Do you have negative money emotions?
So this part of our comprehensive guide to getting good with money is all about the emotional side of money, which I think I can speak for many of us is often the most difficult part. If you feel like money weighs heavily on you, you are very much not alone.
64% of Americans say that money is a major cause of stress, with 49% saying they have spent more than they can afford because of their emotions things like stress, and the boredom, et cetera. Money is fundamentally emotional, and it’s fundamentally about more than just the money itself. And accepting that and gaining control over how you feel about money is one of the big keys to getting good with it. Because you may not always have complete control over things like your income or your expenses, but you can gain control of how you feel about these things.
Financial advisor Rick Kahler says: “only about 20% of financial planning clients respond to logic and education alone. For the other 80%, there are underlying emotional issues that impact their spending habits.”
Some people even need financial therapists like the father-son duo of Brad and Ted Klontz to tease out why they have money trouble. They rely on things called money scripts, which may have been ingrained into people’s minds and color their relationship with money.
Money scripts include things like, all women are bad with money, or, your self-worth is based on your savings, and other harmful and false beliefs. And there are probably some money scripts that you’re living by right now without even realizing it or your ideas that you’ve internalized about money that are way more based on emotions or shame than any kind of financial literacy.
For a lot of us, the university is the first time where we’re really confronted with the facts that money has a huge impact on how we live, how much finance and class can impact everything around us, and how coming from different socioeconomic backgrounds than peers can have a huge impact on how you feel.
Even while many colleges are prioritizing accepting students from different socioeconomic backgrounds, studies have shown that students who come from these more challenged backgrounds often have a much more difficult time taking advantage of the college experience.
As we mentioned in our blog, I’m someone who experienced financial insecurity when I was young, and I also spent much of my adolescence around people who had vastly more than I did. And so much of my terrible money decisions were driven by that desire to keep up, or to look a certain way, or associating who I was with what I could afford.
And when you’re in college avoiding, spending to keep up with the life you want to live can be nearly impossible. Take something like Greek life, for example, where club members can easily rack up $7,000 or more just on having the proper outfits, attending the right events, paying dues, living expenses, et cetera associated with being a part of that club.
For an incoming college student, that network of sisterhood and socialization can be a real boon if you don’t know anyone, but it can also be incredibly elitist and exclusive to students who can afford the luxurious lifestyles.
And in addition to these economic disparities being all around us in college, college is often the first time where many of us have to handle our day-to-day living expenses on our own, even if we’re still somewhat being subsidized whether by parents, or scholarships, or student loans.
Even if some bills are covered and out of sight for you, there are many choices you’re going to be making in college on a day-to-day basis with your money where are the outcomes, financially, are up to you whether you go out for a meal with your friends or you stick to your meal plan, whether you buy a cute new outfit for that party, or you spend that money on the music festival you probably can’t afford.
It’s easy to feel like college is a time in which nothing really counts and you’re free to make all of those terrible decisions, including financial ones, but they add up and can have a real impact on the relationship that you’re creating with money long-term in addition to the savings you’re missing out on. One of the biggest mentalities to switch out of when it comes to money is, it’s in my account, therefore, it’s OK to spend.
When I was in college, I lived and died by that number in my account, and that was the money that I considered available to me until I inevitably overdrafted, in which case, I would just continue to try and spend until they would stop me. This “in my account, available to spend” mentality is one of the money scripts that the Klontzes often encounter with their clients.
It can manifest this feeling of, well, I might as well spend it. Because if I don’t spend it now, I will later anyway. A similar money script of theirs for people who come from wealthy or comfortable backgrounds is, there will always be enough money. In other words, this mindset can come from a place of privilege like there will always be more and a place of scarcity or misplaced practicality i.e.
I need to spend what I have now before something else makes it go away. This is one of the biggest problems with living off that one lump sum. All the money kind of bleeds together, and it’s hard to differentiate what you have now versus what you need for later, which is why I categorized budget is so important.
