Harris: Feeling Financial Emotions in February

By Charlestien Harris, Retired Financial Coach at Southern Bancorp

February is commonly known as the month of love. It is a time for reflection on our relationships with family, friends, foes, and sometimes finances. I want to focus on the relationship between you and your money.

Whether you are single or married, the relationship you have with your money is very important, and it says a lot about your goals, dreams, emotions, and money habits. Love is a feeling, and whether you realize it or not, you can develop strong emotions about your money. Those emotions ultimately determine how you handle your money – or your family’s money – when a partner or other family members are involved.

Emotions are an important part of the human experience. A study performed by Nobel Prize–winning psychologist Daniel Kahneman showed that we make financial decisions based 90 percent on emotion and only 10 percent on logic. The most critical emotions when it comes to money are fear, guilt, shame, and jealousy. Let’s discuss how each of these emotions can affect the decision-making process when handling your finances.

1. Fear

Financial fear is a common emotion that can be described as a powerful, unpleasant response to a perceived financial threat. It can cause people to make irrational, emotional, and short-term decisions that often lead to lost opportunities or financial setbacks. In some cases, fear can paralyze an individual to the point of making no decision at all.

Financial fear may also trigger a “survival of the fittest” instinct, causing people to hoard cash, panic-sell during market volatility, or miss growth opportunities due to fear of loss. In extreme cases, it can lead to an overwhelming fear of spending money – even when financially stable – resulting in self-denial of basic necessities needed for everyday living.

2. Guilt

Financial guilt is another common emotion and is often characterized by feelings of remorse, anxiety, or shame related to personal money decisions, such as impulsive spending, accumulating debt, or even receiving a financial windfall.

Survivor’s guilt can occur when someone feels guilty about having financial stability while other family members struggle financially. This emotion can also stem from a scarcity mindset, one’s upbringing, past mistakes, or constant social comparison. You might recognize financial guilt if you experience any of the following:

• Hiding credit card balances, even from yourself
• Avoiding checking your accounts because it feels “too stressful”
• Feeling guilty every time you spend money on yourself, even when you have earned it
• Downplaying your success because being the “first” or the “only” feels isolating
• Believing you should already “know better” when it comes to managing money
• Internalizing family expectations that conflict with your current financial reality

3. Shame

Financial shame can bring feelings of emotional distress, embarrassment, or a sense of inadequacy regarding one’s financial situation. Often, this emotion causes people to equate their net worth with their personal self-worth.

Shame frequently leads to inaction, which can worsen financial problems and create a negative, self-reinforcing cycle of anxiety and deteriorating financial circumstances. Other characteristics of financial shame may include carrying high levels of debt, experiencing bankruptcy, falling behind on savings goals, comparing wealth on social media, or failing to meet personal financial expectations.

4. Jealousy

Financial jealousy can be defined as resentment, insecurity, or frustration experienced when comparing one’s financial status, assets, or spending power to someone else’s. It often arises when comparing oneself to peers, friends, family members, or even the extremely wealthy.

Financial jealousy can trigger feelings of bitterness, depression, anxiety, and low self-esteem. While jealousy can produce negative emotions, it may also serve as a motivator by highlighting personal goals or revealing areas for financial improvement. However, a common pitfall is allowing jealousy to drive risky investments or excessive spending in an attempt to mimic peers, family members, or a neighbor’s lifestyle – often leading to debt.

As humans, we experience a wide range of emotions that affect many aspects of our lives. Learning to manage these emotions can be challenging, especially if they are not properly identified. Understanding your financial emotions can go a long way toward helping you make sound financial decisions.

One effective step is seeking professional help from a certified financial professional. To find an Accredited Financial Counselor, visit www.afcpe.org (Association for Financial Counseling and Planning Education). To find a licensed, reputable, nonprofit credit counselor, visit www.nfcc.org (National Foundation for Credit Counseling), www.fcaa.org (Financial Counseling Association of America), or the U.S. Department of Justice website at www.justice.gov. If you need help, do not hesitate to reach out to one of these resources. 

Southern Bancorp also has a team of financial counselors who are available to help you. Simply contact your local branch for more information. 

For more information on this and other financial topics, you can email me at charlestienharris77@gmail.com or write to me at P.O. Box 1825, Clarksdale, MS 38614.

Until next week – stay financially fit!

Charlestien Harris is our financial contributor, a retired financial coach with Southern Bancorp.