Why are we so attached to money? This question is perhaps the crux behind the often-quoted saying, “money cannot buy happiness.” The implication and acceptance behind the saying seems to stem from the understanding that happiness depends more on friendships and family relationships than wealth. And yet, however socially well-off, everyone still has the niggling worry at the back of their minds, especially during periods of economic downturns, “will I have enough money?” It is a universal fear that underlies many psyches and indicates that something deeper is at stake. The topic of money is arguably an appropriate one for psychologists to enter, given that money is itself a psychological phenomenon.
1. Introduction
Money as a commodity, money as a means of storing value, money as a means of payment and money as a means of —- accounting, money as a wide-spread medium of exchange even came before money in states or countries. Money entered or has parasitic relationship with the psychological domain long before the language and script entered or was invented [1]. So, to a certain extent, money would arguably shape the psychological landscape. The question “what do we mean when we say someone is motivated to obtain money?” is, and hence gives full consideration to the complexity of the phenomena involved. It is cautioned that even an apparently trivial or straightforward question like “what is money?” raises complex conceptual and philosophical issues.
1.1. Overview of Money Psychology
This is a topic worth talking about. Why money? Whenever money is talked about, there is a rush of emotion which is visible even through the post. Some may say that mankind’s most inhuman activities have been carried out all in the name of money. There is jealousy, greed, conflict, wars, hatred, deception, horror, cunningness exhibited. There are some who attempt to undo this attachment with money that leads to rancor. Some just laugh and say that it is all nothing, I do not crave money. There is respite there, but there are also cravings and attachments in some other form. Some think that by enabling these materialistic cravings and desires there is bliss and ultimate happiness. There are whether these materialistic and violent cravings lead to peace, contentment or happiness at any time be it now or in future detaching away from money. It is also requested of those, without being just academic or intellectual, to share life experiences and feelings which world is sorely in need of even minimum. It also needs to be stated that this is not a debate, nor a discussion.
Amongst many industrial and organizational hazards, something innate persists which is a punishment for having and not having money. Broadly categorized, money can be useful, addicting or both. It is important first to realize what money is, why is there attachment to it and how involving that attachment is. Then the thought processes can be redirected/structured away from it. Money things the medium of exchange approach to a numerous subtype, even some which go further enabling everyday transactions which find a better subjective fit during economic development and professional careers. Money inherent thoughts and emotions go back millions of years, physically [1]. Here is just a beginning, sharing thoughts and experiences.
2. Historical Perspectives on Money
The beginning of the use of money dates back to around 3000 B.C. in Mesopotamia, where shekels of barley were mentioned in texts as payment for services, taxes and debts. Initially, an acid communication system emerged where certain precious commodities served as measures of accounts and media of exchange. Using commodity money made accounting easier since it served the triple purpose of a means of payment (medium of exchange), a means of valuation (unit of account) and a commodity for future purchase of consumption goods (store of value). Historical evidence supports the view that money has not been something purposefully designed, but something that has emerged gradually from usage [1]. The problems of barter have led to evolutionary processes which selected certain commodities as money.
Many historians agree that trust in money began with social institutions guaranteeing its recoverability. Sociologists argue that the introduction of fiat money was only possible in society with expanded commercial networks of trust, where social institutions and norms converged to a certain degree [2]. With the emergence of fiat money, the use of instruments other than coins and notes for payments became widespread. The increased complexity of accounting systems and the volumes of transactions led to a higher turnover of money which in turn meant that money had to become more intangible. The invention of the telegraph made it possible to send information within minutes and allowed the emergence of electronic money system.
2.1. Evolution of Money
Historically, there were barter systems where goods were exchanged for goods. This was not suitable for many nations. As a nation evolves, more things are brought under trade, increasing the goods involved in the exchange process and the potential for disputes. So, different systems of money emerged. Commodity moneys (like gold, silver, shells) were used at first as a measure of trade. Then nations devised their own coins, paper moneys, bank notes, and finally the currency systems we have in place today. [2] Browsing Ebay, click and read some interesting articles on currencies used in the Roman Empire, Arab trade, or maritime industries.
