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Finances: money management starts with emotions

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

“Eighty-five or 90 percent of our financial decisions are based on our emotions,” says Bari Tessler, financial therapist and author of “The Art of Money Workbook,” published this month. “We need to understand what our emotions are related to money so that we don’t feel overwhelmed or try to run away.”

Tessler had this experience several years ago, when she felt hyperventilated at a car dealership with her husband. She excused herself to go to the bathroom, where she wondered why she felt so anxious. Tessler has found that she doesn’t like making quick decisions about money at all. She and her husband therefore took more time to discuss the purchase.

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

When author and producer Rebecca Walker began soliciting stories for her collection of essays “Women Talk Money: Breaking the Taboo,” she discovered that many people felt ashamed of having money, guilt for having more than their parents and regrets for their past financial decisions.

“So many women in my life had painful stories about money — confusing, unsettling experiences with money,” she says. “A lot of us were trying to figure this all out on our own, and it was preventing us from getting help.”

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 hold on to about money, a memory or a fundamental idea that has shaped their life about abundance or scarcity, and that they leave from there. How do you want to change this story now? »

Changing that story could lead to real changes in spending. For example, if you grew up watching your parents spend too much without saving, you may need to teach yourself how to save with a tool like the 50/30/20 budget. He suggests spending 50% of your net income on needs, 30% on wants, and 20% on debt repayment and savings.

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

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

Giving himself a body check, like Tessler did at the car dealership, is something Tessler encourages, especially when discussing money with a partner or making big purchases. Focus on the physical sensations, including your breathing, and observe any feelings or memories that resurface.

If you notice yourself feeling tense, for example, you can pause or exit before continuing. “Money-related emotions don’t go away completely, but we can reduce them in size and intensity,” she says.

In his book, “Finance for the People,” financial educator and musician Paco de Leon suggests creating a list of strategies to help you calm down and using them before you make 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 afterwards,” she says. “But if we could manage our emotions first, then you can say, ‘I felt my feelings, now I can be rational. “”

De Leon took this approach when he decided to take out large student loans. After putting the stress aside, she created a spreadsheet to crunch the numbers and decided law school wasn’t for her.

De Leon says being in debt, whether it’s credit card debt or a student loan, often puts people to shame. She suggests changing the story we tell ourselves about debt by writing him a letter, an idea she picked up from “Express your feelings; you’ll find they’re complex. Consider thanking your debt for what it’s allowed you to do,” she writes.

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

Self-compassion is a powerful tool, says Michael G. Thomas Jr., financial advisor and founder of Modom Solutions, a financial coaching platform. “We are more likely to show grace and courtesy to others when they make a mistake,” he says. Forgiving ourselves of past mistakes can help us move forward.

In her book, Walker writes about forgiving herself for her past choices of making purchases instead of learning how to invest. “I let go of the idea that I had done this terrible thing and started to be compassionate with myself, which was liberating,” she says. “It allowed me to move forward in a healthier way.”