“Do you know exactly how much money you have?” I asked.
“No,” Mike replied.
“Why don’t I help you calculate that?” I asked. “It’ll help you know exactly how much assets you have.”
“But I don’t want to find out. I’m afraid. I don’t want to think I have a lot of money and then start making stupid decisions.”
This was a conversation from late last year. My friend used the word “afraid” to describe his relationship with money, but his facial expressions and body language suggested he was more terrified.
Mind you, this wasn’t some 23-year-old fresh graduate. This was someone who’s (by my estimates) a closet millionaire.
I was stunned. Not only because I realised how most people (even smart, rich ones) attach emotions to money, but also because I realised I do it too.
But why do we attach emotions to money? And are those emotions actually hurting us?
What’s your history with money?
Looking back at my history with money, I’m ashamed to say that I never understood it till my mid-twenties.
Of course, I knew the math and the practical uses of money. I knew how much things cost, and how to pay for them. What I never fully understood was this: where does money come from and what does it really represent?
I suspect most people are the same. We see the practical uses of money, but because no one ever formally taught us personal finance — money takes an almost mythical form in our minds.
Like when we look at a 50 ringgit note. Do we see it as a magic pill to solve all our problems (“Hey I need to get more of these notes! Then I can pay off all my debts and buy even more stuff!”) or for what it really is: A piece of paper that only holds value because the government says so, and because everyone else believes in it. If everyone just decides to stop accepting the RM50 note tomorrow, it would become worthless.
The problem isn’t with the pieces of paper, value or the government. But my fear is when people don’t understand something like money, we start to attach all sorts of irrational beliefs to it.
Here’s another example: let’s say your father lost a lot of money in the 1997 Asian Financial Crisis (when you were growing up) and told you, “Don’t ever play the stock market — it’s gambling, you’ll lose, and won’t have enough food to eat.” You might develop a fear of investing.
But is investing in the stock market gambling? Not necessarily, depending on how you do it. Will you lose? Sometimes, but there are ways to evaluate risk and cut losses. Will you starve? No — if you manage your money well.
Because if you don’t understand money, then you can’t fully optimise it.
What are your feelings about money?
Here are some common feelings I’ve seen people have about money, that aren’t good for you:
Because here’s my theory: the better you are at isolating emotions from money, the better you become at managing it. Like how emotionless computers can beat humans at Chess and Go now, and how your hustler cousin won all your ang pow money during Chinese New Year poker — we could make better money choices if we’re less emotional about money.
But of course — you and I are not machines. And let’s be honest — none of us can fully control our emotions.
I don’t think anyone can help themselves from feeling devastated if they don’t have enough money to feed their children. On the flip side, I don’t think anyone can not be ecstatic if someonek suddenly awards them a brand-new home.
But we can all take the first step by being more aware of how we feel about money. And if there are unhealthy feelings there — we can start by changing our behaviour.
What’s your future with money?
You can’t control your emotions, but you can control your actions. And you can change your beliefs. All these will eventually influence your emotions.
Here are five beliefs and actions to counter the negative emotions most people have about money:
1. Be content
You will never be able to make enough money to satisfy lust. The more you have, the more you will want. Would it be better to be content with what you have? (This doesn’t mean you don’t try to improve your finances. It means you draw the line between healthy ambition and destructive greed.)
2. Money is a neutral tool
If you think money is evil — you will never accumulate wealth (unless of course, you view yourself as an evil person). You will lead a life with poor money habits because of your poor beliefs. It is much better to view money as a neutral, yet powerful tool.
3. Self-esteem does not come from riches
How you feel about yourself should not be dependent on how much money you make or how much you have in the bank. As a person, you have inherent value, worth and dignity.
4. Be responsible
Life sometimes throws us sucky situations — like corrupt politicians and increasing petrol prices. But all of us can do things to respond to bad events. We are not powerless — we can create change.
5. Be happy for others (Compersion)
Jealousy is a useless emotion. It only creates a wall between yourself and the person you’re jealous of. And if you’re jealous of someone’s money — it creates a wall between you and that money too. Better to stay positive.
– – –
No one will ever be completely free of emotions when it comes to money. But changing our beliefs and behaviour can help us manage those emotions better. And it can help us make rational decisions that will be good for you and your money.
After all, when it comes to money, you should really be happy.