In our more globalized and modern economies, as trade increases, new forms of financial instruments (like stocks, bonds, loans) arrive to the market, traded as commodities as well. This eventually leads to a slew of financial crises at times, like the great depression in the US, stagflation, East Asian Crisis, sub-prime mortgage crises, Asian Currency crises. Money is not an abstract number, government policy, a mystical and detached set of rules to manipulate people’s behaviors, etc. It is an evolving historical and cultural institution with its own development, perils, and potential. As such, at present money consists of three components, a measure of exchange unit, a system of loans and interests, and a regulatory policy. Thinking money along those three lines will be a better habit over time.
3. The Role of Money in Society
In every civilization, money is a crucial necessity for trade. Almost every transaction in a community involves a monetary exchange. Without the consideration of money, there cannot be development in any society. Money has the following functions: as a Medium of Exchange, Money acts as a Media of Exchange in an economic system dealing with a large number of commodities. A Direct Exchange of goods and services cannot be possible as it would require a double coincidence of wants to exist. Money as a Media of Notes facilitates a transfer of ownership of goods and services smooth transactions, free from dispute in ownership. Store of Value, Money has an ability to store Value for future use against inflationary or deflationary trends in commodities prices. A non-perishable commodity generally acts as good money since incidents of high depreciation are rare for non-perishable commodities. Nominal commodity money or Fiat money is paper notes and coins which represent wealth but do not have Value in it.
By the mere existence of money, dominion over resources in a civilization can be defined in terms of superiority or inferiority among communities. Money has possession and power over society. The socio-economics of money represent structural disproportion among economies in a community. Money is thus with visions in multi-level domains [2]. It is with complex attributes of psychological behavior, social value and structural hierarchy. Economically, money is at a macro-level but with the implications of psycho-socio attributes of the macro-level domain agrees money within social structure and its evolution to construct a social value system. The involvement of money in an economic system generates social value systems which are either commendation or devaluation to particular economic agents in society [3]. This domain is thus with the historical structural view of nature, starting from the inception of form of money, mode of acceptance in trade, forms in monetary empire, dynamic behaviour over time and creative social value system by restricting free-market on certain agents of socio-economic structure and emergence as modern money in the financial system.
3.1. Economic Functions of Money
The widely accepted functions of money specify that it is predominantly a medium of exchange, unit of account, and store of value [4]. This is a very general acceptance and reflects a very deep choice in humans’ past. Many other things can function as relatively efficient money under certain circumstances. Therefore, technologies for money are manifold. In opposition, broadly speaking, truly good money is bank money, that is, devised and operated by a bank and thoroughly understood and accepted by all, moreover, by institutions of the same kind. Moiety and species money are good only at the same wire centre and not beyond. Money is wool, ox or red copper coins, etc., or it is no money at all. It has no good as different in species or category than all other kinds of commodities with original non-monetary demand. A money deemed to be of a different species (foe) is not discoverable in common, though it can be invented separately. Similarly, with regard to the different money proofs, it is better other than bank instructions like single, four-eye, or double signatures. There are very deep reasons for that belief. Money cannot be sterile even though neither it functions not being a thing on a whole different level than the economy as an aggregate. Everything genuine about money is about the exchange of commodities on markets and markets alone. Its tranquillizing mechanisms work on that level as commodities, not agents, interests, states and moods. The actualised change in one’s real position or wealth leads down the road to obsession, anxiety, envy or greed in opposition to moderation, conscientiousness, care, responsibility, self-limitation, and unselfishness. Money as such fascinates, hypnotizes, bespeaks, overclaims, and sullies. Addiction to money might therefore be ultimately due to attachment to accumulated commodity capital, that is, resources spent on production as opposed to appropriated use value.
4. Psychological Factors Influencing Our Relationship with Money
Examining the psychological factors at play here, many researchers are intrigued by the idea of considering these “systematic and replicable errors” as connected to psychological factors, especially cognitive ones. It is proposed that cognition and other cognitive processes could bestow a psychological connection between these biases and the attitude, feelings, and behaviors regarding money and finances of the individual [5]. These cognitive processes manifest different attitudes toward money, such as money avoidance, money worship, money status, money esteem, and money vigilance. It is the argument of many that this apparent connection with these psychological factors is quite instrumental in explaining the irrationalities and inconsistencies of financial decisions and actions of an individual.
