Emotions And Our Money

By Larry Light AdviceIQ.

The people who have money problems are captives of self-delusion. Let's face it, many people have money problems, and not simply by failing to have enough greenbacks in the bank.

Some are misers, fooling themselves that ever more worldly wealth will cure their unhappiness. (It won't.) Some are tightwads, who think that most spending is frivolous, which deprives them of the fun that money can buy. And some are willfully naive, certain that the future will take care of itself somehow, without their planning and investing.

Thus comes the rise of a new type of advisor, the financial therapist, a specialist who treats emotion-driven misconceptions. New York Times columnist Paul Sullivan writes about this small, yet intrepid, cadre in his new book, "The Thin Green Line: The Money Secrets of the Super Wealthy."

He draws a distinction between being "rich", connoting those with a large number on a financial statement, and "wealthy," where they know they have enough for wants and needs.

Many of the rich are riddled with anxiety they will go bust. The wealthy, in Sullivan's parlance, may have nowhere near the assets of the rich, but harbor the lighthearted self-assurance they will be fine.

Financial therapists see their mission as tutoring folks on how to arrive at this blessed state. Sullivan describes their field as striving to "get people thinking about the decisions they make, and not about their investment returns."

Often, what occurs in your past colors how you look at finances. Sullivan cites examples of what happens to three families about to lose their houses, due to bad decisions. In one, relatives ride in and save the homeowners. In a second, the homeowners figure out how to fix the problem. In a third, they lose the place to lenders.

I imagine the three sets of owners' approach to finances in the future will be, in order: 1) blithe disregard because something always will turn up, 2) caution regarding future asset purchases and 3) despair about ever getting ahead.

Sullivan shows how intense emotions run about money, with an anecdote of his visit to the Financial Therapy Clinic in Manhattan, Kan.

They hooked him up to a bunch of sensors and asked him a series of pointed questions, such as about his personal debt level. Although Sullivan has sturdy personal finances, the monitors showed he was feeling stressed during the interview.

Maybe if you hooked up Warren Buffett to that machine, his readings would show Zen-like calm. Or not. But knowing yourself and how you regard money is vital to your material and psychological well-being. ___ ABOUT THE WRITER Larry Light writes for AdviceIQ, which delivers quality personal finance articles by both financial advisors and AdviceIQ editors.

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