You and Your Money: An Emotional Partnership

Excerpted from
Master Your Money Type: Using Your Financial Personality to Create a Life of Wealth and Freedom
By Jordan E. Goodman

Money is clearly quantifiable. It's something we can negotiate to the penny. It can be lost or won, and at the end of the day we have a number. What could be more black-and-white, more rational? But the problem is we are not always rational, and no matter how we try, this fact immediately alters the world of our personal finances.

In other words, when it comes to money, two plus two might equal four, but when we add in our emotions, this equation may not hold. To see what this equation may mean to you, for example, complete this sentence: "If I had a lot more money, I would . . ."

How did you respond? There are so many possibilities:

"I'd never walk into an office again, or take any job."

"I'd give some of it to medical research, do an extreme makeover on myself, and start a business."

"I'd leave my spouse and start fresh somewhere else."

"I'd get Martin Scorsese's phone number and invest some of the money in his next movie."

"I'd move to Vegas and play the tables every night."

"I'd buy a house for my parents and a new house nearby for myself."

"I'd sock away 90 percent of it and give my kids some money to play with."

I have asked this question so many times of my clients, and it never ceases to amaze me how idiosyncratic the answers can be. Some reflect a desire to change lifestyles or even partners. A few responses reveal generosity and philanthropy. Other answers mirror a deep desire to realize a dream or simply take care of loved ones. And then, of course, I often hear about the need to feel safe and secure. On the surface, these replies can seem so different. But they do share one quality: deep feelings.

Money, quite simply, is an emotionally charged topic.

When people think about having a lot of money, they think about how it can bring them happiness and fulfillment-and an exciting new definition both to their lives and their very sense of self. It's not the actual numbers that make the difference. You will note that my hypothetical question doesn't include a specific amount of money. Few people ever even ask if I have a number in mind. The definition of "a lot more money" is different for everyone and is reflected in what people want to do with it.

What counts is the fears, dreams, and needs stirred by the prospect of having-or not having-money.

You may believe that how people manage money is based on a combination of experience, reason, background, and social trends. And you'd be right-but only partially so. The simple fact is that before a conscious decision based on a real understanding of finances is made, another influence is actively exerting a significant force on our rational thinking. It is our feelings about money

Why Money Is Also About Feelings

Whenever I talk about the emotional component of getting a financial life in order, I learn that most of us are ready to acknowledge that people can feel anger at loss, pride at gain, fear or defensiveness under a threat, and exhilaration at having made it. I can't say I disagree with that. But to stop there misses the most important point about money and feelings: How you feel about money affects how you make financial decisions-no matter how big or small, whether for today or tomorrow, or for yourself or your loved ones.

You can have everything you need to succeed-expertise, luck, and the right connections-but still unwittingly make a decision that destroys a business deal that could have been profitable for you. Why? Perhaps you're stuck believing that you don't deserve success, or that you haven't worked hard enough for your good fortune, while others you love are still struggling mightily. Maybe your parents fought for every dime as you were growing up and you don't want to outshine them. Guilt could easily squelch your grabbing an opportunity and passing up a good deal so that you are not "better than . .

Or consider this. Perhaps you grew up in a home in which the experience of a financial trauma changed life as you knew it. You were a have, and then a have-not, almost in the blink of an eye. Today, money is a profound symbol of what you think you can gain or lose: status in the eyes of others. You're determined never again to be a have-not. While you fear losing it all, paradoxically, you may be spending most of your income on maintaining an upscale lifestyle. Recently, your upkeep is beginning to cost you too much, financially and emotionally.

In both of these cases, emotions are ruling your behavior, not rational thinking.

Which leads me back to my opening question: "If I had a lot more money, I would . . ." What does the money really mean to you? Is it power or security that you're after? Is it your idea of freedom? Is it the stuff you think you have to own to impress others? People behave emotionally and sometimes to the extreme about money. If hoarding money is at one end of the spectrum, then holding up banks, killing for money, or jumping out a window because you've lost it all is at the other end.

When you think about money, do you feel deserving, confused, stable, unstable, excited, entitled, guilty, optimistic, fearful, powerful, relieved, philanthropic, greedy, or corrupt? This is one of the key questions you need to answer. The more you know about yourself, the more your financial decisions will be ruled by your rational self and not by any emotional burdens that could cloud your thinking.

Don't worry about how much money you do or do not have right now. Don't worry about what Money Type you are or what you're going to do about your situation. Right now the task at hand is to explore your money behavior from an emotional and personal historical perspective. What beliefs and feelings are you bringing to the party, when did they first occur, and how are you playing them out in your current life?

This chapter is designed to be a kind of launching pad from which you can begin to discover your very personal (and emotional!) financial style. This is your opportunity to examine your past and present experiences, feelings, disappointments, dreams, and even misconceptions about money. It's a chance to glimpse what might unconsciously be behind many of the financial decisions you make, both positive and negative. As you go through this chapter, answer the questions as honestly as you can and they will add enormously to your self-knowledge. Always keep in mind how your feelings relate to your possible financial type. Of course, you may have a number of characteristics from a few Money Types, but there will be clues in your answers as to your most dominant style.