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How to make healthy financial choices every day, according to a financial psychologist
How reframing your emotions and changing your daily behavior can help you save money.
- There is a psychological connection between your emotions and your spending habits. Many people live in a "reactionary" mode where they spend money in reaction to the day's events.
- Living in "intention mode" can help you reframe daily financial decisions - "how will this get me closer to my future goals?"
- Financial psychologist Dr. Tracy Thomas shares her tips for harnessing the power of emotion and intent to create a healthy, financially stable life.
How your emotions drive your financial habits
Your feelings and emotions deeply affect your financial habits...learn how to control them for better financial decision-making.
Image by Lightspring on Shutterstock
Dr. Tracy Thomas is a psychologist and self-proclaimed emotional scientist who helps highly driven, emotionally sensitive people harness their emotional strength to live an elevated life.
"At one time," Thomas explains, "emotional-sensitivity was believed to be a weakness. However, new work into emotional sensitivity reveals that emotionally sensitive people aren't just overly-emotional, 'touchy' or 'hyper-sensitive'. Without knowing it, they actually possess an incredible gift of creativity, intelligence and intuition."
Your feelings deeply affect your financial habits.
When emotionally sensitive people combine their gifts with drive and motivation, it becomes an asset that can lead them to wealth, success, and happiness.
There is a psychological connection between your emotions and your spending habits. As human beings, our emotions drive most everything we do — and the choices we make with our money are deeply affected by how we interact and react to things that happen in our lives.
Living in reaction is something we do most of the time, according to Dr. Thomas. When we're in a reaction, we tend to create chaos. We aren't able to harness our emotional energy into creating positive investments and outcomes.
Living in reaction means that we're often simply reacting to our immediate situation, immediate wants, immediate "needs" with little thought to the needs of our future self.
The more reactive you are, the more you will simply "engage with life" instead of investing in building the life you truly desire.
Acting with intention when it comes to your financial life doesn't mean removing all emotion from the situation at hand. In fact, you are just redirecting those emotions.
To act financially with intention, Dr. Tracy Thomas suggests that we consider what our future self would want us to invest in today. Making emotional choices doesn't have to be a bad thing - as long as those emotional choices live to serve you in the future instead of in the moment.
Living in a state of reactivity also creates distractions. We are sidetracked from our original, long-term goals and lose sight of what we really care about. Ridding your life of financial distractions can help you focus your energy on giving your future self what they desire most.
Changing the way we think about finances
Reframe what it means to "save money" into something that is more positive by placing emotional meaning in your investments.
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Most people, according to Dr. Thomas, are reactive by nature. We react to our immediate emotions, needs and desires - often putting our long-term goals at risk. The first step in changing the way you interact with money is recognizing that there are emotions and behaviors in your life that need to change.
Monitor your behavior: Am I going to be intentional or reactive today?
A big part of this change, Dr. Thomas says, is monitoring your daily behavior and really taking note of when you are reactive and when you are intentional.
From there, you will be able to identify healthy and detrimental behaviors that are affecting your ability to live a financially healthy lifestyle.
When you go to spend any of your money, Dr. Thomas suggests you ask yourself these kinds of questions:
- Is this an intention? If so, what is my intent with this purchase?
- Is this a reaction? If so, is this a valid reactionary expense or something I can avoid?
- How will this purchase (or lack of purchase) bring me closer to my future goals?
- Will this decision create my desired outcome?
Think about money as a motivation, not a restriction.
Thinking about money in terms of "savings" can feel restricting and often unmotivating. However, thinking about money in terms of "motivation" for your future goals (whether that be a house, a car, a trip, etc) can help you reframe what it means to "save money".
In your mind, no longer is "saving money" something you "have to do" - it's something you want to do. Saving money becomes a goal in itself, rather than something that feels like a burden or responsibility.
Refocus on what you are really invested in by adding meaning to your investments.
Reframing what it means to save money includes refocusing on what your investments are, both financially and emotionally.
If you are currently invested in a home in which you want to do major renovations, that can be a financial motivator. Saving money (to later spend on renovations) will increase the value of your home.
If you are currently investing in a trip for your family, this can be a great emotional motivation. Creating life-long memories and providing a fun vacation for your loved ones is a wonderful goal to keep in mind that will help pull yourself out of reactionary choices and help you think more rationally when it comes to saving money.