Thorough scrutiny of these cognitive processes, and their connection to the attitudes and feelings regarding money and finances, could shed more light on this connection, broadly explaining the many attitudes toward money, and how they influence the attitudes, feelings, and behaviors regarding money and finances [1]. Focusing on how the discoveries of the cognitive and psychological connection to the attitudes regarding money can extrapolate the concepts of biases and fallacies broadly, better understanding the complex psychological relationship of mentally healthy individuals with money and finances is possible.
4.1. Cognitive Biases and Money
Our perception of money tends to be intensely biased. However, why is it that it has remained constant through the ages? All individuals engage with money. Although each relation to it is intimate, the differences among individuals are many for a seemingly homogenous unit. First, it is worth addressing what money is. Money can be described in simple terms as a means of storing, accounting for, and transferring value. There is, however, a problem with this definition. The pervasiveness of money means that each individual relates to it differently, including generally accepted ideas of class and wealth. The powerful, for example, create wider buffers to prevent being exposed to the “real world” of poverty and debt while simultaneously being more susceptible to certain behaviours typical of money addiction [1]. The somewhat naïve definition of money would presumably apply broadly, regardless of wealth.
There is a wide range of cognitive biases shaped by perception of wealth. Studies have shown that rich students are more likely to take an initial risk when it comes to saving decisions [5]. Data suggests, however, that those who lose out and are exposed to hardships may be equally biased in the opposite way, creating further barriers to the prevention of the decline from normality towards poverty. Likewise, environments where financial literacy is provided appear to reverse the aforementioned biases, attracting interest both in those who study monetary policy and those managing stock exchanges. Children exposed to the stock market were found to relate differently to numbers and fairness. They manipulated chips while viewing one another head on and barred from instruction to speak. As a result, they spectated differently at one another’s activity and were equally biased towards competing or cooperating.
5. Money and Emotions
Money has an undeniable impact on our emotions, often acting as a powerful trigger for feelings ranging from joy and satisfaction to stress, anxiety, and even despair. The relationship between money and emotions is complex, shaped by both personal experiences and broader societal influences. For many, financial stability brings a sense of security, while financial uncertainty can lead to overwhelming fear and worry. This emotional connection to money can drive behaviors such as excessive saving or spending, driven by underlying psychological needs rather than rational decision-making.
5.1. The Emotional Impact of Money
A prominent claim is that for many people a significant part of their emotional responses are money-related. Therefore, money is claimed to have a different emotional charge depending on its presence or absence, framing or focusing relationship, use or potential use, mode of availability… [1]. This psychological effect is at the individual level but can have cumulative effects at a social level shaping the controls, policies and uses of money making them state in equilibrium. A social equilibrium can be adjusted by the effort of the community, but positive equilibria are not easy to reach given the limits on human and social cognition [5]. However, rigorously studying the social, cultural and political dimension is a far-reaching undertaking. Roughly, consider three initial avenues of exploration involving different theoretical and analytical constructs, namely: the emotional framing rules that ease interpretation of an individual’s relationship with money, the wider social aggregates of emotional framing norms and traditions acting socially to preserve the community equilibrium, and the narrative flows that reproduce at the community level colleagues‐friends‐family recounting stories involving money and its iconic use, modes, transactions, composition (what money is made of? In terms of pictures, figures, writing, sound?; how is money passed on?). Each avenue is concerned with the common picture people have of money, which is thought to boil down meanings, ideas and beliefs towards the usage of money shaping emotions embedding it.
6. The Influence of Culture and Society on Money Attitudes
Culture and society significantly influence our attitudes and behaviors regarding money. Our cultural upbringing shapes our beliefs about financial matters, affecting how we perceive its worth, role, and place in our lives. Money perspectives differ culturally, which impacts attitudes toward savings, spending, and investments [6]. Societal norms and values foster certain attitudes toward money, such as the belief that it is the root of evil or a source of security or freedom [5].
