Every day involves some type of money decision – eat out or brown bag, premium fuel or regular, donate to a worthy cause or pass, allowance for the kids or not. The decisions are endless.
And if you’re making those decisions with a spouse, the odds that you see eye-to-eye on 100% of those decisions are low. No one does.
But understanding yourself (we’ll get to your spouse later) and what makes you spend when you do and save IF you do, helps lower your anxiety and contribute to a more informed, positive, in-control financial decision.
All money decisions, whether big or small, are complicated on some level. But you can change that.
There are four drivers or catalysts that compel every money decision. Feel better about your money decisions when you understand the driving forces behind your choices.
Money decisions are:
This driver takes a look back at how you were raised. My upbringing is different than yours. The way you were raised probably differs a good deal from how your spouse was raised. For example, I have a friend who gives gifts all the time. Whether she is going to a party or whenever she is meeting a person for coffee. She gives gifts because her parents never did. She missed out on that so she is making up for it now.
This driver puts your emotions behind the wheel. In fact, last week I (Bethany) was having a pretty hard week. While I was out doing errands, I kind of drifted a little bit and bought some clothes I had been wanting. It made me feel better. It was emotional. I was spending out of emotion. It wasn’t “personal”, I had plenty of clothes growing up. It was an “emotional” decision. It was not the end of the world, but had I been more aware of the emotion behind my purchases, I might not have made them.
This is when a person is compelled to make a money decision based on facts. And only facts. On the surface this sounds like a great strategy, but if you involve others’ feelings, special occasions, etc. that’s not always the case. The person using this driver for their decision thinks, “Do I have the money?” “Do I not have the money?” “Should I save?” “Should I not save?” “Do I have enough for retirement?” “Do I not have enough for retirement?” I (Scott) am more of the factual spender than Bethany.
We are hardwired to approach money in a certain way. If you watch carefully you can see those tendencies in small children before they even understand what money is. Our money decisions are part of who we are. Some of us love to spend, while some of us don’t. Some of us are really great at saving, while some of us are terrible at saving. Some of us like to take risks with our money, others of us don’t. But the reality is we have this internal mechanism that is a big driver in how we are going to spend our money.
It’s helpful to try and understand which drivers are at work in our decisions before we are faced with a decision. We put together a Money Decision Equation Calculator to help you determine which driver is behind the wheel when you make money decisions
The more you’re aware of your feelings about money and what drives you to make the money decisions that you do, the more you are in control of positive financial outcomes and positive interactions in your relationships. If the calculator helps you see that “emotion” or “factual” was the driver in the last few money decisions you made you can be aware of that next time you’re faced with a money decision. You can control your choice taking all drivers into account: personal, emotional, factual, and internal. Identifying your drivers helps you in better understanding and communicating with one another.
Make it Happen!
Scott & Bethany Palmer