Money problems can often be understood in a new way when approached from a psychological perspective. Family history and self-awareness are often key to understanding why we behave in a certain way; it is no different with money. Though understanding the basics of budgeting, saving, debt management, and investing is essential to managing money, these tools alone won’t solve financial dilemmas unless we have a clear understanding of our ingrained attitudes and thought processes about money. The following areas are worth considering as you assess your financial wellness.

How we are raised affects every aspect of our behavior, including our attitudes toward money. For example, some individuals who grew up with little resources can be very concerned about building wealth. Sometimes this can prevent them from enjoying the life they have or cause them to worry about having enough. Others may have been influenced by family values that include feelings of hopelessness, such as “We’ll never get lucky, we’ll never catch a break, and we’ll never get out of debt.” They may feel there’s no point in trying to save money or learn about finances.

We may have even adopted an attitude from our parents at a very young age about “it’s not polite to talk about money.” It’s hard to learn and grow in financial literacy if it remains a taboo subject.

The first step toward financial wellness is thinking about how we were raised and how this continues to influence us in financial matters.

Our ability to demonstrate good judgment is an important psychological trait. Understanding our decisions and judgments about purchases, savings, and investments is a critical component of financial wellness. Some people buy things out of habit or in order to keep up appearances. Others use “retail therapy” to make themselves feel better when they are stressed or sad. Certain shopping situations make people more vulnerable to over spending such as shopping on pay day, shopping after drinking, or shopping during sales. 

Exercising good judgment about spending can be a challenge. It’s important to always know the balance of our checking account, the total amount of debt we have, and how long it will take to pay it off. We may have no idea how we will ever retire, mostly because we are avoiding an honest look at our situation. When we allow fantasies or concerns about keeping up appearances to override reality, we may make decisions that can easily result in long-term consequences and an uncertain future.

Impulse control helps us delay gratification and stay out of trouble. Many Americans have difficulty waiting to buy things until they have saved up the money. The “pay yourself first” (putting money into savings) concept is often lost on people with little impulse control. We all feel more confident when our finances are in order. Over time, this helps boost our competence around money and may help us make less emotionally charged decisions in the future. When we finally have money to invest, knowing our risk tolerance helps us sleep at night. Developing impulse control is essential for anyone who wants to achieve financial wellness.

Some people may need help to gain control of a gambling or spending addiction. If overspending or gambling takes on a life of its own and starts to affect relationships, work, health, or causes legal issues, addiction is likely to be the culprit.  Your EAP counselor can assist you with finding treatment for yourself or a loved one.

When you think about all of the psychological issues related to money management, it is no wonder that couples often disagree on the subject. What are the chances that two people will have the same psychological makeup when it comes to managing money? Often a couple or a family will have conflicts over spending and saving habits that prevent them from establishing financial wellness. Couples counseling may be the best first step when financial issues are impacting an otherwise healthy relationship. 

Finding meaning and purpose in life is a key to overall happiness and wellbeing. Lending financial support to causes that reflect your values is an important part of how you interact with money. Take some time to think about where you might want to allocate some of your resources.

Much has been written on prosperity thinking in the financial wellness field. It is grounded in resiliency theory and is an important part of the psychology of money. You are considered resilient when you see a positive future, see the glass half-full instead of half-empty, and can reach out to others for support when needed. Prosperity thinking follows the same line of thinking. When you picture financial wellness in your mind, and do this frequently, you may be considered a prosperity thinker. This attitude, along with taking concrete steps to manage your financial situation, helps lead you to a positive financial future.

Understanding the psychology of money and attaining a state of financial wellness is a big undertaking for anyone. Thinking about your ingrained attitudes toward money, however, should help you on the road to financial wellness. If you need further assistance, the EAP counselors at CompEAP can help you to a path of self-exploration and self-awareness, as well as identifying resources, providing consultation with a certified financial planner, and debt management services.