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As it is often said, “Money rules the world.” While not entirely true, it’s no secret that money plays an important role in our lives. It impacts everything from basic necessities to our greatest aspirations. The irony in this is that while we acknowledge the significance of money in our lives, we often don’t prioritize it as such. Many of our financial decisions from everyday spending and even savings are often made subconsciously rooted in our habits, thought patterns, and behaviors that have shaped us over our life.
But as a credit union, our mission is to change that! To improve financial lives, we want everyone to have full control over their money, not the other way around. One avenue through which we do this is financial education— offering free online courses, free resources, and free financial workshops for our community. We firmly believe that financial education is a key to unlocking financial freedom.
FINANCIAL EDUCATION IS IMPORTANT, BUT...
We also know that financial education is pointless if it is not paired with self-awareness and intentionality. Simply put, financial education isn’t truly effective unless we’re in a place to listen and apply it to our lives. It's not just knowing about personal finance; it’s about practicing it.
In this article, we’ll dive into how our habits, thought patterns, and behaviors shape our finances and offer a few ways to begin to become more aware of those impacts so we can spark intentionality within our financial journey.
OUR BEHAVIOR'S ROLE IN OUR FINANCES
For many, our finances are mostly determined by our behavior. Our behaviors and habits affect every decision we make with our money and the hard part is, sometimes we don’t even realize it! According to the American Psychological Association, 43% of daily actions are habitual and happen while we’re already thinking about or doing something else. This is no different when it comes to our finances— while we may make some intentional decisions with our money, most of the things we do with our money are repeated behaviors that have formed into habits.
Our finances are impacted by our behavior in many ways:
- Emotionally: Fear, anxiety, sadness, happiness, and all the emotions in between can have an impact on our behaviors within our finances. Being aware of and regulating the behaviors caused by the emotions is important to pursue success within our financial journeys. For example, impulse shopping is often triggered by emotions such as stress, excitement, or boredom.
- Socially: Our finances are often heavily influenced by those closest to us. Whether we’re aware or not, our family, friends, and other voices in life impact the thought patterns, habits, and behaviors we form within our finances. Recognize the ways that those around you have spoken into your life. Consider whether their influence is positive or negative on your finances. For example, you’ve probably heard the phrase, “keeping up with the Joneses”. This is a perfect illustration of how our money habits are often influenced by those around us, more specifically around comparison and keeping up social-economically to those around us.
- Situationally: The experiences we encounter impact our thought patterns and behaviors regarding our money. If we’ve experienced a big loss of money in the past, it is likely that our thoughts and behaviors will reflect the desire to not experience that again. In turn, if we’ve done something to positively impact our finances, it is likely that we will be influenced to do that same thing again. Often, these thoughts and decisions happen subconsciously and are a result of learned behaviors. Our life is a collection of experiences, so it is no surprise that these experiences have a great impact on the formation of the thought patterns, habits, and behaviors that mark our decisions— this is true for our financial life, too!
WHAT DOES THIS ALL MEAN?
For financial education efforts to take root, self-awareness must be present. Without self-awareness, the tactics, topics, and tips we learn through courses, resources, and workshops will likely be less effective. To combat this, consider working to become more in tune with the root of your thoughts throughout the decisions you make regarding finances. You may find that you can easily pinpoint areas in which habits, thought patterns, and behaviors have inadvertently dictated your finances. You may also find it more difficult to discern the behaviors influencing certain decisions. In both instances, practicing self-awareness will set you up to grow in awareness and intentionality within your financial journey. A few ways you can do this are:
Take a Money Personality Assessment
Understanding your money personality is essential to capturing the “why” behind the buy and the psychological influences that play a role in how you make your money decisions. By doing so, you can make better, more intentional financial decisions that will shape how you apply what you’ve learned. Take a look at this article to get started!
Tracking Your Finances
Tracking your finances will give you a clear picture of where your money is going and will reveal the decisions you are making regarding your money— intentional or not! Once you begin tracking your money, you’ll be more aware of where your money is going, which will give you the ability to think about the “why behind the buy”.
Taking Inventory of the Influence Around You
While much of the influence others have on our habits, thoughts, and behaviors happens unknowingly, there are likely some influences that can be identified. If you begin noticing patterns that others are influencing your financial behaviors, you can come up with a game plan to combat the influence or set boundaries so that you’re making decisions based on your own needs, values, and goals, not those of anyone around you.
While this may feel like a lot to chew, remember it’s a process. Simply take small, intentional actions to practice self-awareness and pursue financial literacy. There isn’t a timeline placed on your journey and ultimately, it’s up to you what path you take. If you need a helping hand, we’re always here to support you. Find free financial education resources on our website and reach out to schedule a free financial coaching session with one of our certified financial counselors.