6.1. Cultural Differences in Money Management
There’s a study conducted between 2008 and July 2009 comprising 176 questions considered appropriate to a sample of 102 college (undergraduate) students in Hong Kong. The majority indicate the following: Males and females manage money much the same; Hong Kong management is classified as short‐term. Results identify some of the roots of good money management habits, identify the risk‐reward attitudes from the Chinese cultural background. Conclusions suggest policy implications inciting education at a very young age [5].
Dietary choices differ significantly across the country of China. Such differences persist for thousands of years. On cultural background, these preferences can be classified into two groups, the Chinese, Indian, and Muslim consumers on one side; the westerners on the other. Due to cultural influence the former group has strong concerns on food hygiene, spiritual observance in processing and consuming food. Such beliefs affect their behaviors in market choice, risk aversion attitude, and consequently impact on consumption and food residing time [7].
7. Gender Differences in Money Behavior
As gender roles have evolved throughout history, so have attitudes towards money and overall money ethics. These evolving attitudes are rooted in society’s expectations of femininity and masculinity [8]. Gender plays a significant role in shaping individuals’ behaviors towards money. Money behaviors of different genders are reviewed here based on research examining how individuals’ socialization experiences, societal influences, and cultural factors shape their monetary-related behaviors.
In general, women are taking responsibility for household budgets, although the division of day-to-day decisions often depends on couples’ income level. The higher is the income, the more likely it is that men take the responsibility. On the other hand, women with their own businesses more often take full financial responsibility. Sole financial responsibility is more commonly indicated by men than women in client related occupations. In comparison to men, women are more likely to use a ledger for recording their spending, while women prefer to keep cash over men. Regarding the use of electronic payment methods, it turns to be gender neutral with almost everybody having a bank account and using credit cards. Women and men indicated different views on money issues. Men’s views can be summarized by self-reliance and independence, while women’s views cluster around security and stability. Finally, the household money attitudes and behaviors among different genders are compared at the end of this section.
7.1. Gender Roles and Money
The concept of gender roles extends to the realm of financial conduct as well. Society enforces certain expectations of how men and women should behave in relation to money, often influencing attitudes and behaviors to a degree. In general terms, men are perceived to view money as a means of power and status, to earn more, and to take greater financial risks, while women are expected to spend more, to be conservative hodlers of wealth, and to take less interest in money matters. Consequently, men are more likely to save in order to invest (looking to the future), while women are more inclined to look for secure savings accounts (focusing on the present) [8]. It has also been found that men are more confident in their financial decisions, while women tend to underestimate their financial literacy levels [5]. However, some studies have also uncovered an inclination for extravagant spending among women.
These gendered expectations, beliefs, and stereotypes in regard to finances often extend to individuals on a personal level, affecting their conduct, confidence, and self-perception. Moreover, it is important to remember that, although it is common for men to display ‘masculine’ and women to exhibit ‘feminine’ conduct in relation to money, there are of course many individuals who do not embody the typical attitudes established by society. Instead, they may fall in between or experience different combinations of beliefs and actions in regard to finances, further shaping the perception of the overall relationship with money and financial conduct.
8. The Connection Between Money and Self-Worth
If people’s self-value is determined by the adjustment of their social things and strength (power, intelligence, beauty, and so on), it can be said they have adjustment self-esteem. If people’s self-value is determined by their own qualities or characteristics (kindness, loyalty, honesty, and so on), and they sincerely believe that they have these qualities, it can be said they have narcissistical self-esteem. Provided people believe themselves to be different from others and this difference deserves a value, it can also be said they have special self-esteem [9].
Adjustment self-esteem usually has the weakest correlation with money. Narcissistical self-esteem can have the strongest positive correlation with money, and very strong negative correlation in such pure cases as honesty. Special self-esteem yields a parabolic curve with intensive confrontation, because social commodities often induce dollar-oriented self-esteem and excessive comparison makes money the only adjusting standard (not only profit but also risk). People with low self-value compared to dollar tend to be obsessed with money, and people with high self-value compared to social power tend to spend money without saving.
