When we consider relationships, we usually consider our interactions with many people, both known and unknown. We rarely consider how to define our relationship with one of life’s most important aspects: money. Money relationships, like investments, do not follow a one-size-fits-all approach since each of us has a unique relationship with money.
However, there are a few questions that might help you define this crucial relationship and reflect on the importance of money in your life.
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What is your earliest memory of money?
Almost certainly, your first encounter with money occurred in your own home. Your parents would have shown you how to earn and handle money. The manner in which they did so would have formed a mental image of money in your mind.
If you’ve watched someone struggle to make money and manage it, you’ll have a very different impression than if you got everything you wanted straight away. These early money memories stick with us for a long time and help us establish a worldview that serves as the foundation for this exciting relationship.
When you hear the word money, what is the first thing that comes to mind?
This is, once again, unique to every one of us. While it may be a way for some to indulge in a lavish vacation, it may also be a way for others to meet their fundamental needs. Money is clearly a luxury for the former, whereas it implies meeting both ends for the latter.
If you fall into the first category, your attitude toward money will be very different than if you fall into the second. The relationship with money will be very different, as will the spending habits.
What Role Does Money Play in Your Life?
While money is necessary for all of us to survive, the magnitude of its importance varies from person to person. If you are already making a large salary or own a successful business, the worth and relevance of what you have will be vastly different than if you are struggling to make ends meet.
Needless to say, you have the luxury of binge spending in the first group, however, in the second, you will think twice before going crazy. In a nutshell, the value of money is largely determined by the ease with which you can obtain it.
How Do You Make Financial Decisions and Relationship with Money?
This is another crucial topic to answer because it determines your financial connection. Your connection with someone who is a spendthrift will be fundamentally different if you are a conscientious spender who spends every penny after analyzing the advantages and cons.
If you are a careful spender, it is obvious that you appreciate and value money more than someone who does not. Having said that, you may not always have complete control over your spending decisions. You can be swayed by peer pressure, fear, or greed, and these factors can have a significant impact on your purchasing habits.
What Would You Do If You Were Suddenly Rich?
The things you’ll do if you suddenly had extra money will help you figure out how much you value it. Many instances exist of people who have gotten windfalls of any kind and ended up squandering just to lose all of their additional money in a few of years.
On the other side, there are stories of people who have wisely invested in their windfalls to ensure their present and future. Simply put, how you handle extra money that comes to you without you having to do much reflects your relationship with it.
Let’s take a look at the other side of the topic. This is a spectrum of money relationships. Financial insecurity can be seen on both ends of the scale. You could be exceedingly frugal and concerned about the relative paucity of your resources on the one hand, and extremely irresponsible on the other. Each of us has a distinct manner of processing and organizing money messages, as well as modeling money actions.
Creating Relationship with Money and a Financial Personality:
From childhood to adulthood, we are constantly assaulted with messages about money. Even siblings who were raised in the same home do not always share the same perspective on money or their relationship with it. And, while you may build your financial style early in life, it is subject to change over time or due to unforeseen circumstances. It’s very uncommon for someone who has gone through a huge life transition to have a completely new attitude toward money. If you have a near-death experience, for example, you may discard the “saving” mentality and instead invest in experiences to maximize your life. Similarly, having a child may motivate you to put money down for the future.
Acquisition Dimension:
The acquisition dimension is concerned with how much money is required for you to feel comfortable, rather than how you acquired your riches. Some individuals believe money is the “source of all evil,” while others say there is never enough of it. Even Nevertheless, some people consider the acquiring of money to be a pointless endeavor. You could be avoidant, ravenous, or something in between when it comes to money. Which side are you on?
To get more money, a person may go to extremes, breaking rules or even breaking the law. Even wealthy individuals sometimes succumb to the notion that “you can never have enough.”
Spending Dimension: Relationship with Money
“What do you do with it?” is a question that arises once you have money. Most of us have heard stories of people who “penny-pinch” their entire lives and die with a large quantity of money in their bank accounts. Alternatively, you may have heard of famous athletes who have amassed millions of dollars over the years only to wind up with nothing.
The miser is on one extreme of the spectrum, while the compulsive spender is on the other. Most of us are sensible, cautious, and deliberate in our spending; but, we all have instances when our spending spirals out of hand.
Also Read: Tips for Money Management in Stock Market
Management Dimension: Relationship with Money
The compulsive spender is frequently bad financial management. The way you manage your money, like your acquisition and spending habits, is highly personal.
Everything from how you pay your bills to how you handle your investments falls under the umbrella of money management. The micromanager must account for every nickel and dime, but the person who is entirely disorganized with money may put off paying bills and be oblivious of his or her genuine financial situation.
Half the Battle is Knowing: Relationship with Money
Money connections on either end of the spectrum are usually unhealthy—you need to strike a healthy equilibrium. A “regular” or “secure” money connection indicates that your acquisition, spending, and management habits will not put you in financial trouble and that you are satisfied with the relationship. If you have an “insecure” relationship in one of the money dimensions, it has already led you into financial difficulty or may do so in the future.
You can focus on changing bad money behaviors or reinforcing healthy ones once you’ve determined where you lie on the spectrum.
To Sum It Up:
We deal with money every day, yet we rarely understand how we feel about it. If you’re having trouble getting a clear picture, go to a financial expert who can help you dive deeper into your genuine relationship with one of your most expensive and treasured possessions.