If you want to understand your finances, think about your emotions

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• If you’ve been struggling with your finances, it may be because your feelings about money are complicated.
• It’s important to understand your money story – the beliefs you have about how you get and spend money.
• To understand this, think about your feelings when interacting with money and write it down.

If you’re like most people, you might struggle to follow popular personal finance advice. Why this? Well, for a lot of people it’s because it feels dry, technical, and a bit disconnected. Moreover, it does not correspond to the dreams, values, beliefs and emotions of many people.

For many of us, the decisions we make about our finances are not based on logic and pragmatism. On the contrary, they are rooted in emotion.

There’s a disconnect between financial literacy and emotions, because success with money seems to be simple, says Jacent Wamala, a licensed marriage and family therapist.

“The steps to create financial freedom and independence are very simple, but most people don’t follow otherwise simple frameworks for financial success,” says Wamala. “It’s because they haven’t addressed the psychological contributions to their financial situation. Dealing with emotions and money stories that are often filled with trauma and turmoil can be very painful.”

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Understand your money story

Our ability to have a positive relationship with our finances is complex, to say the least. And it starts with our history of money, which is shaped by the beliefs and perceptions we have around our finances. For example, we might believe that we don’t deserve to enjoy financial stability, and the only thing we will ever know is that we constantly feel short of money.

“The most dominant approach to financial literacy is to tell people what to do – i.e. focus on their behaviors, how much they should save, how to start investing, etc. – without including the importance of their thoughts and feelings,” says Certified Financial Therapist Lindsay Bryan-Podvin. “It omits the importance and power of the story of money and emotions.”

Bryan-Podvin points out that the result of focusing behavior solely on financial literacy and education is that it shifts blame for a person’s financial situation solely to their will.

“It’s not as salable to say, ‘Hey everyone, your money story deserves loving and empathetic exploration as you work to improve your financial health,'” says Bryan-Podvin.

The links between emotions and money are cyclical in nature, Wamala explains. “Emotions can cause and contribute to how you spend money, and vice versa, how we spend can cause and contribute to affect our emotional state.

“It all stems from the history of money that you learn growing up – from how family talks about and interacts with money, to overt and covert messages received from friends, school and community about money. ‘money,” continues Wamala. “You often pick up the habits we see from others or flip the other way because we’re deterred by what we see.”

Financial literacy is not enough to solve many problems”

Audit Your Emotions – and Consider a Journal

To get in touch with your emotions around money, keep track of them, suggests Wamala. How? Start by evaluating how you feel when you make purchases or check your bank account. “I always tell my students to do audits,” she says. “Check where your money went in the past 30, 60, 90 days and ask yourself if your emotional state contributed to how you spent money during that time?”

Also, have there been any life-altering circumstances – think of losses, breakups, birthdays, celebrations, hormonal fluctuations, or illness – that might have affected how you spent your money ? “Documentation is always useful when it comes to tracking habits, behaviors and decisions,” says Wamala. “It can take the form of a budget.”

Wealth starts with well-being, says Wamala, and that includes emotional health. “Ignoring your emotions keeps you from knowing how and why you spend money,” she says. “Most purchases are made emotionally. Being aware of your emotions allows you to have more influence over your situation. And through that, you can start to see more financial progress.”

Bryan-Podvin recommends keeping a diary of your money and your emotions that arise for at least a week. It works like this: whenever you have a money-related interaction, write it down and how you felt.

For example, once you’ve paid for your groceries, ask yourself what you think about it. Did you feel proud? Anxious? Indifferent? Or, let’s say you receive a Venmo request from a friend that you forgot to pay for your share of a recent ski trip. Do you feel embarrassed? Relieved? Avoiding?

“We will always have emotions, especially when it comes to money,” Bryan-Podvin says. “Rather than demonizing our emotions related to money, it’s a much more empathetic and enduring approach to engaging with our emotions.”