Last week while I was having a lunch with my colleague, I found him perturbed and chagrined. On my cajoling, he revealed that the financial blunder he committed last afternoon was the reason behind his restlessness. He owned shares of XYZ Company which he sold off and the stock appreciated by over 20% that day morning. “I took a wrong decision. And now, all I feel is guilt and anger,” he said. As he recalled that incident to me, I realized that he is still not aware of his emotion i.e. ‘Greed.’
Can he alone be blamed for experiencing greed, anger, and guilt while making financial decisions? These are the emotions we all may have faced at some point in our lives. Sometimes, we succumb to the societal pressure of buying things which we actually cannot afford. Post nasty breakup, we indulge in ‘make me feel good’ shopping which gobbles our monthly savings. We experience guilt while making investment mistakes. And, we envy when our ex-classmate comes up with a snazzy outfit and a fancy car. Knowingly or unknowingly, we all have been a victim of the vicious circle of ‘Financial Fear’.
Over the years, our brain has been fortunately or unfortunately coached to take decisions based on the emotions such as anger, shame, greed, fear, hate, etc. This holds true even while handling our finances. Psychologists term these emotions as ‘money scripts.’ These money scripts can have a positive or negative impact on wealth creation. The point is that they do impact both our short-term and long-term investments. We unconsciously let these emotions transcend the rationality and most often, land up with decisions that don't seem too fruitful.
Take Control of your consistent emotions and begin to consciously and deliberately reshape your daily experience of life.
- Tony Robbins
Where and how do we develop these 'Money Scripts?'
The beliefs and values about the money stem up in our mind right from childhood. The emotions are imprinted by the way our parents talk about finances, how they treat money and how we have been taught to deal with money. Few parents are entangled in debt, while few focus on imparting their financial acumen to the next generation. The striking difference in their money habits is beautifully captured in the book ‘Rich Dad, Poor Dad’ by Robert Kiyosaki.
Even our education, our peers, and friends also play a significant role in shaping our emotions about money. It’s imperative to keep a tab on these emotions to understand how they impact our financial behaviour.
Turning a blind eye to these emotions?
Maintaining a healthy relationship with your finances is crucial. It is a conscious practice to be rational-savvy and not emotional-savvy while handling finances. Have you ever observed a person who suddenly wins a lottery? Money can sometimes have a negative impact also. In the lottery case, it can make the person feel elated and powerful due to the unexpected inflows of money. Sudden loss of money can also turn a happy person into gloomy and miserable. Money structures people’s persona, behaviour, and their attitude.
How can you deal with emotions?
Don’t run from them, embrace them: The first step is to acknowledge these emotions before we explore and control them. If you experience strong reactions to the below-mentioned situations, then you can consider scheduling a meeting with the financial / stock advisor.
The conversation with the expert should revolve around thinking, approaching and managing money in the right way. Remember, financial awareness is the first step in this process.
Energies do come back to you: Here we would like to underpin the importance of your thoughts and their impact. Few people hold the assumption that money is the root cause of every problem. It is important to clean the blockages and allow positive thoughts rein your mind.
The age-old method never goes wrong: We give a lot of substance to the role of saving and investing in stocks. You can start with a small amount and then you can top it up with additional money. Plan your retirement when you are young.
The comparison game may not always work: It is an easy task to compare our stuff with others and switch to a self-pity mode. Jealousy leads to self-empathy which leads to frustration and the down run in the emotional cycle doesn’t seem to have a full stop. Instead, spend your time on focussing on what you have and getting the most out of it.
Take a pause to ‘Appreciate’, ‘Forgive’ and ‘Forget’: It is a good habit to display gratitude for what you have. We do commit financial mistakes. However we should also accept it, learn from it and move on rather than clinging to it.
How Research and Ranking can help you?
Mastering the emotions is indeed not everyone’s cuppa tea. Once you achieve the milestone of self-control in your life, you are on a roll. And this is especially true in the situations where money matters. Many researchers believe that people who have made sound financial decisions tend to take balanced and optimistic approach en route to wealth creation. At Research and Ranking, we assist and motivate our clients to take rational decision while advising them on long-term wealth creation. Our highly qualified researchers are committed to advising on best wealth creation strategies for long-term investments.