The Fascinating Psychology of Money

MichaelBeliefs, Habits, How to, Misc1 Comment

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Why do you do what you do with your money?  Where did you develop your beliefs around money?  Are they positive or negative?

I’ve always found the psychology of money fascinating.  I suppose it shouldn’t come as a surprise.  My father was a CPA (certified public accountant) and my mother was a marriage and family counselor.  I am confident that my beliefs and views of money were developed as a child and formed throughout adolescence through my experiences.  I suspect this holds true for you as well.

Mom 068c

As a young child, I grew up in a loving middle class family in the suburbs of Los Angeles.  We lived a comfortable lifestyle, but nothing too lavish.  As we got older my Father’s CPA practice was doing well and my mother wanted us to buy a new home in order for us to have access to the “better” schools in the neighborhood.  It was exciting as we were moving to a bigger home that sat on a large plot of land, had a huge swimming pool, satellite dish, etc.  Little did I know though, my world would come crashing down the following year.

On a hot August evening, I can clearly remember the dreaded words, “Your Dad and I are getting a divorce,” my mother stated.  “We love you and your sisters very much, but we cannot live together any longer.” I was in shock, “What the heck just happened!?”  Over the course of the next year I felt my world unravel at the seams.  As I turned 13, we were now living with my mother in a different house (older & half the size), money became tight, and the financial worry began to set in.  My father had handled all the finances before, so my mother had to figure things out for herself and did the best she could.

The “squeeze” was on.  I can remember some of my clothes having holes, not getting a haircut for months, and having to make my own lunches everyday with the simplest of ingredients.  I was poor all of a sudden!*  This was pretty tough on me mentally, but it also fueled me to make a life impacting decision – I decided that I would have a net worth of a million dollars before 30.

Million, or Bust

*Here’s the fascinating thing though.  We were actually never poor (in a textbook sense).  We always had enough to eat, shelter, and no outstanding debt.  I just didn’t know.  In my own skewed reality, we had become poor.  (Ever notice it’s much tougher to lose something once you’ve had it, vs. not having it and never having it before??)

The beauty in this epiphany is that our reality is simply based on our perception.  Our perceptions are filters that can be created for us unconsciously, or consciously.  I prefer the the latter because it allows us to take control of our destiny.

We may not be able to change events that happen to us, but we can attach meaning to them.  These emotional meanings shape our attitudes which then evoke actions to better our lives (i.e. striving for early financial independence).  Although my perception wasn’t a conscious choice back then, my burning desire to eliminate all the pain, embarrassment, and frustration of being “poor” was enough.  It created a lasting decision for more than a decade…  I finally achieved my goal at age 29.

Although our situations may be different, you can still benefit from the power of your beliefs.  How do you feel about money in general?  Do you have any strong beliefs about money?  How did you arrive at your feelings?  When, where, & how were you most influenced?  If you find out that you don’t like them, consider how to change them.  This process of introspection is a way to identify how financially conscious you are today which I will discuss in more depth later… we’ve only scratched the surface here!

brain feelings

For now, consider the possibility that your beliefs about money are not hard wired.  Consider that being able to change your core beliefs will affect everything… your internal drive to save, invest, and share money with those you love.  This is your starting point.

For more thoughts on the psychology of money, check out these other articles:



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Hi, I have been blessed to take an early retirement in my mid-30's so I can focus on becoming a better father, blogger, and investor.

My goal is to help you find your personal path to financial freedom, and to enjoy the entire journey.

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One Comment on “The Fascinating Psychology of Money”

  1. Pingback: Freedom Fighter Interview #19 – Michael @ Financially Alert - Gen Y Finance Guy

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