The Psychology of Money

To most of us, money is not just a medium of exchange. The psychology of money is a complex mixture of feelings, beliefs and values that can have a devastating impact on our ability to manage our money effectively.

Emotions

Despite the idea that ideally financial decisions are or should be rational, our emotions play a significant role in our decision making processes.

Some of the most significant emotional triggers include:

• Security
• Power
• Love
• Guilt

Which emotions most often drive your financial decisions?

Money Personality

Each one of us has a unique psychological relationship with money that has developed and evolved over the course of our lives. These financial traits and behaviors relatively stable characteristics, and operate in a similar manner to other aspects of our personalities. Every decision you make about money is impacted, often unconsciously, by the traits and characteristics that you possess.

If you were able to gain an insight into your ‘money personality’, you would be able to make positive changes in your behavior around money.

In 1988 Dr. Katherine Gurney developed a methodology which categorizes individuals into the following nine distinct money personalities:

• Entrepreneurs
• Hunters
• High Rollers
• Safety Players
• Achievers
• Perfectionists
• Money Masters
• Producers
• Optimists

Dr. Gurney has developed a profile for each one of these 'types' or categories, and this can be a valuable tool to help you to understand your strengths, vulnerabilities and motivations that form the basis of your money personality.

What is your money personality?

Negative Beliefs About Money

Do you hold any negative beliefs about money?

Even if you say no, they might still be there hiding deep within your subconscious affecting every decision you make about your personal finances!

Our subconscious minds are incredibly powerful. In fact your subconscious will act on your behalf, sometimes without your conscious knowledge, to fulfill any belief that you hold.

But not all is lost if you do find that you hold negative beliefs about money. Believe it or not identifying those beliefs is a good thing. If you are not aware of them, you have no reason to change them, and with a bit of work you can change them and significantly improve your ability to attract (or earn) more money.

Locus of Control and Money

Locus of control is a psychological construct that describes how an individual perceives his or her level of control (or lack thereof) over the major events in their lives.

An individual with an internal orientation believes that they are in control of their own destiny, while an individual with an external orientation believes that their lives are subject to fate or luck. Whether you are an internal or an external will necessarily have an impact, probably without you even being aware of it, on the way you manage your money.

Psychology of Money Resources

Conscious Finance: Uncover Your Hidden Money Beliefs and Transform the Role of Money in Your Life

Conscious Finance (2005) by Rick Kahler and Kathleen Fox will help you to discover your unconscious money beliefs.

Kahler and Fox argue that our behavior around money and many of the decisions we make about our money and our lives are rooted in deep beliefs that we don't even know that we have.

Your Money Personality: What It Is and How You Can Profit from It

Your Money Personality (1988) by Kathleen Gurney can help you to be a winner with money by helping you to understand how it works for you.

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