8.1. Self-Esteem and Financial Behavior
This section specifically zooms in on the interplay between self-esteem and financial behavior, examining how individuals’ self-perceptions influence their financial choices and actions. In the realm of personal finance, the emotional impact of money is a commonly considered factor. However, the psychological dimensions of one’s self-worth and how it is reflected in financial behavior is less conspicuous. Concepts are presented in terms of how self-esteem directly impacts financial behavior across diverse economic backgrounds. Moreover, the interactions between self-esteem, financial behavior, and the individual’s economic environment, including macroeconomic and contextual influences, are illustrated. Another noteworthy factor of the emotional aspect of personal finance is how an individual’s self-perceptions, with respect to socio-economic background, education, and spending habits, influences their financial choices. The link between these perceptions and financial behavior is still an under-researched area in terms of psychology and behavioral economics. A general overview of self-esteem and how it translates into financial behavior is provided. A vertical scale characterizing one’s self-perception has been developed, ranging from a “societal view” wherein an individual’s self-esteem is derived from their socio-economic status, to a “down-to-earth perspective” describing those who tend to view themselves by their solid financial behavior, intellectual traits, and spending habits irrespective of their societal position.
9. The Impact of Childhood Experiences on Money Attitudes
Exploring childhood experiences can offer valuable insights into the developmental roots of attitudes and behaviors related to money. Early upbringing and familial influences, such as economic circumstances and parental money attitudes, are particularly impactful. For instance, children from economically disadvantaged families may adopt an exaggerated frugality and thriftiness posture [5]. A lack of an opportunity to acquire economic competence and security may fuel fears of deprivation, needs, penalty, and distrust, which in turn may manifest as difficulty in expenditures, investments, or even accurate estimation of the amount needed for various activities. There may be concerns about a sudden loss or waste of possessions leading to hoarding behavior. It is noteworthy that the financial situation of parents does not guarantee the transfer of sound money attitudes to offspring due to the intergenerational transmission of dysfunctional attitudes.
Empirical findings indicate that educational background also engages the development of ideas of money, which, depending on countries and systems, may prevent children from the risk of falling into either excessive underestimation or overestimation of the money concept. A financial education of children at a younger age promotes their economic security in adulthood [10]. Problems with the development and transfer of money attitudes may contribute to discrepancies in money use calculations between people from different countries.
9.1. Parental Influence on Money Habits
Your parents are your first teachers. From the day you were born, they made it their priority to help you through your terrible twos, angst-filled teenage years, and various awkward encounters that come with growing up. But who taught your parents about money? When it comes to money habits, your family is not just your number-one role model; it’s also your first classroom [11].
As your first teachers, your parents shape your attitude around financial topics, opportunities to discuss financial topics outside the household, availability of financial resources, and your future financial well-being. Research has consistently demonstrated that an individual’s relationship with money is heavily influenced by their upbringing, and so it comes as no surprise that this influence often lasts long into adulthood. Think back to your childhood, or ask your peers about theirs, and it’s easy to externalize how this naturally impacts your money habit as an adult. On this path, it’s important to note that it’s not only your parent’s treatment of money; it’s also the modeling of their own habits, positive or negative, that you inevitably mirror.
10. The Role of Media and Advertising in Shaping Money Beliefs
The emotional impact of money is far-reaching, influencing not just individual well-being but also interpersonal relationships and societal dynamics. Financial stress is a common cause of anxiety and depression, often leading to strained relationships and reduced quality of life. On the other hand, financial abundance can sometimes lead to feelings of guilt or a sense of disconnect from those who are less fortunate. Understanding the emotional underpinnings of our relationship with money can help in developing healthier financial habits and fostering a more balanced approach to wealth and spending.
10.1. Consumerism and Money
The present examination seeks to uncover evidence of money beliefs, attitudes, and practices that have been shaped and molded by experiences with consumerism, fitting into the framework of academic study on money’s social psychological aspects. Several works of popular media afford opportunities to reflect back on the impact of various commercial messages received over a period of time. There is the very real possibility of gaining personal insight into how society has exercised implicit yet powerful control in shaping, judging, and producing specific meanings to cash-money as it exists within the confines of a consumerist social structure.
