuing.
Find your own calming techniques
In her book, Finance for the People, Los Angeles-based financial educator Paco de Leon suggests creating a list of strategies that help you to calm down and using them before making a big financial decision, such as buying a house.
She lists ideas such as going for a walk, reading a book and playing an instrument.
“We make decisions based on emotion and rationalise them after,” she says. “But if we could deal with our emotions first, then you can go, ‘I’ve felt my feelings, now I can be rational’.”
Ms de Leon took this approach when deciding whether to take on significant student loans. After setting the stress aside, she made a spreadsheet to crunch the numbers and decided law school was not for her.
Address your debt
Ms de Leon says that carrying debt, whether it is credit card debt or student loans, often makes people feel ashamed. She suggests changing the story we tell ourselves about debt by writing a letter to it.
“Express your feelings; you will see that they are complex. Consider thanking your debt for what it has allowed you to do,” she writes.
Once you process those feelings, it is easier to tackle the debt itself.
Forgive yourself for past mistakes
Self-compassion is a powerful tool, says Michael Thomas Jr, a Georgia-based financial counsellor.
“We are more likely to extend grace and courtesy to other people when they make a mistake,” he says. Forgiving ourselves for past mistakes can help us to move forward.
In her book, Ms Walker writes about forgiving herself for earlier choices to splurge on purchases instead of learning how to invest.
“I let go of the idea that I did this terrible thing and extended compassion to myself, which was liberating,” she says. “It allowed me to move forward in a healthier way.”