Money and Well-being: Emotions and perceptions that impact our financial decisions

I often hear people say, “If only I made more money, I would be happier and life would be better; I would be able to get the things I want out of life.” This same statement, in one form or another, comes from people who make less as people who make more.

Since this same sentiment is conveyed by people at all income levels, there must be more than money getting in the way of people’s wants and dreams. For many of us, emotions can be a major roadblock to reaching our goals. Emotions often cause us to spend money on things we really don’t need or want long-term. Emotions can also prevent us from doing what we need and want long-term.

What does emotion look like? It looks like the red dress and new coat you bought because you had a bad day at work. It looks like the big flat screen TV bought to have friends over to watch a sporting event. It looks like the new car you bought because you really like the car your neighbor owns—and you deserve the better things in life too.

Emotion is linked to self-esteem and other attitudes and perceptions. Self-esteem can have great impact on spending and financial decisions. If we feel something is missing from our lives, or that we don’t measure up to the expectations of ourselves or others, we might buy something to prove ourselves or to fill the void, at least temporarily. Or we might pass up opportunities that could put us ahead financially.

Our level of self-esteem and other emotions can change from day to day, but do we want our credit card balances to increase — reflecting our emotions?

Remember, the fix you get from the purchase is only temporary—the real change in how you think or feel about yourself and others must be made in your own mind.

You can’t fix how you feel inside just by changing things on the outside.

Other emotions that impact our financial decisions include depression, anger and retaliation; boredom or the need for recreation; fear; envy or unrealistic expectations; the need to use money to control, or power over other family members, friends or people; and emotions related to attitudes, perceptions and values we acquired during our youth and from our life experiences.

Greatest Thoughts by Suzanne Zemelman, MS, JD: Consumer & Family Economics Specialist