What’s Holding You Back, Your Money or Your Mind?

“Two topics impact everyone, whether you are interested in them or not: health and money.”

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This quote from Morgan Housel’s The Psychology of Money accurately hits on the tension that exists within finance. No matter how experienced or successful you are, money is something that impacts just about every aspect of your life.

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Whether you tend to save or spend, taking time to reflect on your financial habits can be the first step to understanding the deeper meaning behind your behavior toward money.

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What Is Your Relationship with Money?

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Everyone has a slightly different relationship with it. There are some who agonize over every dollar spent and earned, while others who spend it trusting that money comes and goes. There are people who meticulously budget by tracking every cell of a spreadsheet, and others who hardly check their bank statements. Take a minute to think about your philosophy on money and where it comes from. As a kid, were you taught to save your allowance or spend it? Does your entrepreneurial side tell you to finance a project with the confidence that it will pay off later or do you shy away from risky investments or taking on debt at any cost? Are you comfortable with your financial situation or worried you’ll never have enough, no matter how much you have? A 2010 study reported that emotional well-being rises with income until plateauing at an annual income of $75,000, although that number is probably higher given the rate of inflation. While $75,000 is not a hard cut off, the idea that a certain amount of money sets a maximum threshold of happiness begs some questions about your relationship and mindset around scarcity, abundance, and what feels like enough. It’s not just the amount of money that matters — you should also consider how and when you choose to spend it. We all need money and we all want money. That’s not a bad thing. But what’s that number for you, what does that number get you, and when does chasing more actually produce diminishing returns on your quality of life and overall happiness?

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What Are You Chasing?

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If you decide there isn’t a specific amount of money that will satisfy your financial aspirations, we recommend looking for a deeper reason why. Maslow’s hierarchy of needs outlines the different levels of human needs and what fulfills each category. Starting with physiological needs as the base and ending with self-actualization as the peak, it’s easy to correlate this structure with personal finances. For all of us, there is a certain amount of money needed to accommodate physiological and safety needs including food, shelter, and a source of income. After you hit those foundational pillars, how does money help facilitate social relationships and encourage self-esteem? Finally, an abundance of money allows you to reach self-actualization, or achieve your full potential by providing the freedom of time, exploration, and creativity. If you’ve satisfied all five stages of this hierarchy and are still chasing more, perhaps it’s time to look at what money is standing in for in your life. Is it status, freedom, power, or peace of mind? Part of your pursuit may be due to the theory of inertia: an object in motion stays in motion, and an object at rest stays at rest. If you’ve had your foot on the pedal since adolescence, it might be as simple as the only pace you’ve ever known.

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Do You Change for Change?

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We’ve all seen it. Money can change people. How has it changed you? What have you noticed about yourself throughout your history with money and any changes you’ve experienced in different financial situations — both positive and negative? One study found that even subtle reminders of money can cause major changes in human behavior. This experiment included giving different amounts of Monopoly money to players that was “for later,” and then later having someone spill pencils in front of them while completing another task. Interestingly, those who had been more strongly reminded of money were less helpful (picking up less pencils) than those who were weakly reminded of money. It’s clear that money changes are behaviors — the question is has it changed you for the worse or for the better? Some people stay intrinsically motivated, and others focus on extrinsic validations. Some are motivated by starting a new challenge, and others are boosted by a new title. Acknowledge your personal philosophy on money, and you may be able to jump over the invisible hurdles preventing you from feeling fulfilled.

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The more you understand your relationship with money, the more conscious your decisions will be, and in turn means the more leverage you’ll have over your financial freedom and money psychology. Take time to audit your financial mindset, and prepare to see changes in every avenue of your life. Trust us, it’s worth it.

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