Mind, Over and Before Money
— building a better relationship with money.
Our lives revolve around money. The rule is either we earn to live, or the reverse. Even though money has been an inseparable part of life, we don’t really talk about it. We don’t come to colleagues, friends, or relatives to ask questions like: how much do you earn nowadays? Or did you save this month? In most cases, it is considered to be rude or makes people uncomfortable. As a saying goes: nobody talks about it, but everybody does something about it.
My own circle is no exception. Money talk is so taboo and sensitive that it makes me want to understand better about it. Ever since I started earning my own money, I have tried to delve deeper into treating money and managing personal finance. Somehow, it eventually leads me to the psychological side of money i.e., our relationship with it. Upon finding it, I was taken aback. I thought this was a very important thing to understand yet not many people know it mainly due to the taboo subject of money. And so, here are things that I have learned so far.
Money is powerful, realize how big it is
In my adolescent years, I started to learn that money is probably the source of all kinds of problems — sadness, greed, kids quitting school, people fighting over inheritance, crime, and of course, corruption. These problems might arise because of the need and perception that people have towards money. As I grew up, I learned that money even has the power to control our minds, and thus, our lives. It influences how we see the world, how we perceive others, and the way we make our decisions.
Many studies have tried to see what kind of power money holds and how it might affect one’s life. Psychologists who study the impact of wealth and inequality on human behavior found that money can influence our thoughts and actions in ways that are more powerful than we thought, no matter our economic circumstances. Moreover, money or wealth is believed to be at odds with empathy and compassion, may cause a sense of moral entitlement, and is even linked with addiction.
In his TED Talks, Paul Piff also explained that wealthier individuals are more likely to moralize greed and self-interest as favorable, less likely to be prosocial, and more likely to cheat and break laws if it behooves them. These are just some impacts the money has that we might have not realized. Therefore, to build a healthier relationship with money, we need to recognize how big its power is and how much it may affect our lives.
Money can buy you happiness, but how?
I had a discussion with a friend some time ago. I started by asking whether money can buy him happiness. He said without any hesitation,
“If you think that it cannot buy you happiness, it’s clearly because you don’t know how to do it. Just give me the money, I’ll use it to buy my happiness instead.”
We laughed and promptly resumed the discussion. Ultimately, I came to realize that what my friend said was somewhat right. Money can indeed buy us happiness, but it depends on how we do and perceive that.
According to a Harvard Business Review research by Dunn and Courtney, there are mountains of evidence that shows that wealthier people are happier on average. However, earning more money does not necessarily give more happiness.
Rather, how you spend, save, and think about money plays much more significance in determining how much joy you get from it.
Some data even suggest that money itself doesn’t lead to dissatisfaction — instead, it’s the ceaseless striving for wealth and material possessions that may lead to unhappiness. Generally, the solution is not to focus on earning more money, but instead on developing a better, healthier relationship with it.
Further, Dunn and Courtney also provide some suggestions on the right way to spend money if we want to be happier. First, spend on experiences, not things. Our experiences cannot be directly compared with others’ and therefore, this will not degrade our satisfaction. Second, buy time. Spend money on time-saving services so that we can use that time to enjoy our own special experiences. Third, invest in others. Decades of research has shown that we’re more likely to derive happiness from spending it on someone else. However, it is important to make sure that the giving is something that we choose to do, not something we are forced to.
Information is not enough
Nowadays, it’s easy to find guidance and financial advice on planning our budget, making our first one hundred million rupiahs, considering which investments are the best ones, or budgeting income to certain expenses. Knowing all that technical money know-how is certainly needed and will indeed help. But what if, even after we know about it all, these rules still don’t work well?
In Mind Over Money (2009), Brad and Ted Klontz conveyed that many people think that problems with money stem from ignorance on the intricacies of personal finance. Further, people also mistakenly believe that the solution lies in gathering more information, tips, and strategies for budgeting and investing. To some, this might indeed be the case. To others, however, the lack of information is not the problem. The Klontz concluded that in overcoming destructive financial behaviors, financial advice is not enough.
In most cases, one should find the root cause of their problem with money. The cause could be the history with it or the preconceived notions about it. Once someone has identified the cause, they will have more awareness and consequently, improve their relationship with money
Your beliefs about money show your history with it
The exposure to money started early in one’s life, when their parents showed how to deal with money. As The Klontz explained, there is something called financial flashpoints — an early life event (or series of events) associated with money that is so emotionally powerful, they leave an imprint that lasts into adulthood. Consequently, these financial flashpoints become the foundation of our financial struggles in adulthood.
Take the example of Courtney Pullen. When he was in grade school, he was repeatedly exposed to his father’s anger and other issues towards money. He even heard his father once said, “Rich people can’t go into heaven”. This became the financial flashpoint for Pullen. Since then, he started to think that money is a bad thing and this interpretation stayed with him for years. He then assumed that he should not earn more money because it will bring him to the evil world that his father warned him about. This is what the Klontz called as money script — a set of beliefs about money that shape the way we think about and interact with money.
According to the Klontz, money scripts can be destructive if we cling to them and act on them unthinkingly throughout our lives. To free ourselves, we must first recognize them and their origins. Then we can deal with any unfinished business, learn new ways to think about it, and deal with money.
Make a firm stance, but a flexible mindset
Speaking from personal experience, I remember an advice I got from my English teacher in my diploma degree. One day in the class, he said:
“Live a sufficient life. Always try to have the feeling of being enough with what you have and what you need. Do not let yourself become enslaved by material possessions”.
At first, I thought he told us to not set money as the goal in life as it signifies that we are enslaved by these material possessions. But upon further consideration, I realized that what my teacher was trying to say was that we should free our heart from the endless pursuit of material values.
However, our minds still have to be flexible. One day you might win a lot, but you might have nothing left on another day. Our financial condition might never stay the same. Therefore, we have to make sure that our minds can attune to changes. As Jonathan Swift once said: a wise person should have money in their head, but not in their heart.
Developing a better relationship with money starts with understanding how it has affected our life and being more vigilant with the future. This is the process that we often miss. Dealing with money does not only refer to how we should manage and treat it. We need to look back, see inside ourselves, redefine the meaning of money, and design a better mindset towards it. Indeed, it is essential that we mind over our money and carefully consider what’s on our minds before doing anything with our money.
Originally published in Media Defis XXIX.
