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Finance and feelings: Navigating life's twists and turns

“Take the emotion out of money.” At one time or another, you’ve probably heard this advice, whether you’ve heeded it or not. But is it the best advice?

Last week I was happy to host a presentation and discussion with Dave Jetson, a therapist and financial counselor who would certainly disagree with those words of wisdom. In his work and his writings (his latest book is Finding Emotional Freedom: Access the Truth Your Brain Already Knows), Dave focuses on helping individuals explore and heal money issues.Over the course of the evening, Dave shared how our emotions impact our financial decisions, and how three parts of our brains—our “trauma child,” conscious brain, and inner child—all compete for our resources and dictate how we save and how we spend. As a financial advisor, I found Dave’s thoughts and research to be in line with my experience observing how feelings can cloud judgment and, all too often, derail the best-laid financial plans.

It’s no mystery that money is an emotional hot topic for almost everyone. Even though we know intellectually that money is simply a necessary tool to support our goals, most of us can’t help but have feelings (and often lots of them!) about money. And those feelings, whether they’re conscious or not, can cause some very real issues when it comes to making smart decisions.  Issues that typically cause the most conflict are rooted in our fears about money, safety, and survival. Dave refers to this fear as the reaction of the “trauma child”—the part of us that, at a very young age, formed our deep-rooted reactions to money. Like Dave, I’ve found that it’s important not to ignore these feelings when they come up, but instead to connect with them and share them—especially when making decisions together with your partner. Here’s an example:

My clients Julian and Karen have very different perspectives about money. Julian was raised by a single mother and money was always a challenge, so he has a lot of fear about being able to provide for his family. To manage his fear, he is hyper rational about money. He serves as the financial regulator in the family, setting the budget and the savings rates, and taking full responsibility for meeting their financial goals. His wife Karen, on the other hand, was raised in an affluent family and never had to worry about money. Since Julian takes the reins financially, she doesn’t have to worry about survival, so she’s free to focus on keeping the family healthy and happy. That structure seemed to work well, until recently when they faced a financial crisis that challenged their thinking. When their pre-teen daughter showed signs of serious depression and needed a residential treatment program, Karen called me in tears. Julian was refusing to spend the money needed to pay for his daughter’s treatment, and talking to him about the issue was leading nowhere.

I was so glad she called. Clearly this crisis was bringing some big emotions into play, and those feelings were clouding the real issues. Whether it was their “trauma children” interfering or some other issue, I knew I needed to tread carefully. But I also knew that, ultimately, they both wanted the same things: a happy, healthy, financially secure family. With that as a basis, I was able to help. I asked them to meet with me as soon as possible to talk through the issue and see if we could agree on a solution. When we sat down together, I began by asking them to revisit their shared values. Next, we talked about their fears. Julian opened up about his fear of getting off track from their savings plan. “We don’t even know if this treatment will work, and it will set us back a lot. How can we be sure we have enough money to cover the expense and still be on track for retirement?” Karen shared her fears for her daughter. “Depression is a serious issue. What is it worth to us to be sure she can recover and be safe and happy?” Then she shared about her sister’s depression growing up and how much it had scared her. “I couldn’t do anything for her, and it made me feel helpless.”

As we talked, I could see the walls come down. In less than an hour, Julian and Karen had “felt” their way through the issue instead of “thinking” their way through it. They both had a new appreciation for where the other was coming from and, most importantly, they were re-focused on their shared values and goals. Julian was able to see that this crisis was a small wrinkle in their big-picture plan—not a derailment—and Karen was no longer angry at his initial reaction to what she saw as an urgent need.

It may sound a lot like a full-fledged psychotherapy session, and while I’m certainly not a therapist, financial planning is, by definition, a type of intervention. The purpose of creating a financial plan is to help identify your values, understand your goals, and create a tangible path to achieving your short- and long-term objectives. But even with a great plan in place, there’s always (and I mean always) an unexpected twist and turn. At one time or another, every family will face a crisis that drives them back to that emotional place and forces them to deal with a “trauma child” throwing a fit that can threaten to undo even the best-laid plans.

As Dave Jetson shared last Thursday, “Our ‘trauma brain’ is the same as our financial brain.” That’s why it’s important to pay attention to what we’re feeling first, and then tackle the dollars and cents of the equation. So the next time you’re facing a financial decision that has you feeling less than peaceful, take the time to connect with what you’re feeling rather than “taking the emotion out of money.” I expect you’ll find it’s a much easier path to wise, rational decisions—about money and just about everything else.

Need help figuring out how to navigate your emotions to make better financial decisions? Let’s schedule a time to chat. As always, I’m here to help.

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09 November 2016

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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >