3 Ways To Hack The Psychology Of Money Using A Financial Coach’s Tools
Updated: May 2, 2023
Written by: Sophie Hau, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Have you ever remained in a job you dislike for the paycheck, spent more than you had planned, or just felt stress regarding money? You aren't alone.
Every time I sit with my clients during the inevitable task of going through their budget. 90% of them tell me they are ashamed about their spending habits, fearful when looking at their bank accounts, and unsure where their money went. Everyone can agree that money doesn't necessarily equal happiness but undoubtedly contributes to it. Money is vital but intricate: it is involved in all levels of society and drives most of our life decisions consciously and unconsciously, yet it is taboo. Why? Because it is heavily loaded and entrenched in our culture, and most importantly, we don't know how to talk about it.
On the one hand, psychotherapists aren't trained to address finance-related issues. On the other hand, Financial Advisors use only education and rational thinking to tackle money management. As a result, Money Coaching has emerged to fill the gap at the intersection of the three fields: psychology, education and coaching. In this article, I will share how Money Coaches address the elephant in the room so you can tame your relationship with money on your own.
Be familiar With Your Money Story
Your wealthy friend isn't smarter than you.
Successful and healthy money management does not depend on your mathematical and logical brain. With more emotional load than its financial value, money also has cultural, societal, and family connotations and remains the leading cause of divorces and the number one cause of stress for individuals. It is entrenched in power and status but is also associated with social constructs: childhood, intergenerational trauma, culture, race, gender, and class.
My client, Janet, is a second-generation Asian immigrant in the USA, and her parents have sacrificed their whole life juggling multiple jobs and saving every penny to create a better future for their children. Adult Janet has reluctantly kept her boring – but steady – well-paid job to follow her parents' dream. Only when she dived into her money story did she realise that she has integrated that a job is just to put food on the table regardless of how fulfilled you are.
A Money Coach addresses the core issues of both your lack of and your bad financial actions to deconstruct what has been holding you back. The methodology includes writing your "money story", to understand what your narratives have been hiding and implying: are they inherited by one of your parents or caregivers? Or did you manifest them in reaction to your unique experiences?
Unravel Your Inner Money Beliefs
Money is controversial.
"The love of money is the root of all evil", "the more you have, the better you are", "your money is your self-worth", "success is defined by money”... We grew up in a society with double-bind standards when it comes to money. Society, parents and friends send mixed messages about wealth. Our personality combined with unique experience creates money beliefs that differ from those you grew up with. And before you reach 10, you have pretty much formed what money means to you.
Back to Janet's story, after graduation, she started making good money in tech but lived paycheck to paycheck for years because her younger self had witnessed how her parents had worked so hard to neither take care of themselves nor enjoy life. Unconsciously, she didn't want to reproduce the same thing for herself and instead went into revenge spending. Whether you think money equals "good" or "bad", you need to understand what has been driving your life decisions in a positive and more challenging way. Money Coaching helps you free yourself from those harmful thoughts so you will stop repeating the same pattern over and over again.
Decipher Your Family Patterns
Money isn't taught in school.
Financial topics are avoided at work, family gatherings, and with friends. In fact, people would rather talk about sex, politics, or religion than money. You can hear your friend's detailed bedroom adventure or be caught up in a political debate about the newest policy, but you won't know how much your friends earn or how they handle their finances.
In the past, Janet's paternal grandparents lost all their fortune in gambling. Then, when her parents pursued their American Dream, they got lured into some get-rich-quick schemes and took unnecessary risks with individual stock picking and friends' businesses, which made them averse to any form of investment today. Janet didn't know the story until she jumped in with both feet and confronted her parents: she finally understood that her family has a history of money slipping away, and she refuses to fall into that trap and is now breaking the cycle.
By becoming familiar with your Money Story, you can assess the roots of your problems to reframe your relationship with money and break the intergenerational cycles. Money coaching can help to control money instead of money controlling you, so you can design your own life.
What's Next?
How much do you spend monthly on each category (groceries, restaurants, shopping...)?"
Have you saved enough for your retirement?
Do you have a robust system to assess if an investment is good for your portfolio?
If you can't answer any of the questions, your issues are deeper than just a simple lack of information. Financial education or a solution alone can't solve a financial problem, but a behavioural solution might.
You can start today exploring the Money Stories of your childhood to assess what has been blocking you. Journaling can help.
Alternatively, Money Coaching can accelerate the process and give novel perspectives. Not only can it help improve one's financial management, but also it helps all aspects of their life. In that case, book a call here to start exploring the origins of your conflict to transform your relationship with money and live your life fully.
Sophie Hau, Executive Contributor Brainz Magazine
Sophie Hau is a Certified Money Coach (CMC)® who helps her clients transform their relationship with money to become financially healthy. With over 15 years of experience working in non-profit, corporate, and entrepreneurship spanning 3 continents, her diverse career has led her to create a company bridging personal finances, coaching, and psychology: HØDL by design. The platform aims at raising awareness about the psychological factors in individuals' relationship with money so that finances are no longer a barrier to achieving one's full potential. Her mission: making financial education accessible to all.
