How a person relates to and feels about money has a great impact on how good they are at managing their money and making important financial decisions. For example, knowing that you have a net worth of negative $13,200 because of credit-card debt is useful, but it’s probably not enough information for you to do something constructive about your problem. A logical next step would be to examine your current spending and take steps to reduce your debt load.
© Artem Beliaikin / Unsplash.comPractical solutions to common financial quandaries abound in books and on the internet, but money also has a touchy-feely side. For example, some people who continually rack up consumer debt have a spending addiction. Other people who jump in and out of investments and follow them like a hawk have psychological obstacles that prevent them from holding on to investments.
What you learned as a child affects you today
How you deal with money as an adult could be, in part, related to what you learned from your parents when you were growing up. I was fortunate — my parents taught me a lot of things that have been invaluable throughout my life, and among those things were sound principles for earning, spending, and saving money.Unfortunately, in many families, money is a taboo subject — parents don’t level with their kids about the limitations, realities, and details of their budgets. Some parents I talk with believe that dealing with money is an adult issue and that children should be insulated from it so they can enjoy being kids. Others readily admit the many holes in their financial knowledge and thus don’t feel comfortable teaching their kids about personal finance.
In too many families, kids hear about money only when disagreements and financial crises bubble to the surface. Thus begins the harmful cycle of children having negative associations with money and financial management.
Philosophical and psychological aspects of money
And then you have those somewhat philosophical and psychological issues relating to money and the meaning of life. Saving more money and increasing your net worth aren’t always the best approaches. Many people attach too much significance to personal wealth accumulation and neglect important human relationships in their pursuit of more money. Some retirees have a hard time loosening the purse strings and actually spending some of the money they worked so hard to save for their golden years.Balancing your financial goals with other important life goals is key to your happiness. What’s the point, for example, of staying in a well-paying, admired profession if you don’t care for the work and you’re mainly doing it for the financial rewards? Life is too short and precious for you to squander away your days.
So as you educate yourself about managing your money, please consider your higher life goals and purposes. What are your nonfinancial priorities (family, friends, causes), and how can you best accomplish your goals with the financial resources you do have?