By: Barbara Knoblach, PhD., FPSC Level 1 ®
“These are my New Year’s resolutions…”
We all start the year with a collection of resolutions to improve our lives. We want to lose weight to fit into new clothes; we want to join a gym to improve our fitness; and we want to enhance our financial situation to provide more security for our families and ourselves.
But while our plans have the best of intentions, many people face emotional roadblocks that detour, or completely derail, the follow-through required to achieving these goals.
This is especially true in the area of personal finances. While financial decisions can be very analytical – based on facts, figures, charts and graphs – many of these decisions come face-to-face with emotional roadblocks that overtly affect the decision-making process.
Fear, Shame and Guilt
Three of the most troublesome emotions are fear, shame and guilt. People fear they do not have the knowledge to make wise financial decisions. They are embarrassed that others may be more successful than they are. They feel the guilt that they cannot provide financially for their loved ones – or even themselves.
The negative emotions some people feel towards their personal financial situation often prevents them from seeking professional help. Unfortunately, they cannot bear the thought of opening up about their finances to an outsider – they are simply too embarrassed.
As a Certified Money Coach, I employ many different tactics to help clients overcome these emotional roadblocks that stand in their way to improved financial well-being.
Step 1: Recognize that Emotions Can Mislead You
You are not alone. Most people set high standards and goals for themselves, and are unhappy when they do not meet those aspirations. This commonly happens to people as they approach retirement. They thought their savings would hit a specific amount at a certain age, but then they realize that there will be a shortfall on their goals. This leads to frustration, anxiety, and all too often, poor financial decisions.
But here is the point: Personal finance is a complex subject. Calculating the amount you need for retirement is not a straight forward exercise. Because the future is uncertain, fear is a natural by-product. Some people, in extreme cases, even see their retirement as a ‘battle between themselves and their pet’ for a daily meal. These people need the cooler head of a trained professional to point them in the direction of the facts, and not let emotions drive their decision making.
Even long before retirement becomes the focus of your financial plan, while you are looking at day-to-day management of your resources, emotional roadblocks can interfere with your plans. Setting monthly and yearly priorities for spending and investing – and keeping to those schedules – will result in positive outcomes.
Step 2: Focus on Small Victories
There are times when financial circumstances feel like a tidal wave coming right at you. There is a sense that events will overwhelm you and destroy the best plans. Often, the analogy used is that of climbing a mountain that just seems too steep and rocky.
For these people, focusing on the end goal (reaching the top of the mountain) is downright scary, so they do not even attempt to get started.
Paying down debt one small chunk at a time and/or increasing wealth by small incremental amounts every month does two things: it erases the anxiety over not reaching the ‘top of the mountain’ in one step, and it builds the confidence that comes with a winning streak.
The momentum that is built through a series of small victories is what finally leads to financial success.
Step 3: Stop Comparing Yourself to Others
Let’s return to our exercise analogy for a moment. When you go to the gym, do you focus your attention on the other people on their treadmill, or on your own steps? Do you see how many kilos are on their free weights, or do you make sure you are doing your lifting correctly?
The same goes for your financial situation. Your financial challenges, plans and goals are as individual and unique to you as your exercise and diet programs.
Comparing your own material possessions to someone else’s will create an emotional roadblock. Even if you are doing better than one person is, you will inevitably find someone else who is doing better than you. Then you are back in the emotional traps of envy and regret.
The Analytical/Emotional Approach to Financial Happiness
In addition to being a Money Coach, I am a university-educated research scientist. In this capacity, I interact with families whose lives have been altered by genetic disease. This background affords me the ability to rigorously analyze a situation (someone’s finances) while at the same time being compassionate about this person’s emotional circumstances.
I feel that we should all take the best of emotions AND analytics to create a life in which our financial decision-making is in alignment with our goals and values.
Many of my money coaching clients are dealing with major life events – new marriage, birth of a child, recent separation, career change or relocation, nearing retirement – that create both an emotional and financial strain. These people count on my levelheaded approach, my understanding of ‘family dynamics’ and my knowledge of personal financial management to calm their waters and create an environment that is both emotionally and financially rewarding.
Please take this opportunity to visit my coaches’ page, learn about what it’s like to work with me as a Money Coach, and read first-hand accounts of how I’ve helped clients dramatically improve their financial well-being.