Guest Writer, Ivy H. Menchel, Family Wealth Partners
If you are like most people, you probably have a multitude of emotions when it comes to money – happiness, fear, shame, anger, excitement – to name just a few. Each of us have a complex relationship with money and simply hearing or reading the word may stir your emotional pot. It has been the subject of countless books, songs, plays and movies. For a small piece of paper, money carries a lot of weight. Yet the green stuff means different things to different people. Some may believe money means security; to others it can mean power; someone else may define it as freedom and to another person money can be a burden.
Most of us presume our financial decisions are based on rational considerations — benefit versus cost, desire versus need — however the blood pumping muscle in the middle of the chest controls as much, if not more than, our heads. Yes, emotion is part of almost every human decision… and money IS emotional!
As a Certified Financial Planner and Certified Divorce Financial Analyst, I deal with financial emotions and behavior on a daily basis. My financial planning process begins by asking clients what is most important to them and time is spent trying to help them understand what money truly means to them, who they are from a fiscal perspective. Their history, beliefs and behavior make up what I call their monetary blueprint and will significantly impact many aspects of their life.
Money attitudes are deeply engrained in all of us based on upbringing as well as cultural and psychological background. The effect on decision making should not be underestimated. It is certainly no secret habits and beliefs begin forming in childhood and evolve as one progresses through life. Parents shape their children in so many ways and financial relationships and behavior are included as well.
Perhaps parents fought about money or used money as a way to control others; they may have been extremely generous or financially irresponsible. In some households one parent may have paid the bills while the other managed the investments or one of them handled everything; did they communicate openly about money and make joint decisions or did one take complete control? If we take a moment we, as adults, can see at least a hint of our parents’ financial attitude(s) peeking through. And if one devotes a little time to self-reflection, it is clear to see our parents have contributed (probably significantly) to our monetary blueprint.
A few years back, I had a client burst into tears as we were discussing how finances were handled in her marriage, “Oh my goodness, I have turned into my mother. I swore I would never be like her.” And in some respects she was – though she was highly educated with several advanced degrees, professionally accomplished and good with numbers, just like her Mom, her husband handled all of the finances and she was uninformed and uninvolved.
Culture and religion will also play a role in one’s relationship with money. Christianity advocates tithing; The Chinese culture promotes saving; Islam views money as a means to a higher value, not a goal for personal accumulation or an end in itself. Recently a Latino client had a sizable deficit in his spending plan. He was sending money to his parents and would not reduce or eliminate this line item from his budget. In his mind, this was non-negotiable. Reducing spending on himself and his children was the acceptable course of action based on the practices of his culture.
Another emotional consideration which typically does not have anything to do with money directly – the notion of justice – is often seen in lawsuits, including divorce. The plaintiff and defendant want to be treated fairly. The party who sees him or herself as the victim, strives for affirmation in the form of compensation for being wronged or mistreated. They seek moral justness and want what they view is deservedly theirs. Or the other party may feel an obligation to pay an excessive amount stemming from guilt or shame due to some sort of “offense.” Both, asking for too much and giving away too much can have non-cognitive roots.
Money is a symbol of relationships. An individual’s financial situation is a means for one to express deep feelings. In essence, the way one deals with money is very often the same as the way one deals with their personal connections and is so interwoven with other aspects. It can cause strife in a marriage and then ultimately in a divorce. Two people join together with distinct backgrounds, habits and expectations. Some successfully blend and balance financial rituals while incorporating practices and beliefs from each individual; some struggle with this.
Wouldn’t it be wonderful if people were more aware and developed a deeper understanding of money relationships and emotional states? Perhaps we could create healthier financial dialogues, smoother negotiations leading to more beneficial, sustainable choices for the future. Imagine the impact on the divorce.
Join Ivy along with Master Money Coach, Carrie Rattle, and myself, Wednesday, May 16th in NYC. More information available here.