Personal Financial Emotional Intelligence
No amount of financial advice or budgeting tips will help unless we consider the emotional aspect of how we spend and manage money.
What I read: “Money is emotional — but personal finance advice rarely accounts for that.” by Lindsay Bryan-Podvin. Published June 6, 2022.
Spend any amount of time scanning social media, magazines, or nonfiction book offerings and you’ll notice a lot of money advice. I’ve read and watched much of that content. Some of it’s good. Some bad. Some misses the mark because of the absoluteness of the advice. When it’s off the mark, the missing component is often that money isn’t just a numbers exercise. Money lives within the context of our day-to-day lives, much of which is driven by emotion.
The missing emotional factor in money and personal finance advice is what Lindsay Bryan-Podvin alludes to in her article. Bryan-Podvin describes herself as a financial therapist who started her career in the field of mental health treatment and advocacy. Her unique approach is to combine financial literacy with the emotional and psychological side of money. I see this as fostering a personal financial emotional intelligence.
In putting financial literacy above all else, many in the personal finance industry have decided that repeating the same facts about how much money folks should have in their emergency savings account will, somehow, change people’s money habits. This approach doesn’t account for our human side: the parts of us that crave connection, new experiences, and fitting in as members of our communities. Most of our decisions around money are emotional; no amount of nitty-gritty knowledge about interest rates will change that.
Before I go further, let me state upfront that I can see why many young people might be cautious about taking financial advice from anyone, but especially from older people like me. Their world is different. We older people made it more difficult for a young person to get ahead today. I’m writing this with the full understanding that no matter how much I believe my perspective about money is wise, not everyone will agree.
To use a personal example of how much of the mainstream financial advice entirely discounts the emotional component, I’ve read and listened to countless money advice content creators mention how not buying a daily cup of coffee and making it at home instead will immediately change my financial life by saving me lots of money. Yes, it would definitely save me money.
I know my daily morning coffee at a coffee shop where I see friends most mornings is more expensive than making coffee at home. I don't care. Quality of life matters. As it relates to Bryan-Podvin’s article, the emotional benefits I receive from buying my coffee at a coffee shop and chatting with my friends outweighs the purely numbers-based advice of making coffee at home.
Another frequently mentioned financial decision is the buying a home versus renting debate. I could probably make an argument that buying isn’t always necessarily financially wise, but for the purpose of this post let’s assume that buying a home always comes out better financially in the long run. But what about emotional factors.
I owned a home once. I didn’t enjoy the experience. I often described it as a hole in the ground into which I poured time and money. Apart from that, it makes me happy to live in a bustling dense urban environment in a progressive city. That makes buying a home more difficult than if I chose to succumb to the cheaper homes I could afford in the outreaches of suburbia where I’m sure I’d be miserable. I like the peace of mind of knowing how immediately mobile I can be by renting. These are just a few of the reasons that, at least for now, I choose to not own a home and instead rent.
Someone else with an entirely different set of emotional needs could make opposite decisions, choose to live somewhere much cheaper, and be quite happy with the lifestyle that location offered. Different strokes for different folks.
Interestingly, Bryan-Podvin and I have quite similar backgrounds. As an only child raised by an upper middle-class father, I wanted for nothing. I remember owning lots of toys and other things as a child, but barely. My early emotional landscape was forged never with no lack of the basics or modest luxuries of life.
When I left college I studied dance intensely, spending quite a bit of money in the process. I remember every class filled with so much joy that I’d do it again in a heartbeat.
My first plane trip as an adult was to Key West, Florida. Coming from a wintery Chicago January, the warm weather and laid-back island vibe was something that I remember to this day. I even remember details like the ice cream shop my partner and I went into before heading to the water to watch the sunset.
Over the years I’ve spent money on experiences. Travel. Theater. Museums. Restaurants. Or simply taking a friend out for coffee. I know that many years from now (I hope) when I’m on my deathbed it’s the experiences I’ll remember, not the cars I drove or the fancy clothes I bought.
I never regretted all the money I spent on dance classes.
During a trip in the 1970s to Key West with my late partner, we were enamored with what was then a seemingly idyllic and heavily gay tiny island paradise. My partner and I actually discussed that if one of the local ice cream shops offered us a job, we’d move there on the spot. Luckily, we spoke to a friend who had moved there a few years prior and he told us the two-by-four mile island would eventually make us experience “rock fever” and the job options were few and far between. We backed off the idea. An emotional high during a vacation could have easily nudged us to make what I believe would have been both a terrible lifestyle and financial decision.
For me, the most important takeaway from the entire article is to encourage emotional awareness when it comes to spending money and financial planning. Most of us don’t actually assess how we feel when we spend the money we do or otherwise engage in certain types of financial planning. I had never thought of taking the time to stop and think of the emotional aspect of my handling of money beyond the “buy experiences not stuff” mantra that I think generally guides me well. Maybe keeping a journal for a while like Bryan-Podvin suggests to document how I feel about the ways I spend and manage my money is a good idea.
Then Bryan-Podvin talks about budgeting. Ah, budgeting, an activity that I never quite got the hang of no matter how many times I attempted it.
Not only are these budgeting categories outdated and unrealistic, they also don’t make room for the reality that people want to enjoy life. So often in the personal finance world, consumers are told what to cut: lattes, dining out, vacations. But we all need joy, rest, small pleasures, and self-care — things that often involve spending money.
I had never considered how shame plays a part when budgeting fails. Going into a shame spiral isn’t something I’ve experienced because quite frankly I abandoned the idea of detailed budgeting long ago. I’m sure it works for others, but it never worked for me.
However, I do one budgeting tactic Bryan-Podvin suggests. I document every penny that comes in and goes out of my life. All of it. Yes, it’s a lot of work sometimes, but by seeing with a few clicks on my spreadsheet where I spend my money and how much I have coming in and from what source gives me an instant quick assessment of my financial life.
Seeing exactly where your money is going can help you create realistic financial goals based on your actual spending habits, not what one finance professional says your life should look like.
I also do another monthly exercise where I go through my checking, savings, and investment accounts and record how much I have and what debt (which for me is only occasional credit card debt) I have to arrive at a snapshot of where that’s all at each month. That takes me about 15 minutes. It helps me remain realistic about what I have on hand which keeps me in check from overspending (I think it does anyway).
The article goes on to talk about the wisdom of practicing financial self-compassion which is really just being realistic about being human, making mistakes, moving ahead two steps forward and one step back, and generally just giving ourselves a break on the imperfect way we handle our money.
Money shame is discussed which violates the self-compassion guideline by telling ourselves we’re a bad person because we feel we’ve screwed up financially somehow.
Finally, Bryan-Podvin suggests we celebrate our money wins. Make note of when we’re really good at handling our money. Perhaps we held off on a purchase that in hindsight would have been a bad use of money or we smile at a growing bank savings balance.
If you want to read some of my other thoughts about money, check out “Money And My Own Version Of Minimalism.” If you’d like to read more about Bryan-Podvin’s insights, check out her book The Financial Anxiety Solution: A Step-By-Step Workbook to Stop Worrying about Money, Take Control of Your Finances, and Live a Happier Life (paid link).
I’m fading a bit as a write this. I’m going to walk to my local coffee shop and get a small cup of coffee. I know it would be financially prudent to make that coffee at home, but I enjoy the walk and the many neighborhood friends and acquaintances I’m likely to bump into along the way. For me, that money is well spent. I hope you’ll take the emotional satisfaction you get from money into account too. Spending money on things that bring us true joy and avoiding sinking money into the often short-lived jolt of expensive stuff means taking our emotions into account whenever we spend or manage our money.
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