The importance of thinking about your savings on a deeper, emotional level
According to Brian Tracy, a leading sales, management, and business success advocate, one of the most important things we can do to better our financial choices is to become a life-long student of how to save money.
Investing is about more than just what's in your bank account - it's a way of life.
Dr. Tracy Thomas also believes that changing the way we view our savings (and money, in general) is about more than just making smarter decisions with the money we have - it's about changing the way we view money at all.
"Your savings goals are really your outcomes for your life. It's about creating something you really want." says Dr. Thomas. If you spend your life in a reactive process, savings tends to lack the powerful drive that successful, wealthy people give to it.
While impulsive, emotional purchases are key signs of bad spending habits, there is merit to pulling yourself out of that reactionary spending mode and still maintaining and emotional intelligence when it comes to your spending habits. Completely separating your emotions from your finances can only make things more difficult, as there are no motivating, impactful meanings behind your financial decision-making processes anymore.
The key is to take yourself out of emotional reactionary spending and still maintain an emotional motivator to creating a healthy financial life.
Thinking about your finances as a powerful and emotional driving force that will create a better life for yourself and the things that are important to you in your life (your business, your family, etc) can make things more cognitively clear when it comes to making day-to-day financial choices.
"The budget is not just a collection of numbers, but an expression of our values and aspirations." - Jacob Lew
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Construction of the $500 billion dollar tech city-state of the future is moving ahead.
- The futuristic megacity Neom is being built in Saudi Arabia.
- The city will be fully automated, leading in health, education and quality of life.
- It will feature an artificial moon, cloud seeding, robotic gladiators and flying taxis.
The Red Sea area where Neom will be built:
Saudi Arabia Plans Futuristic City, "Neom" (Full Promotional Video)<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="c646d528d230c1bf66c75422bc4ccf6f"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/N53DzL3_BHA?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
Frequent shopping for single items adds to our carbon footprint.
- A new study shows e-commerce sites like Amazon leave larger greenhouse gas footprints than retail stores.
- Ordering online from retail stores has an even smaller footprint than going to the store yourself.
- Greening efforts by major e-commerce sites won't curb wasteful consumer habits. Consolidating online orders can make a difference.
A pile of recycled cardboard sits on the ground at Recology's Recycle Central on January 4, 2018 in San Francisco, California.
Photo by Justin Sullivan/Getty Images<p>A large part of the reason is speed. In a competitive market, pure players use the equation, <em>speed + convenience</em>, to drive adoption. This is especially relevant to the "last mile" GHG footprint: the distance between the distribution center and the consumer.</p><p>Interestingly, the smallest GHG footprint occurs when you order directly from a physical store—even smaller than going there yourself. Pure players, such as Amazon, are the greatest offenders. Variables like geographic location matter; the team looked at shopping in the UK, the US, China, and the Netherlands. </p><p>Sadegh Shahmohammadi, a PhD student at the Netherlands' Radboud University and corresponding author of the paper, <a href="https://www.cnn.com/2020/02/26/tech/greenhouse-gas-emissions-retail/index.html" target="_blank">says</a> the above "pattern holds true in countries where people mostly drive. It really depends on the country and consumer behavior there."</p><p>The researchers write that this year-and-a-half long study pushes back on previous research that claims online shopping to be better in terms of GHG footprints.</p><p style="margin-left: 20px;">"They have, however, compared the GHG emissions per shopping event and did not consider the link between the retail channels and the basket size, which leads to a different conclusion than that of the current study."</p><p>Online retail is where convenience trumps environment: people tend to order one item at a time when shopping on pure player sites, whereas they stock up on multiple items when visiting a store. Consumers will sometimes order a number of separate items over the course of a week rather than making one trip to purchase everything they need. </p><p>While greening efforts by online retailers are important, until a shift in consumer attitude changes, the current carbon footprint will be a hard obstacle to overcome. Amazon is trying to have it both ways—carbon-free and convenience addicted—and the math isn't adding up. If you need to order things, do it online, but try to consolidate your purchases as much as possible.</p><p>--</p><p><em>Stay in touch with Derek on <a href="http://www.twitter.com/derekberes" target="_blank">Twitter</a>, <a href="https://www.facebook.com/DerekBeresdotcom" target="_blank">Facebook</a> and <a href="https://derekberes.substack.com/" target="_blank">Substack</a>. His next book is</em> "<em>Hero's Dose: The Case For Psychedelics in Ritual and Therapy."</em></p>
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