Understanding Your Relationship with Money for Better Financial Health

By Kevin Neoh

Have you ever wondered if money were a person? What kind of relationship would you have with this ‘person’? Will this be a person who gives you a lot of stress each time you think about them or one with whom you enjoy having a quality and mutually beneficial relationship?

Why Your Relationship with Money Matters

Like many other things, such as our car, house or devices, money is also a tool that we use to help us accomplish specific goals or meet various needs. Other than being a tool we use to buy things, it is also a reflection of your values, beliefs and emotions. How you think and feel about money can affect your financial health, your happiness, and your wellbeing. That is why it is important to have a good relationship with money, one that is based on awareness, understanding and empowerment.

How Your Beliefs Shape Your Behaviour “We begin learning about money indirectly from a young age, observing how adults handle or act around money, starting as young as three years old.”

Our relationship with money is influenced by our beliefs, which are formed through our past experiences, culture, family and personality. We begin learning about money indirectly from a young age, observing how adults handle or act around money, starting as young as three years old.

Our beliefs can be supportive or non-supportive, conscious or unconscious, rational or irrational. The truth is that they can either help us or hinder us from achieving our goals.

For example, if you grow up in a family where money is often a scarce resource, you might develop a focus on saving money and have difficulty spending, even though, as an adult, your situation allows you to live comfortably. Likewise, another person who had a similar childhood might grow up believing that there will always be insufficient money and one should spend while it’s there, or that because one is deprived of many things growing up, one should enjoy them whenever they can. Similar experiences may have produced an opposite belief and thus, different behaviours around money.

This is why our beliefs about money can shape our financial health. For instance, if a person grew up constantly believing that money is bad, that it causes pain, and that it leads to arguments in the family rooted in money issues, this person may feel uneasy having money and thus will find ways to spend it without consciously wanting to. As a result, this person will hardly have savings, may have debts and may be unable to plan their future with confidence.

As another example, a person who witnessed their loved ones lose most of their wealth due to a stock market crisis might grow up thinking that investing in the stock market is too risky, to the point that one might lose everything. Hence, this person might stay away from investing in the stock market without consciously realising why.

It is worth noting that there are no right or wrong beliefs; they are all part of us. Our beliefs are what help keep us comfortable and safe. However, as our circumstances, economy and way of life change, certain things that used to be true or worked in the past may no longer be the same. Therefore, it is sometimes worthwhile for us to examine our beliefs and discuss them with someone who can be impartial.

How to Examine and Change Your Beliefs

The first step in improving our relationship with money is becoming aware of our beliefs and understanding how they influence our behaviours. This awareness can be achieved by paying attention to our thoughts, feelings and actions when dealing with money.

You can also ask yourself questions, such as: • What did I learn about money from my parents, friends or society? • What are the benefits and drawbacks of my beliefs? • How do they align with my values and goals? In what ways may they limit me?

The second step is to challenge and change your beliefs if they are limiting or harmful. This can be done by seeking evidence that contradicts your beliefs, finding alternative explanations or adopting new perspectives. Additionally, you can use affirmations, visualisation or meditation to reinforce positive beliefs.

Relationship with Money & Financial Health

When we have a better relationship with money, we can make more informed financial decisions, placing us in a position to thrive and flourish. This involves being able to cope with financial stress and work towards achieving our financial goals.

As we strive to improve our financial health, it’s essential to be mindful that what society or conventional thought considers financially healthy may not be an ideal benchmark.

Having a substantial amount of money in the bank or earning a high income does not necessarily equate to good financial health. For instance, a person with a high income, lacking an understanding of their money beliefs, and harbouring a non-supportive relationship with money may struggle to retain their income, ending up with significant debts.

Similarly, someone with a high net worth due to reluctance to spend may miss opportunities to leverage their wealth for an ideal and fulfilling life.

TL; DR

If you feel that this article is not something you expected, that’s because it isn’t. In fact, the message I am trying to convey to the reader here is that instead of focusing on growing our wealth, finding the next-best-investment or buying the latest financial product, our focus should shift from a product-oriented to a human-oriented approach. We should give considerable thought to nurturing good financial health.

Traditional financial advice or practices like budgeting, paying yourself first, investing regularly and spending within your means can help nurture our financial health. We may also benefit from seeking financial education and advice whenever needed. However, if we have not spent some time understanding the relationship we have with money and the beliefs that drive this relationship, all the hard work and efforts we put in might not matter much for our wellbeing in the long run.

Remember, money is not an end but a means to an end. Money is a tool to serve your needs, not the other way around. Therefore, this is why it makes sense for us to begin by asking, “What kind of relationship do we have here?”

ABOUT THE WRITER

Kevin is the Head of Financial Planning at VKA Wealth Planners. As a Certified Financial Planner (CFP) and Certified Financial Coach (CeFC), Kevin works with clients to transform their relationship with money, empowering them to take charge of their lives and live the best life they desire. Kevin can be reached at [email protected].

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