AP

Kimberly Palmer: Managing money starts with your emotions

Jun 6, 2022, 4:00 AM | Updated: 6:43 am

Money can trigger strong emotional reactions, which can lead to not-so-great decisions, like missing payments or overspending. A new wave of books urges people to explore their emotional connections to money in order to make better financial decisions.

“Eighty-five or 90% of our money decisions are based on our emotions,” says Bari Tessler , a financial therapist in Boulder, Colorado, and author of “The Art of Money Workbook,” out this month. “We need to be understanding of what our money emotions are so we can not just feel overwhelmed or try to run away.”

Tessler had that experience several years ago, when she felt herself hyperventilating while at a car dealership with her husband. She excused herself to the restroom, where she questioned why she was feeling so anxious. Tessler realized that she strongly dislikes making quick decisions about money. So she and her husband took more time to discuss the purchase.

As a result, she says, “we made the best decision we could.”

CONSIDER YOUR OWN MONEY STORY

When Los Angeles-based author and producer Rebecca Walker started soliciting stories for her essay collection “Women Talk Money: Breaking the Taboo,” she discovered that many people felt shame for having money, guilt over having more than their parents, and regret over earlier financial decisions.

“So many women in my life were holding painful stories about money — confusing, troubling experiences with money,” she says. “So many of us were trying to work all this out on our own, and that was keeping us from getting support.”

Walker encourages readers to explore their own money stories — those experiences, often in childhood, that influenced how they think about money. “I want them to find at least one story that they’re holding onto about money, one memory or fundamental idea that has been shaping their lives about abundance or scarcity, and go from there. How do you want to change that story now?”

Changing that story could result in concrete shifts in spending. For example, if you grew up watching your parents overspend without saving, then you might have to teach yourself how to save with a tool like the 50/30/20 budget. It suggests putting 50% of your take-home income to needs, 30% to wants and 20% to debt payments and savings.

REFLECT ON RECENT MONEY EXPERIENCES, TOO

In her book, Tessler encourages readers to think about their last three money interactions. “When you were checking out at the grocery store or exchanging money for goods or services in some other way, what emotions popped up?” she asks.

Shame, anger, fear, guilt, joy, sadness and happiness are common reactions. “Maybe it’s reminding you of a past money mistake you made. Let’s bring some awareness and understanding to it,” she says.

CONDUCT A BODY CHECK-IN

Giving yourself a body check-in, as Tessler did at the car dealership, is something Tessler encourages, especially when talking about money with a partner or making big purchases. Focus on physical sensations, including your breathing, and observe feelings or memories that are surfacing.

If you notice you’re feeling tense, for example, then you can take a break or go outside before continuing. “Money emotions don’t go away completely, but we can reduce them in size and intensity,” she says.

FIND YOUR OWN CALMING TECHNIQUES

In her book, “Finance for the People,” Los Angeles-based financial educator and musician Paco de Leon suggests creating a list of strategies that help you calm down and using them before making a big financial decision, like buying a house. She lists ideas like going for a walk, reading a book and playing an instrument.

“We make decisions based on emotion and rationalize them after,” she says. “But if we could deal with our emotions first, then you can go, ‘I’ve felt my feelings, now I can be rational.'”

De Leon took this approach when deciding whether to take on significant student loans. After setting the stress aside, she made a spreadsheet to crunch the numbers and decided law school wasn’t for her.

ADDRESS YOUR DEBT

De Leon says that carrying debt, whether it’s credit card debt or student loans, often makes people feel ashamed. She suggests changing the story we tell ourselves about debt by writing a letter to it, an idea she took from DearDebt.com. “Express your feelings; you’ll see that they are complex. Consider thanking your debt for what it’s allowed you to do,” she writes.

Once you process those feelings, it’s easier to tackle the debt itself. You might decide to apply the debt snowball method, where you pay off the smallest debts first.

FORGIVE YOURSELF FOR PAST MISTAKES

Self-compassion is a powerful tool, says Michael G. Thomas Jr., an Athens, Georgia-based financial counselor and founder of Modom Solutions, a financial coaching platform. “We are more likely to extend grace and courtesy to other people when they make a mistake,” he says. Forgiving ourselves for past mistakes can help us move forward.

In her book, Walker writes about forgiving herself for earlier choices to splurge on purchases instead of learning how to invest. “I let go of the idea that I did this terrible thing and extended compassion to myself, which was liberating,” she says. “It allowed me to move forward in a healthier way.”

_______________________________

This column was provided to The Associated Press by the personal finance website NerdWallet. Kimberly Palmer is a personal finance expert at NerdWallet and the author of “Smart Mom, Rich Mom.” Email: kpalmer@nerdwallet.com. Twitter: @KimberlyPalmer.

RELATED LINKS:

NerdWallet: How to save money https://bit.ly/nerdwallet-how-to-save-money-22-proven-ways

Dear Debt: https://deardebt.com/

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Several hundred students and pro-Palestinian supporters rally at the intersection of Grove and Coll...

Associated Press

Pro-Palestinian protests sweep US college campuses following mass arrests at Columbia

NEW YORK (AP) — Columbia canceled in-person classes, dozens of protesters were arrested at New York University and Yale, and the gates to Harvard Yard were closed to the public Monday as some of the most prestigious U.S. universities sought to defuse campus tensions over Israel’s war with Hamas. More than 100 pro-Palestinian demonstrators who […]

10 hours ago

Ban on sleeping outdoors under consideration in Supreme Court...

Associated Press

With homelessness on the rise, the Supreme Court weighs bans on sleeping outdoors

The Supreme Court is wrestling with major questions about the growing issue of homelessness as it considers a ban on sleeping outdoors.

11 hours ago

Arizona judge declares mistrial in case of rancher who shot migrant...

Associated Press

Arizona judge declares mistrial in the case of a rancher accused of fatally shooting a migrant

An Arizona judge declared a mistrial in the case of rancher accused of killing a Mexican man on his property near the U.S.-Mexico border.

12 hours ago

Donald Trump appears in court for opening statements in his criminal trial for allegedly covering u...

Associated Press

Trump tried to ‘corrupt’ the 2016 election, prosecutor alleges as hush money trial gets underway

Donald Trump's criminal trial in New York over alleged hush money payments started with opening statements on Monday.

21 hours ago

This satellite image from Planet Labs PBC shows Iran's nuclear site in Isfahan, Iran, April 4, 2024...

Associated Press

Israel, Iran play down apparent Israeli strike. The muted responses could calm tensions — for now

Israel and Iran are both playing down an apparent Israeli airstrike near a major air base and nuclear site in central Iran.

3 days ago

Speaker of the House Mike Johnson, R-La., talks to reporters just after lawmakers pushed a $95 bill...

Associated Press

Ukraine, Israel aid advances in rare House vote as Democrats help Republicans push it forward

The House pushed ahead Friday on a foreign aid package of $95 billion for Ukraine, Israel, Taiwan and other sources of humanitarian support.

4 days ago

Sponsored Articles

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

Kimberly Palmer: Managing money starts with your emotions