While doing some searching for finance/psychology issues, I stumbled on a site by Fred S. Brown. A Yale graduate, he has over 25 years of experience as a Personal Finance Consultant. I was intrigued by the Family Money Visualization exercise. It is a more indepth version of the questions in my previous post.
http://www.moneyandspirit.com/approach.html
Wednesday, October 25, 2006
Wednesday, October 18, 2006
Personal Finance Blog #2,756,148
Why write yet another blog on personal finance?
I created this blog to breakdown finance to those who are struggling to understand it. Contrary to popular belief, it can be understood. Once the foundation is laid, the fun can begin. Get creative, and it can pay off. Literally.
Some think finance is all the same, whether you are looking at a corporation’s balance sheet or your personal financial statement. While the same basic principles apply, personal finance is different. A corporate buying decision rarely has the psychological component of a personal buying decision. Yes, I said psychological. Personal finance decisions use more than one side of the brain. There are analytical and (gulp) even emotional factors that come into play. To ignore this aspect is to repeat the same mistakes over and over.
Case in point: I spent the last year counseling people in financially stressful situations. It was interesting how a person’s attitude toward their situation would impact the outcome. If the person was not ready to make serious changes, their situation may temporarily improve but long term they would find themselves in the same situation i.e, using the counseling service for the same issue. The solution was useless if the mindset was not there.
It is time to fuse psychology and finance. Not in a hokey, "I am one with my wallet " way. However, asking brutally honest questions about how you feel about your finances can’t hurt. The bonus is it could uncover some financial landmines. Sometimes our beliefs can lie so deep under the surface we do not even realize they are there, kinda like hidden fees.
Some questions I formulated to consider:
What is my earliest memory of money? Was it earned or was it given to me?
How did my parents handle money? (Answer separately for each parent or primary caregiver) Do I handle money more like one, both or none of my parents? Did I make a conscious decision not to handle money like one or both of my parents?
Was money a source of anxiety in your childhood home? Why?
If you have siblings, how do they manage their money?
If in a relationship, do my partner and I have similar or opposing views of money?
Do you plan major spending expenditures (car, appliances, etc)? If you are in a relationship, are major purchases discussed beforehand? How about minor purchases?
How often do you spend more money than you intended to (register total is a surprise)?
What is more important to me than money?
If I had unlimited money what would I do with it?
If I lost my ability to earn money how would that make me feel?
List one word that describes your current attitude toward money?
List one word that describes the attitude you would like to have toward money?
Be honest. Your answers might surprise you. Then again, you probably already know how some of these issues affect your attitude toward your finances. It’s important to know where you are in order to see where you are going.
I created this blog to breakdown finance to those who are struggling to understand it. Contrary to popular belief, it can be understood. Once the foundation is laid, the fun can begin. Get creative, and it can pay off. Literally.
Some think finance is all the same, whether you are looking at a corporation’s balance sheet or your personal financial statement. While the same basic principles apply, personal finance is different. A corporate buying decision rarely has the psychological component of a personal buying decision. Yes, I said psychological. Personal finance decisions use more than one side of the brain. There are analytical and (gulp) even emotional factors that come into play. To ignore this aspect is to repeat the same mistakes over and over.
Case in point: I spent the last year counseling people in financially stressful situations. It was interesting how a person’s attitude toward their situation would impact the outcome. If the person was not ready to make serious changes, their situation may temporarily improve but long term they would find themselves in the same situation i.e, using the counseling service for the same issue. The solution was useless if the mindset was not there.
It is time to fuse psychology and finance. Not in a hokey, "I am one with my wallet " way. However, asking brutally honest questions about how you feel about your finances can’t hurt. The bonus is it could uncover some financial landmines. Sometimes our beliefs can lie so deep under the surface we do not even realize they are there, kinda like hidden fees.
Some questions I formulated to consider:
What is my earliest memory of money? Was it earned or was it given to me?
How did my parents handle money? (Answer separately for each parent or primary caregiver) Do I handle money more like one, both or none of my parents? Did I make a conscious decision not to handle money like one or both of my parents?
Was money a source of anxiety in your childhood home? Why?
If you have siblings, how do they manage their money?
If in a relationship, do my partner and I have similar or opposing views of money?
Do you plan major spending expenditures (car, appliances, etc)? If you are in a relationship, are major purchases discussed beforehand? How about minor purchases?
How often do you spend more money than you intended to (register total is a surprise)?
What is more important to me than money?
If I had unlimited money what would I do with it?
If I lost my ability to earn money how would that make me feel?
List one word that describes your current attitude toward money?
List one word that describes the attitude you would like to have toward money?
Be honest. Your answers might surprise you. Then again, you probably already know how some of these issues affect your attitude toward your finances. It’s important to know where you are in order to see where you are going.
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