Money is about emotions


Over the last 10 years, I have spent more than 12,000 hours helping people to manage their money better. I have watched people make mistakes with their money. Since money is central to our lives, I have wondered why most people learn how to manage money through trial and error, making mistakes along the way. In most cases, people make the same mistakes over and over with their money. I have come to the conclusion that money is not about finances. It is about emotions. And the people constantly making mistakes were letting emotions get in the way of making good financial decisions.

The Money Emotions
The most common emotions surrounding money are fear, shame, worry, embarrassment, regret, guilt, sadness, joy, being overwhelmed, overconfidence and anger. I am often asked “as a certified financial planner, are you exempt from an emotional attachment to money?�? Of course not, all people have emotional attachments to money.

Think about the emotions that you feel when you want to enrol your child into school, when you have to pay for school outings or sports equipment that you can’t necessarily afford…

My Money Emotions Story
A few years ago, my credit card was declined when I was paying for a trolley full of groceries at my favourite retailer. Without much thinking, I looked around the queue of other shoppers waiting to pay, then looked the cashier straight in the eyes and as a stern, hardworking headmaster, said “There is a lot of money in that account.�? My reaction was a typical one when a credit card is denied at a retailer — embarrassment! I felt compelled to tell the cashier about my bank balance.

Some 23 years ago, I was flat broke; like a vulture, scavenging for leftovers in corner food shops; generally scrounging for food; calling public places home, most Johannesburg Park Station; and fighting to hold on to my human dignity as joblessness slowly gnawed at it. With my last penny spent, as I spiralled into homelessness and joblessness, fear, panic, regret and even anger gripped me – money and emotions again!

When I started working, after nearly a year of using public transport, I bought my first car more as a result of being worried about my status as a carless risk manager at a great bank. I bought a brand new 2-door silver Honda Civic with black leather seats that cost nearly 3 times my annual salary!

Taking Control of Our Emotions
Money evokes strong emotions and everyone has deeply-held and often subconscious beliefs about money that often stem from our childhood. Most people learn managing through trial and error and from how their parents managed money. Sadly this means people learn bad money habits and beliefs from their parents who know no better.

The truth is that in many instances the problem isn’t money. The problem is how we think about money and how we manage money. Good money management is the foundation for growing wealth. And this starts with awareness about money and the emotions money triggers in us.

Emotion can cause us to make bad financial decisions like the ones I made early in my career. Here are some ways of taking control of our emotions:


  • Regret can put you in a victim mentality. Forgive yourself for the money mistake and like I did, channel your regret into a learning opportunity.
  • Embarrassment can be tackled head on by realizing that that it’s about who you are inside, not what you have or don’t have – easier said than done!
  • Without a spending plan, some people fall into the vicious “spend, regret and guilt�? cycle. Having a spending plan can break this vicious cycle.
  • Some people don’t want to face the cold, hard facts about where their finances stand, preferring to be confident that overtime, things will work out. This is a sign of overconfidence – going to extreme ends of the scale. A positive outlook is required to overcoming money problems because it helps with the confidence to make decisions to turn things around. This positive outlook must however be injected with a dose of reality.

So what do you think? How do your emotions affect your financial behaviour when it comes to the education of your child? What do you do about this?

You might want to read more about how keeping up with the Joneses is a bad idea.