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Mind Over Money

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Since the fall of Lehman Brothers, the crash in the market, the rise of foreclosures, and the depressing rate of unemployment, many of us have had worries about money. But money worries are not limited to financial crises in the general economy. There are some people who are always worried about money, always afraid that the bottom will fall out.

What are some of the sources of these financial worries? Well, a lot of it depends on what money means to you. Consider the following possible event: Your income and net worth are decreased by 30 percent. What would that mean to you? What does money mean to you?

There are five common beliefs about what money means to you.

  1. Status. You think that having more or less money determines your status among people whose opinions you respect. You look at life as a race where people with more money are winning and, in this case, you are losing. You think of yourself as climbing a ladder, but when you lose status you think of people stepping on your fingers as you clutch the rung above you. You are continually rising or falling. You think of yourself as a loser or a winner. You find yourself feeling humiliated or proud, envious or contemptuous, depending on the money you or others have. What you buy reflects your status -- the car you cannot afford, the labels on the clothing that is over-priced. You are willing to leverage yourself to keep up with the Joneses, who never invite you over anyway.
  2. Self-esteem. This is somewhat related to status, but it stands on its own wobbly feet. You equate money with who you are and what you are worth as a human being. You talk about what someone else is worth. You feel good about yourself when you are making what you think you should make, but worse about yourself when you make less. When you lose money, you feel anxious, ashamed, and guilty. You equate "success" as a human being with your bank account and your income. You are willing to work long hours doing things that are unrewarding simply to make more so you can think better about yourself. You regret decisions you made on investments that went badly because you think that you are stupid or foolish for making the wrong decision -- and then you dwell on these decisions for months or years. You, too, like having status objects to advertise your esteem -- but a lot of this is for yourself, to prove to you that you are worthwhile.
  3. Security. You think of money as a way to buy peace of mind. It symbolizes that you will be able to take care of things -- should anything bad happen. You worry about the money that you will need should you lose your job, get sick, or have to take care of your kids. You worry about outliving your money and facing retirement with only Social Security to live on. You tend to hoard money, get upset when your spouse spends "too much," get anxious when you make a purchase, and you worry about your investments. You like insurance and worry if you have enough. You think, "If I lost this money, how would I be able to take care of my kids?" while you equate the needs of your family -- and your own needs -- with materialism. Because you are so focused at times on money as security, you overlook other important sources of security, like having a good relationship and a meaningful life.
  4. Motivation. Regardless of how much money you may or may not have, you think that you need to be concerned over money to motivate yourself to work harder. You set financial goals -- and, then, when you reach them, you experience momentary satisfaction as you raise the standard even more. You chase after rising expectations that you impose on yourself. When I ask you, "What would be enough to make you satisfied?" your only honest answer is, "More." You think that becoming satisfied will lead to laziness, losing your edge, and becoming complacent. You are like a shark that has to continue moving forward. You fear satisfaction. You cannot live in the present moment because you are running to the next one.
  5. Utility. You are practical and wise about money, because you look at it as currency that buys other things. For you, money is what you use to buy more useful experiences, outcomes, or goods. Your buying is based on real needs, not false needs or status symbols. You can be as satisfied with a pizza as you would be with a fancy dinner in a palace. You care less about what other people care about and more about the things that you really enjoy. When you buy something -- like a car -- you think about how comfortable, practical and useful it will be, and less about how others might evaluate you while you are driving it. You don't leverage yourself to buy things you don't need or to take risks you would be better off avoiding, because it is not useful or practical to have to worry about debt. You value having the time to enjoy your life -- time for your family, time to play, time to sleep. These are "utilities" in your mind, and money is only a way of purchasing them.

So, which of these five mindsets do you have about money? If you lost -- or gained -- more money, would it be filtered through the mindset of status, self-esteem, security, motivation, or utility? It's clear which mindset is the most rational, the most balanced, the most flexible. Have you lost the perspective that money is simply a currency? It buys certain things. It costs something to make money. Taking risks, going into debt unnecessarily, keeping up with others, beating people in a race -- well, those are real sources of stress. They are choices you don't have to make.

Money is not useful in and of itself. Having a thousand dollars under your nose doesn't make you happier. It's what it means, what it buys. And there are a lot of things money doesn't buy.

I'd like to start by thinking about what is free. Think about it. What could you do today -- this week -- that is free? What could be enjoyable, meaningful? Spend a lot of time with what is free and then, if you need more, get some money and spend some money. And then come back to what is free. That's freedom, isn't it?

For more by Robert Leahy, Ph.D., click here.

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