Whatever the merits of the present attempt, it is carefully noted that it is formally acknowledged that these texts have always been read within a speculative mode. More precisely, consumption texts are imagined as mediated spaces of co-participation with advertising messages, choosing to “buy-in” to a worldview, community, lifestyle, etc., that is both reinforcing (of existing beliefs, attitudes, and practices) as well as disruptive (for suggesting novel interpretations, meanings, and actions). Total participation in the commercial system saliently forecloses the interpretive space required for a perspective or stance “outside” the consumerist framework to be developed. This systemic constriction is amplified when popular media texts pedagogically effect “sympathetic” alignments with widespread beliefs and attitudes regarding money, wealth and its place within life-choices, and ultimately, death [5].
11. Money and Decision Making
How is it that people can be persuaded to make very bad financial decisions that are against their own self-interest? In the absence of diagnosis, the question leads down the path of the personal factors, psychological or moral, that may have played a role. The onus is often put on the individual, rather than on the unfair or deceptive practices of firms or other institutions. In the aftermath of disasters, the oversights and errors of decision makers at firms, banks, and insurers are often overlooked in favor of focusing on the risk-taking and poor decision making of individuals. While there is much work to be done in reforming and reimagining policies and institutions, it is also true that financial futures are often put at risk through errors, mistakes, and disaster myopia emerging from individual choice and preferences [5]. Understanding these individual factors, including cognitive liabilities, habits, heuristics, and predispositions may provide a better understanding of how products or policies affect wellbeing and may enhance the design of products and policies.
The examination of psychological factors surrounding money and decision-making has received increasing interest from a range of disciplines, spanning the natural sciences, social sciences, and humanities. Money operates as an affective medium of social relations and has found a unique place in cultural narratives, occurring in fairy tales, myths, and Hollywood films [1]. Drawing on literature from a variety of disciplines, consideration is given to how psychological mechanisms involving an internalized notion of money, as a perception, can influence decision-making behavior. The interplay of these processes and money itself has implications for both collective and individual decision outcomes. Efforts to explore the psychological world of money are pursued by various disciplines and pedagogical traditions, while being enriched by an assortment of social and cultural contexts. The structures of money are being rethought in numerous contexts.
11.1. The Psychology of Financial Decision Making
There continues to be an emergence of interest in the psychology of financial decision making. As a domain of science, it delves into understanding the conceptual machinations, gaps, and nuances in financial decision making. More specifically, the core synopsis of the financial decision making as a concept, is rooted on the understanding of an all-embracing overview of the psychological underpinnings of decision making in the context of finance. Essentially, financial decision making pertains to the procedural steps through which an individual chooses from various options involving monetary funds and subsequently reflect on consequences of such choices. The most widely employed sequential model of financial decision making is the (i) problem definition, (ii) information search, (iii) analysis and evaluation, and (iv) purchase or investment [5].
A longstanding concern within the psychology of financial decision making is identifying and explicating factors that perturb or influence the decision preferences, information processing, or financial outcomes. There are gambling-type heuristics encompassing a cavalcade of biases such as “the house is bound to lose sometime” and “losing streaks point to winning soon.” The subjective conditional probabilities or state-dependent forecasts such as holding optimistic or pessimistic views toward macroeconomic performance are also deterministic in the finance domain. In other words, there are innate cognitive styles or innate idiosyncratic patterns in processing sequential information over time and believability of the information source. Necessarily, financial decision making can be either (i) deliberative or rational or (ii) intuitive, contextual, or emotional [12]. The deliberative decisions are characterized by an exhaustive search and weighing of information, explicit goals and aims, and consistency. In contrast, intuitive decisions disregard prior beliefs or knowledge, entail a non-linear processing of information, and reflect emotional states.
12. Money and Relationships
The nature of money in interpersonal relationships is truly complex. Relationships are often complicated, and one of the key reasons for relationship difficulties is often money. Money matters are somehow more complicated than other relationship issues, and they often don’t get handled well, with the result that relationships suffer [9]. There are however ways in which money and finance must be considered, especially in new relationships, and things needed to be in place…
The idea here is to present the financial matters that need to be understood in relationship terms, with journal ideas for thinking about them and writing them down so that they will be clear in finance plan [1]. Taking the time to list and understand each of these aspects is probably one of the most helpful things that can be done for communication and harmony in relationships.