But if you really still don’t trust yourself not to overspend, give yourself a daily allowance in cash and leave the rest at home. There are even people who literally freeze their credit cards. But sometimes the emotional side of money extends beyond just a feeling that money in your account equals money available to spend.
Sometimes it’s about feelings of inadequacy, and it’s easy to think that buying a certain thing or having a certain thing will suddenly make you feel a certain way or appear a certain way to others. And trust me, I have been there.
I once stole my parents’ credit card and got grounded for a month one summer to buy a pair of UGG boots because I considered that the thing that I needed to have in order to be cool which, like 10 levels of yikes. We idealistically often like to think of college as a great equalizer, people coming from all different backgrounds to learn and grow together.
But anyone who’s been to a college campus knows that that is very much not true, and socioeconomic differences will display themselves very clearly amongst the student population. And while it is true to some extent that college can act as an equalizer for people from different backgrounds, with bachelor’s degree holders being about half as likely to be unemployed and earning, on average, about $32,000 more a year annually than those with just high school diplomas, it’s less true that it is much of an equal opportunity step as we’d like to think.
According to the association of colleges and universities, only 22% of high school sophomores from lower socioeconomic backgrounds expect to pursue a college degree. That means that they are less prepared for the application process should they choose to pursue it and have fewer financial resources to pursue visiting and applying for colleges.
According to a 2016 report from the Pell Institute, when organized into four income groups, 77% of college students belong to the top two groups, with students from the top quarter households that made more than $116,000 per year accounting for about half of all college degrees awarded.
The lowest quarter students from households earning $35,000 or less only accounted for 10% of degrees awarded. So while college may help you gain an equal footing on graduation, even making it into college in the first place is going to be much more difficult from people from those lower socioeconomic backgrounds.
And of course, when it comes to the game of unpaid internships, I think we all know who has a leg up and taking advantage of them. So especially if you are from one of those lower socioeconomic backgrounds, at college, you will likely find yourself surrounded by people who come from different means than you do.
These are people who eat out all the time for meals, never stick to their meal plan, go on weekend trips, buy new outfits for every party, and generally live without having to be all that aware of the money things that are well outside of your budget which can create a huge sense of FOMO, where you feel like you’re missing out on the “essential” college experience because you simply can’t afford to do all of the things these other people are doing, which, in some cases, will inevitably lead you to spending student loan money on frivolous stuff or going into credit card debt in order to keep up which are both things that I did.
And it’s not unusual or weird of you to notice when your friends are spending a certain way. 60% of Americans report being curious as to how friends are able to afford the things that they post on their social media. There is a creeper inside of all of us.
One of the biggest ways to overcome this hurdle of feeling like you have to spend in order to keep up with those around you is to get very comfortable with the phrase, “it’s not in my budget.” The more you are clear about your boundary-setting around money and don’t open up the expectation that you can’t join in on certain things the less you will feel like you have to make up an excuse or give in to the peer pressure in order to keep up.
In addition, you can start to find things to do that are ways to spend quality time with the people that you want to be spending time with that don’t necessarily require a ton of money trivia and movie nights at home, potluck dinner parties, picnics, all kinds of things that can be accessed at all different income levels and will still give you that burst of fun college time with my friends.
Around 80% of people report not communicating it with their friends when they’re overspending, which is understandable when it can feel like it’s embarrassing or shameful to say that something isn’t in your budget.
But ultimately, if you are not able to get comfortable with that dynamic, you are going to be setting yourself up for financial failure. And if there are people in your social group who you think would genuinely think less of you, or judge you, or cut you out if you revealed not being able to keep up with their spending habits. Those people are not your friends. Time to x them out of your circle. Not cool, not cool.
Lastly, one of the most common side effects of an unhealthy emotional relationship with money is impulse-spending. This is spending that you’re going to do that is not motivated by a rational, thought-out need or something that you even really, on many levels, want.
