The human brain has a great capacity for memory, calculation, perception, and measurement. Rational decisions are made by analyzing data through a linear, logical process. Consumer science posits that individuals are “rational consumers” who calculate the cost and benefit of each purchase. Yet my research and financial workshops with women have revealed that is far from the truth. When it comes to spending, many people are impulsive and irrational, influenced predominantly by emotions, social cues, and subconscious beliefs formed in early childhood.
How can the power of your mind and emotions shift your financial behavior?
“Money-Wise Women” guest Sally Palaian, Ph.D., is a licensed psychologist in private practice for over 30 years who specializes in the treatment of addictive behaviors. She is the author of Spent: Break the Buying Obsession and Discover Your True Worth. This book offers effective approaches to become more empowered with money by examining those underlying emotional, familial, and societal factors that affect spending behaviors.
Over three decades of counseling, Sally has identified common struggles that women have with money. I can suggest four psychological keys to improve your money relationship:
1. Self-Love. By finding a strong center and sense of self-worth, shift your co-dependency. Women are often focused on outside perspectives, wanting to be noticed, liked, and accepted by others. This can lead to excessive spending, often on others. Women are wired neurologically to look out for the needs of others, and it can be hard for women to prioritize caring for themselves.
2. Inner Authority. Through looking honestly at your financial situation and finding a strong inner “no,” abandon your lack of responsibility. A few generations ago, women were not allowed to own land, use banking services, or take out credit, and many women still defer to men to handle the finances. Develop financial maturity by having honest conversations and making informed decisions based on the numbers and your intuition.
3. Purpose. Through aligning their money with their values through self-reflection, women find clarity beyond their confusion. As people align with their values when making purchases, investments, and choosing employment, they become more satisfied. Aligning to your values and your long-term goals reduces impulse spending and compulsive behaviors. Find greater clarity to make better financial choices.
4. Assertiveness. By becoming able to better identify and speak your preferences you can transform financial submissiveness. Many women are in the habit of playing the victim and are afraid of having the power money brings. When you speak more confidently and have healthy boundaries with your time and money, then you develop greater respect for yourself and from others.
I asked Sally about the myth of the “rational consumer.” This assumption is at the foundation of microeconomics, that each individual rationally calculates the value of each purchase to maximize the benefit. Yet spending is often impulsive and influenced by marketing messages.
People evaluate economic activities not only cognitively but also strategically and viscerally. This emotional aspect explains why economic choices make many people uncomfortable. People do not approach economic decisions with a single mind, and they often make strategic mistakes. The advice of financial planners only treats the symptoms of overspending.
Shame is the feeling that you are wrong and inadequate at your core. It keeps people from reaching out for advice. Sally describes the disappointment that happens when “people compare their insides to other people’s outsides.” Financial struggles are often hidden, even from those you love.
Sally’s book, Spent, teaches readers to control shopping, pay off debt, develop budgets, and become financially competent. She includes easy-to-use assessment tools designed to pinpoint the severity of a problem and questionnaires that facilitate the exploration of the root causes of unhealthy financial behavior.
Sally counsels couples about money, and often it’s a power struggle. She describes some of the common relationship pitfalls and the issues of power and control that come as distinct personalities handle finances as a couple. Sally elicits greater understanding between the individuals, with extensive reflection on their money history and early imprinting that leads to destructive behaviors.
Listen in to find out if you have addictive spending habits and discover steps to take to improve your financial situation. Women are becoming more empowered by breaking through taboos. They are approaching finances more effectively by speaking more candidly about money. Put your mind at ease, and discover greater joy and satisfaction.
Sally Palaian, Ph.D., is a licensed psychologist in private practice for over 30 years, specializing in the treatment of addictive behaviors (money, food, alcohol, gambling, relationships, sex), trauma, and Imago Relationship Therapy. She is the author of Spent: Break the Buying Obsession and Discover Your True Worth (Hazelden, 2009). Dr. Palaian utilizes a practical approach to help individuals and couples make long-term financial and lifestyle decisions through visioning the future and creating a spending plan to make those dreams come true. She speaks nationally on the psychology of money, compulsive spending, shopping addiction, paying down debt, developing budgets, and financial underachievement. You can contact Sally through the Positive Self Center.