12.1. Financial Infidelity
In a relationship, problems will naturally arise. However, certain issues tend to create more roadblocks than others and make it painfully clear the relationship may be in jeopardy. A dilemma that many couples face is financial infidelity. The dollar amount doesn’t necessarily have to be large, but the complexity of it weighs heavily. Sometimes financial infidelity goes beyond a spouse telling their partner “I bought this” or “I put it on a credit card,” evolving deeper into breaking a bond of trust. Research was conducted to gain insight regarding financial infidelity and to understand its impact on relationships. The methodological approach was qualitative in nature, gathering data through interviews. A theme that became prevalent throughout was the idea of visibility. The visibility of the purchases, the visibility thought of telling the partner beforehand, as well as the visibility regarding whether other people knew about them, impacted how participants reacted to the financial infidelity [13]. Financial infidelity has a profound effect on relationships due to the presence or absence of trust, lack of communication regarding expectations and concerns, and the domino effect on future finances within the relationship [14]. Ultimately trust trumps everything. It is belief in the character, ability, strength, or truth of someone or something, and its absence threatens to destroy relationships. So often, trust becomes broken in relationships when one partner steps over the line, like the act of financial infidelity does. Couples with financial infidelity struggles often contend with other factors that are constantly raising red flags regarding the health of the relationship, including lack of communication on various matters, decisions being made without the other’s consent, and differing expectations being harbored about the future.
13. Financial Literacy and Its Impact on Money Management
Money is central to our lives. It controls the world’s process and influences its working. The pace of life is determined by economic conditions, mass prosperity, and high unemployment. Money plays an essential role in the lives of people, countries, and nations. Various defending roles are associated with money with its psychological perspective. The role of money in the developing and established economies is always scrutinized. Behavioral Finance is emerging social science that endeavors to comprehend and better the pattern of behavior, whereby behavior is affected by involvement/discrepancies in financial knowledge or insights and education. Behavioral finance investigates ways, methods, and arrangements to betteran understanding of properly regulating money and greed to contribute towards development and application of intelligence and knowledge to deal with economic anxiety and turmoil, thereby conserving social capital for the long run [15]. Financial literacy is the fluency in money concepts, including comprehension of economic products and knowledge that directs an individual’s ability to grow and claim wealth, broad in the area of investment, insurance, and retirement investment, ideally capable of clean-impact assessments of jobs, debts, projects, and policies. The field of research was branches coping with the behavioral problems individuals face around money with perception dealing with banking, debts, savings, insurance, and investments [16].
13.1. The Importance of Financial Education
The importance of financial education has increased globally because of the increasing transfer of responsibilities to individuals. It has long been recognized that financial consumers are becoming increasingly responsible for their own financial wellbeing [17]. In parts of the world, this has resulted in the wholesale privatization of formerly national social welfare programs. Global economic interdependencies have resulted in regulatory structures such as NAFTA that foster political discourse, legislation, and challenges associated with the retirement and investment choices of working citizens. The collective actions of the financial markets drive home the point that a citizenry requires financial literacy for the survival of both the individual and the collective [5]. This includes such basic understanding as the concepts of value and monetary exchange for products and services.
A body of knowledge, skills, and abilities is necessary to satisfactorily meet the personal financial planning needs of the average person. Education is necessary to plan for a number of strategic goals, such as housing, purchases of capital goods, business ownership, and income for retirement. Educational programs are required to address the more complex financial literacy tasks, as needed. Even the saving and spending decisions of everyday life are now determined by a more sophisticated and churning world. In short, Money Pathology emphasizes expenditure on immediate needs while neglecting to create wealth. It encompasses the control of expenditure patterns and investment decisions caused by poverty; particularly relevant in developing nations that regard poverty and illiteracy as synonyms.
14. Practical Strategies for Overcoming Money Attachment
Awareness of how money emotionally and behaviorally affects us puts us in a position to start changing things. This awareness tends to open us up to new possibilities, making healthy choices more straightforward. Here are six simple suggestions for creating a healthier relationship with money:
Mindfulness is key. The impact of money on our everyday lives becomes more apparent through meditation. After practicing mindfulness regularly, someone might notice compulsive spending habits or over-the-top concerns about saving. Noticing these patterns is the first step to change. People often grind through life, barely aware of their money habits until they’re well or healthily beyond the limits. Be a gentle observer. Apply the non-judgmental drift norms of mindfulness and love to money. Money is not evil nor of higher being. Detachment, it is. Cultivating love for self and others means also loving capital. Gentle inquiry is helpful. Instead of judgment or guilt, just ask the sincere “why.” Incorporate these wholesome money behaviors in daily reflection: Why was the purchase made? Why was the sale made? Notice unhealthy patterns, even be present with the energy motivating them [9].
