Emotional spending: Do you let your emotions manage your money?

The relationship between money and emotions is complex. Emotions influence decisions about money and in turn, those decisions affect emotions.

Money can be associated with feelings of anger, guilt, and fear. On the other hand, money can make us feel secure, validated and significant. Our financial health is certainly a powerful emotional catalyst.

Even the age-old question of can money buy happiness may have been answered by a 2010 Princeton University study that found there’s a correlation between happiness and wealth, to a point of about $75,000 per year. When people make more than $75,000 a year, their happiness doesn’t increase. So winning the lottery might not make all our worries go away.

Another study found that wealth, as an indicator of a happy life, falls short because the pursuit of wealth takes time and energy away from other domains that are important to life satisfaction, like family and health. However, the idea that wealth signifies success, motivates us to achieve goals and may make us feel more satisfied and hopeful about the future.

Self-awareness is key to financial and emotional wellbeing. Let’s take a closer look at the emotions attached to money and how they can influence your actions.

Sadness: Feeling sad or low may be better resolved by going for a walk, talking to a good friend or watching a funny movie, than by going shopping.

Anger: May lead to taking risks with money and spending impulsively. Try not to take any actions associated with spending immediately after getting angry over something. Distract yourself, talk it out with someone, or even just take deep breaths to calm down.

Fear: A complicated emotion, fear can motivate us to take positive steps. It can also lead to second-guessing our financial decisions or it can motivate us to spend more to keep up appearances. Check in with your goals and values, and separate needs from wants often to stay on a path that works for you.

Guilt: We feel it when we go against our own values or standards. Creating and maintaining effective limits and budgets can help manage this emotion.

Gratitude: Feeling thankful “reduces excessive economic impatience,” according to Harvard University researcher Jennifer Lerner and this helps us to delay gratification for greater reward and security later on.

To continue to build self awareness by exploring your emotions attached to money, consider these reflective questions:

• What beliefs do I have about money?
• What family stories about money am I holding onto?
• Does money play an enhancing or diminishing role in my life?