Money is a complicated matter. There are best practices for handling it, earning it, and for making it grow. The amount of information available on the subject is staggering and certainly overwhelming for most.
With countless resources and money experts, why do so many of us have so much trouble soaking in this knowledge and applying it to our lives? Why do we know all the “shoulds” but we rarely translate them into what we actually do?
When boiled down to the simplest terms, money is simply a form of currency. But if that’s all it was – a physical means of paying for goods and services – we likely wouldn’t have so much trouble with it. Instead, it has come to represent our worth, our level of success and how we’re perceived as others.
Seeing money through this context might make it appear more overwhelming but it actually helps put the control back in our hands.
How emotions show up in our spending habits
We’ve become acutely more aware in recent years of emotional eating as an issue many people deal with. When life gets particularly challenging and our emotions get out of control, we seek comfort in food. If it’s a consistent problem, weight and other health issues arise.
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Spending is simply another form of emotional pacification.
Several studies spanning the past ten years have found this emotional trigger in a variety of settings. One such study found participants were willing to pay significantly more for a water bottle (and average of $2.11) if they watched a sadness-inducing video clip versus those who watched an emotionally neutral video clip (an average of $.56).
‘“This is a phenomenon that occurs without awareness,” Jennifer Lerner a Harvard professor who studies emotion and decision making, said in a phone interview. “This is really different from the idea of retail therapy, where people are feeling negative and want to cheer themselves up by shopping. People have no idea this is going on.”’
These studies suggest sad situations push us to lessen the attachment we have to money – there are bigger things going on, so material possessions and how much we spend on them mean less.
Emotions also exacerbate the feeling of being out of control, something we feel can be addressed through what we can control – our spending.
External chaos breeds money chaos
If our internal, emotional world impacts how we manage our money, it should also be noted how much our external world can do the same.
In the last six months I’ve purchased four full containers of corn starch. Corn starch is something I’ve used in only four recipes during that time frame. Yes, I’ve purchased a brand new box every single time because my kitchen is anything but organized.
This is a minor form of external chaos – when we end up with things we don’t need because we don’t know what’s already there or because it goes bad before we remember we had it in the first place.
According to the Natural Resources Defense Council, 25% of the food and drinks American families purchase each year go to waste. The cost of that waste amounts to $1,365 to $2,275 annually.
The impacts can extend far beyond our pantries, however.
Think about the cost of late bill payments because the bills are lost in a pile of paperwork not yet sorted through. If this is a consistent problem, you are not only paying for the late fee, but years worth of payments with higher interest rates tacked on because your credit score is lower than it should be.
Chaos or simple lack of organization in our physical world is time consuming. According to studies, the average person will spend over 3,000 hours looking for lost items in their lifetime. This added strain on our time, when our lives are already filled to the brim with busyness, makes handling other tasks — like money management — a frazzled process.
Just think about what this means for how well we actually handle these tasks.
Money goes far beyond the dollars and cents we have in our accounts or the amount we take home in pay. It can be a direct reflection of how we are feeling and how our external world is operating. With that in mind, what could you do to address your internal and external world in order to improve your overall money management?