Take a hybrid approach to spending. One contentious issue with money is using credit cards vs. cash. Some insist that only cash should be used as it forces a closer relationship with one’s amount. However, the current socio-economic reality of credit gives individuals more purchasing power than cash. For example, same transactions could have a 3% or 10% cash discount but a 30% credit discount. Inputting the discount into the long term purchasing power into consideration, daily transactions could vastly exceed daily available cash. Such discrepancies hurt budgeting. Therefore, the hybrid approach is to have an easily visible debit card linked to saving excess credit. This demands chronic budgeting but allows one to reap the discounts. This could free behavioral worries and restore the true purpose of money—possess a balance of time and free choice.
14.1. Mindfulness and Money
The practice of mindfulness involves paying attention in a particular way, on purpose, in the present moment, and non-judgmentally. Developing mindfulness requires both weeks of practice and commitment as regularly set aside periods of practice will help attain the ability to focus upon the body and mind as it experiences life. However, it is possible to incorporate brief mindful moments into one’s daily life.
Take a few deep breaths, or close your eyes and breathe as you normally would. Repeat whatever assertion feels comfortable, whether “I understand that I am a noble and worthwhile person” or “I am a person of unlimited potential.” During this practice, one can notice thoughts that arise, feel them as one breathes in and out. After several minutes, sense the thoughts as if they were clouds passing over one’s head, come and go. Repeat the affirmation at least once. Such mindfulness exercises highlight the intersection of emotional and financial well-being, especially the perils of rumination [9]. Rumination involves the constant replaying of thoughts, typically unpleasant, and can become an extensive habit, often linked to anxiety, depression, and stress. Mindfulness techniques counteract this habit – an encouraging prospect.
Mindful Awareness of Money consists of a series of exercises, accompanied by commentary, that straightforwardly apply the principles and skills of mindfulness to financial life. It is thus designed both to extend the benefits of mindfulness to all aspects of people’s relationships with money and to demonstrate concretely and practically that a more balanced relationship with finances is possible [5].
15. Conclusion
In conclusion, our relationship with money is a complex and multifaceted issue with which all living beings grapple. For a more nuanced understanding of this relationship, one must consider a diverse array of factors from a diverse array of fields ranging from finance to biology and anthropology. Broad limitations of existing research remain, but the implications of money psychology for a modern living are clear.
While money is a tool that acts as a facilitator of transactions between parties, this notion also elides the capacity for nefarious use of capital. In so far as capital’s expansion and garnering is driven by profit, it acts on an addiction-like gradient. The modern disenfranchised spend their lives grinding away in the work-a-day world to provide capital to already wealthy corporations. Under its influence, many engage in unethical behaviors to continue providing financing to those who grow profitably. Distrust of and detachment from the system is important [1]. For those comfortably situated on the ladder pursuing the interests of large corporations drives income inequality. Money is as much a social commodity governed by the unwritten rules of etiquette, status, and respect as it is an economic commodity used to acquire goods and services [9].
15.1. Key Takeaways
This section distills key learnings from the exploration of money psychology. The psychological meanings of money are ascribed, examining everyday experiences and scientific findings regarding attachment to money. Money is often considered a neutral tool and an economic unit, but it is philosophically astonishing due to its motivational powers [1]. The investment in money can produce obsessive qualities and disturb interpersonal relations [9].
The shaping of these meanings and the way attachment is elicited and reinforced have been noted. Money is an object of highly structured attachments with profound consequences for the individual and society. The subject has been investigated from various disciplinary perspectives and cultural contexts. A major conclusion is that attachment to money is cultivated, signifying trade-offs associated with previously good intentions. No one explicitly decides to become attached to money, but vulnerabilities to attachments are created.
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