Budgeting & Saving

Rethinking Your Relationship with Money

Guest writer Reeta Wolfsohn joins to share more from her unique analytical perspective on our personal relation to and emotional interaction with money.

Everyone has a relationship with money. It's one of the most important relationships in a person's life because it plays a critical role in physical, emotional, financial and overall well-being.

The genesis of this relationship is in thoughts and feelings regarding your financial circumstances. These components form your attitudes and beliefs about money and combine to create your relationship with it. Money relationships are complicated: this is why so many people struggle with them.

A simple way to begin to assess this complex issue would be to identify which one of the following terms best describes how you feel about your financial circumstances. Are there words that characterize how you feel about money? Hopeless, pessimistic, or indifferent versus optimistic, or even confident.

Next, list the top three reasons you chose your particular category. Those three reasons reveal the general areas most in need of attention when beginning to work to improve your financial future. While this is only a brief self-assessment, it helps you better understand your financial circumstances and relationship with your money.

To set yourself up for future financial stability, financial wellbeing requires a healthier relationship with your money.

Your relationship with your money provides the foundation for your money habits.

The dollars and cents of your financial situation matter. However, it's only by knowing and understanding your thoughts and feelings about money (helpless, anxious, stressed, confident) and what money represents to you (success, failure, generosity, deprivation, independence, power, control, etc.), that you will be in a position to develop a healthier relationship with it for the future.

Part of that process is recognizing that dollars and cents don't make financial decisions. Your "Inner Money Self" (i.e., where your thoughts, feelings and beliefs about your money and yourself) is where your financial choices originate.

Your financial health depends on how you think and feel about yourself. If you don't feel worthy or deserving of financial wellbeing, you aren't likely to devote the time and effort to create it. That's why a strong sense of "self," (self-awareness, self-confidence, self-acceptance, and self-esteem) are essential to a healthy relationship with your money.

Your money habits determine your financial circumstances.

Your money habits refer to how you earn, spend, save, share and borrow money. The complexity of what this requires, in conjunction with the lack of money management skills/knowledge in this country, causes many people to avoid dealing with their money. This is exhibited in behaviors like postponing bill-paying, not balancing the checkbook or other pro-active money management steps, all of which are an open invitation to having financial problems.

Your financial habits are measured by your credit scores, the three-digit numbers generally between 300 and 850. Those numbers are derived from your financial habits and history, and are used by lenders to assess how likely you are to repay or default on a loan (such as a credit card, mortgage, car loan). These numbers tell lenders and others about how you've handled your money in the past — some details of which you might prefer others not to know.

Your relationship with your money is very individual, emotional and personal. Only you can determine how much time and effort you are willing to devote to it. In addition, only you will reap the benefits or problems that will result from your efforts (or lack thereof).

Finally, remember that change takes time and there's always the hope that your past doesn't have to determine your financial future forever.