The Emotional Side of Money

When I sit down with a client to look at her finances, we're not just looking at income, spending, savings, and investments. We're also looking at years of experiences, beliefs, expectations, and emotions that have shaped the way she makes financial decisions. I want to get to the heart of what every client values in her life so we can make sure her money is supporting these things. 

Sometimes a spending habit that looks irrational on paper makes perfect sense once we understand what's behind it. Maybe spending money spontaneously is a way to reward yourself after a difficult day. Maybe saving every dollar became a way to feel safe after growing up around financial uncertainty. Maybe you've always been the person who takes care of everyone else, so saying no to financial requests feels almost impossible.

Your habits make sense once you understand the story behind them.

That doesn't mean every habit is serving you. It means understanding where it came from gives you a much better starting point for changing it.

Emotional Spending Isn't Always the Problem

Emotional spending gets a bad reputation, and I think we sometimes make the conversation too black and white.

We're told that spending because we're happy, stressed, tired, celebrating, or having a difficult day is automatically a problem. I don't agree with that. Money is part of our lives, and our emotions are naturally going to influence our decisions.

The goal isn't to remove emotion from your spending. That's not realistic. The goal is to understand your emotional spending well enough that you can make room for it without allowing it to derail your financial goals. I want my clients to have money available to them to enable spending that makes us feel good. The trick is to set boundaries so we don’t derail our goals. 

I might have a client tell me, "I know I shouldn't have bought that ______, but I had a terrible week and I just wanted something to make me feel rewarded/comforted/special/supported." Rather than immediately labeling the purchase as a mistake, I'd rather ask, "How often does this happen, and did you have money set aside for it?"

There's a big difference between occasionally spending money because you want to enjoy yourself and regularly using spending as your primary way of coping with life’s ups and downs.

This is where planning can actually make emotional spending healthier. If you know that you enjoy dinners out, shopping, travel, or treating yourself when you've had a hard week, include some of that spending in your financial plan. Give yourself room to enjoy your money without wondering afterward whether you've ruined your budget. I call this “flex spending” and require all my clients to have this accounted for in their spending plans. If you have a life partner, they, too, should have a flex spending category (it helps a lot if they are equal amounts). 

You don't have to feel guilty every time you spend money on something that brings you joy. You do need to know what you can comfortably afford and plan for it.

The Money Stories We Carry

We all have stories about money. Some of them came from our parents. Some came from watching friends or relatives struggle. Others came from our own experiences of earning, losing, saving, or spending money. A lot of these stories are also narrated to us by our culture. 

You may have grown up hearing that money doesn't grow on trees, that wealthy people are greedy, that debt is necessary, or that talking about money is rude. You may have watched one parent handle every financial decision while the other stayed completely uninvolved.

Those experiences can shape how you behave with money decades later.

I often ask clients, "What did you learn about money growing up?" The answers can be surprisingly revealing.

Someone who grew up with financial uncertainty may have a hard time spending money, even when she has more than enough. Saving money feels safe, and spending feels risky, frivolous, or even bad. They may have come from a generational poverty mindset. 

Someone else may have watched their parents spend freely and assume that there will always be more money coming in. They may earn a good income but struggle to build savings because spending feels normal and necessary. They may have come from a generational debt mindset. 

Neither person is necessarily making bad financial decisions because they don't care about their future. Their behavior may simply be connected to an old story about what money means and what it takes to feel secure.

Understanding that story doesn't mean you're stuck with it. It gives you the opportunity to decide whether it still fits the life you're living now. I tell my clients to operate on a “no shame, no blame” basis. We can’t change the past, but we can make smart choices to sculpt a better future. 

The Tale of Two Money Styles

I often see two very different money styles in my work.

There is the woman who is incredibly careful with money. She saves, plans, researches every purchase, and thinks twice before spending. From the outside, she looks financially responsible. But underneath that behavior, there may be a lot of fear. She worries that something will go wrong, so she keeps holding onto more and more money without ever allowing herself to enjoy it. The fear is actually holding her back from growing assets and living her best life. 

Then there's the woman who is comfortable spending. She enjoys her money, values experiences, and doesn't want to spend her life worrying about every purchase. But she may avoid looking too closely at her finances because she doesn't want to feel restricted. She earns well, but her lifestyle keeps expanding and there isn't as much left over for her future as she'd like. This client always tells me, “I know I make good money, but I don’t seem to ever be able to save or invest.”

These women look completely different, but they may have something important in common. Neither has found a comfortable and strategic balance between enjoying money today and using it to build security for tomorrow.

This is why I don't believe there is one perfect way to manage money. It needs to be crafted and customized for the individual. 

Some people need to give themselves permission to spend. Others need to create more structure around spending. Some need to learn how to save with intention and not fear. Others need to learn that saving money isn't punishment, it’s empowerment that feels good down the road.

The right approach depends on your circumstances, your goals, and the relationship you already have with money.

You Don't Have to Take the Emotion Out of Money

I don't think the answer is becoming completely rational and emotionless about money. We're human. Of course our emotions are going to be part of our financial decisions.

Instead, I want women to become more aware of what is happening when they make those decisions.

Before you make a purchase, you might ask yourself, "Do I actually want this, or am I trying to change how I feel?"

If you're struggling to save, ask, "What does having this money set aside mean to me? Does it make me feel secure, or am I afraid to let myself spend anything?"

If you're constantly saying yes to other people's financial needs, ask, "Am I helping because I genuinely want to, or because I feel responsible for everyone else?"

These questions aren't meant to make you question every purchase. They're simply a way to notice the patterns that may be influencing your decisions.

Once you understand the reason behind a habit, you can decide what you want to do with it.

Make Room for the Life You're Living

Your financial plan should account for the fact that you're a person, not a spreadsheet.

You will have birthdays, difficult weeks, celebrations, unexpected invitations, holidays, and moments when you want to buy something simply because you love it. There is nothing wrong with that.

The important part is making room for those things intentionally. Making them a part of your plan. 

If you know that travel matters to you, save for it. If you love going out with friends, include it in your spending plan. If having a little extra money available for spontaneous purchases helps you enjoy your life, build that into your plan too.

When you plan for the things you enjoy, you don't have to constantly choose between being financially responsible and living your life.

That's what I want financial planning to do. Not take the emotion out of money, but help you understand it well enough that your emotions don't have to run the entire show.

If you feel like your relationship with money is holding you back, I'd love to help you understand what's really going on beneath the numbers. Book a free Q&A with me and let's talk about where you are, where you want to go, and what might be getting in the way.

You can also join one of our monthly live events for practical conversations about money, financial confidence, and the decisions that come with building a life you actually want.

Your money story may have influenced where you are today, but it doesn't have to determine where you go next.