Personal finance advice is useless if we don’t address the emotional side of money –

Financial literacy — the ability to understand how money works in your life — is considered the secret to taking control of your finances. Knowledge is power, as the saying goes, but information alone doesn’t lead to transformation.

In putting financial literacy above all else, many in the personal finance industry have decided that repeating the same facts about how much money folks should have in their emergency savings account will, somehow, change people’s money habits. This approach doesn’t account for our human side: the parts of us that crave connection, new experiences, and fitting in as members of our communities. Most of our decisions around money are emotional; no amount of nitty-gritty knowledge about interest rates will change that.

As a financial therapist, I’ve seen spending behaviors driven by emotions and not logic time and time again. One young couple that came to see me was so caught up in having the “perfect” wedding that they put a large cash gift meant for a house down payment toward their wedding venue. Another client whose parents had saved for them to attend a state college debt-free confessed that they took out private student loans to finance a semester abroad; they’re now paying a hefty monthly bill. Another family put a pricey Disney trip on a zero percent interest credit card, telling themselves (and me) they’d pay it off before the interest rate skyrocketed, only to procrastinate on paying it down and owing nearly 22 percent in interest on their trip over several years.

These people weren’t doing anything “bad.” They were doing what most of us do: making money-related decisions based on feelings. In my work, I help people understand how their emotions are driving money decisions, assess if their money is going where they want it to go, practice financial self-compassion, and know when to ask for help. Here is what I tell them.

All decisions are emotional

It’s imperative to understand that emotions drive most decision-making. For example, we know we shouldn’t read on our phones in bed because it’s bad for our sleep quality, but we do it anyway. We know we should move our bodies regularly for our physical and mental health but still let exercise become another chore that we put off. The same is true when it comes to money: We know we should spend less than we earn and save for the future, but many people find it really hard to do that.

An individual’s relationship to money and the emotions it brings up starts when we’re young. When we’…….


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