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The Psychology of Personal Finance: How to Have a Healthy Relationship with a Limited Budget

Finance

Photo Credit: www.thebalance.com

The human mind and money have an overly complex relationship.

A cause of shame, anxiety, depression, and oftentimes thought as a source of happiness, people have long associated money with emotions. And this is why people seldom handle their personal finances logically.


Despite it being in their best interest, people don't save money. People spend too much out of excitement or too little out of guilt. This is especially true for people with a limited budget. Studies show that people with constrained personal finances invest their emotions heavily with money.

So with that in mind, here are the key concepts you have to understand in order to have a healthy relationship with money:

Understand your finances
Having a healthy relationship with anything entails having a deep understanding about it. A good grip on the limits and potentials of your personal finances can help manage your expectations and rationalize how you see money. A provocative think piece published on the New York Times highlights how people feel happier with cash on hand rather than investing that cash, even if the latter makes much more long-term sense.

In many contexts, talking about finances is still taboo. At work, people don't talk about remuneration. In gatherings, discussions around debt rarely come up. And even at home, any dialog on managing money almost always end up emotionally charged. To attain financial literacy, you have to pierce this veil and have a grounded approach on managing debt, expenses, and savings.

Understand the game

Contrary to what you might think, consumers aren't that savvy. Marketers around the world have always tapped into the fact that emotions are the greatest drivers of consumption. People buy things when it has an emotional presence or relevance.

Knowing the pain points of being a consumer and how marketing utilizes your emotions to target your wallet are the best ways to get ahead. Tricks like making the medium sized drink almost as expensive as the large one to point you in that direction is an old one that remains effective to this day.

An online survey commissioned by the housing charity Shelter found that families who rent suffer from anxiety. Especially in highly coveted markets, you need to be aware of certain unsaid rules that can make survival difficult for the uninitiated. For instance, in one of Yoreevo's guides to NYC real estate, the site reveals how co-op square footage in the city is almost always overstated. This makes it very hard to compare units based on stated size alone.

These are just some of the reasons why the vicious cycle of anxiety, depression, and guilt in spending is also fueled by consumerism. But you can do something about it. Having a healthy relationship with spending means discerning your needs and wants and making sound financial decisions from that discernment.

Furthermore, unhealthy notions of your financial capacity or situation may even lead to a decreased capacity to make money. Some CEOs in this interview think they won't get funding if VCs uncover that they have mood disorders or are stressed psychologically.

Understand yourself
The most relevant emotions related to money are guilt, shame, fear, and envy. Being more conscious of when and how these feelings come up when you spend, save or invest will help you to be more mindful with money.

Mint recommends you forgive yourself when you miss a credit card bill or overspend. Beating yourself up over financial mistakes can end with you sinking even deeper into the cycle of guilt and shame.

This should go without saying: never make major financial decisions when you're emotional or in a vulnerable state. But it's easier said than done. Creating powerful habits or rituals like taking a jog or eating a meal first before deciding can aid in disengaging from emotional decision making.

A deep understanding of yourself is key in having a level-headed approach to managing or even growing your finances. Personal finance is really one of those fields where emotion fails and logic thrives.

3 Min Read
Career

Black LGBTQ Woman Powerhouse Launches Vegan Cosmetics Line

I am a proud Black business owner carrying a line of lip colors for the woman who wants to shine. At Vatarie Cosmetics you can find cruelty-free and vegan lip care products, including clear lip gloss and liquid matte lipsticks. The line is still under development, so there are more products in the making that you'll hear more about soon!

My products are high-quality and it is my dream to take my brand into high-end storefronts across the nation and even across the globe.

About Leticia

I have worked my way into my entrepreneurial career as I did not come from money. The goal of my cosmetic line is to bring excitement to everyone who tries the line. My products are high-quality and it is my dream to take my brand into high-end storefronts across the nation and even across the globe. I believe that with added makeup and a good set of threads, anybody can confidently face the world. I am a proud and firm supporter of the Black Lives Matter (BLM) movement and a proud member and supporter of the LGBTQIA community.

There have been plenty of hardships that I have had to face throughout my entire life, the most recent being the recent death of my father who passed far too soon. I have never allowed these hardships to deter me, and won't start now. I will continue to progress and work hard to build my business, knowing that this is what my father would have wanted.

About the Vatarie Line: What It's All About

Upon launching the line, I had the mission of inspiring every human to find their inner beauty and to have fun along the way. With this in mind, my products are designed for people of all genders, races, religions, and creeds. The Vatarie line will have more to offer customers very soon as I am continually working on developing products and expanding the line. In addition to the lip colors currently offered, the line will soon include highlighters, eyeshadows, and new lip gloss additions.

I believe that no one needs makeup to validate themselves, and we are all beautiful on our own. I do believe, though, that makeup can make life a lot more fun. Now more than ever we are living in a world where there is so much sadness and darkness. Sometimes all we need to change our moods and get away from that darkness is something to help us feel better and more vibrant — this is where a pop of makeup and a well put together outfit can really make an impact.

Now more than ever we are living in a world where there is so much sadness and darkness.

I encourage everybody to embrace their inner beauty and inner style, and express themselves no matter what. My line of products is inspired by high fashion and designed to make a bold statement. The running theme across my products is empowerment at every stage and level. I create products that make my customers feel happy, and I ensure I am happy myself with my products before I release every single one. There is no place for cutting corners as I believe in producing the highest quality product.

I bring my sense of humor and quirky personality into my products and you can see this in the names of each item. Take the lip color "Blood Money," which signifies all the money, tears, sweat, and yes, blood that was put into the brand. Let me tell you, it was hard work, and it still is hard work, but at the end of the day, it fulfills me to know the type of quality I am providing. It gives me great pride to create a line of legendary products that will positively affect someone and bring them to a place of self-love and acceptance.

About the Past that Gives My Business Meaning

I have struggled over the years with mental abuse that has left me feeling as if "I wasn't enough." Added to that, being a Black woman in an industry that is predominantly dominated by other races, I had to work harder to get to where I am today.

Coming from a broken home, my family struggled with addiction, making my entire childhood a miserable nightmare. My mother abandoned us as she was being physically abused, and it was up to us the kids to do everything necessary to take care of the home and each other. We eventually ended up living with my grandmother in Miami, Florida. At a very young age, I had to endure physical and mental abuse and was locked up. At the age of 22, I lost my younger sister to gun violence and found myself raising her one-year-old son as my own.

Being a Black woman in an industry that is predominantly dominated by other races, I had to work harder to get to where I am today.

While my past was a rough one, it is what has made me the strong, independent, and vibrant woman I am today. That woman strives to be her best every day and works tirelessly to provide a line of only the best cosmetics products. I couldn't see this while I was living through those bad situations and struggling to grow up, but I can look back and see how I was made more resilient because of my hardships.

As I grieve over my father's recent passing, I become stronger. It is this added personal strength that will push me forward in everything I do and will be reflected in my work ethic and in the development of new products for my Vatarie line of cosmetics.