This is spending that’s motivated by moment-to-moment emotional state things like stress, or anger, or envy, or happiness, basically times at which emotions are clouding our ability to make decisions about money and leading us to want to satisfy an urge with a quick buy. And for many of us, online shopping, especially from the comfort and/or discomfort of your dorm room, can be one of the easiest ways to fall into the impulse-spending trap.
If you find yourself online shopping after a bad exam score or online shopping as a reward for a good one, you’re spending emotionally.
According to social psychologist Jennifer Lerner, negative emotions like sadness or stress actually increases the amount of money you’re willing to spend at once because it gives an immediate, small mood boost. Buying things does give a quick head of dopamine, but it’s short-lived and an unhealthy coping mechanism if you find yourself constantly buying things you do not want or need just to boost your mood.
Having and sticking to a budget with sometimes a little bit of funny money built-in for the times that you want to just spend without worrying about it too much is a good way to make sure that you’re keeping these things in check.
You can literally create a segment of your budget that’s dedicated to those impulse buys so that when you do inevitably occasionally make them, they’re not really impulses.
They’re something that you’ve already dedicated money for. Or you may want to create a buddy system, where you have a person you can reach out to when you’re tempted to spend based on an emotion that may not be rational.
They can give you an instant veto on an emotional purchase or talk through with you about the reasons for buying it, and you can do the same with them.
Making sure to plan ahead and have outlets for when you are tempted to emotionally spend is incredibly important. I find that, for me, often, when I’m tempted to emotionally buy, I like to make myself a little mood board of the saying that I’m thinking of.
Like if it’s a pair of shoes, I’ll take the time to build a little mood board or outfit around the shoes in question. It takes up time, it allows me to use my imagination, and by the time I finish, I often find that I don’t even really want the item anymore.
I just wanted to fantasize about it for a little bit. If your emotional spending is out of control, you may want to check out resources for campus counseling, finding someone to talk to in a more professional and prolonged way about why you may be having this relationship to money.
One of the most important phrases you will ever integrate into your adult vocabulary is, “it’s not in my budget.” You have to be able to be candid about what you can and can’t afford and not allow yourself to get suckered in to being a part of something or buying something that you simply cannot afford and just cringing as your credit card gets swiped at the table.
There can be awkward moments of things like a shared trip, where bills are split differently, or a birthday when not everyone’s ordering the same thing at dinner, but everyone is expected to pay their fair share.
And making sure that you’re comfortable with having these conversations up front, and establishing the expectation, and even sometimes opting out of things if it’s not necessarily something you can afford means that you won’t find yourself backed into a corner financially with friends or, even worse, acquaintances you don’t even really want to be eating out with.
And if you extend this to people you might live with, like roommates, you can start to think of it in terms of very, very proactive steps, such as a roommate contract. Just you might upfront want to split the chores that you’re doing or rotate out uses of things like the television, you should also plan for all of the different little money things that could easily cause conflict in a household.
You don’t want to be left paying a ton of money for your friend who runs the air conditioning whether they’re home or not because they insist on splitting it evenly.
Proactive planning and agreeing beforehand on the terms means that you will not walk into a social situation and be left feeling uncomfortable. People often act like money and friends don’t mix, but unclear money and friends don’t mix. The truth is that money and friends have to mix in many situations because a lot of social activities cost money.
But feeling uncomfortable or shying away from these discussions only really ensures that you’re going to end up in situations that you wouldn’t have chosen for yourself. Money is deeply interwoven into our sense of self our value, our sense of security, our worth. But ultimately, gaining a healthy relationship is about decoupling this sense of self with how much money you may or may not have or what you may or may not be able to afford.
Gaining control over your money and having a comfortable, healthy relationship with saying no to things are parts of the key steps to making sure that you are in charge of the narrative around money in your own life and not the other way around. It’s easy to feel shame, or insecurity, or spend out of misguided emotions, but it’s not OK to build a life that way. Gain control over how you feel about money, and you will start to gain control over how you spend it.
Don’t forget to check out our blog to get good with money for college students. And for all things talking about money.