"Money psychology" attempts to explain how personality affects financial goals and behavior. One aspect of money psychology involves reducing personal debt, rebuilding credit, and learning how to save more money. For these financial goals to be achieved, personality and psychological motivation must come into play – which is what this article is all about!
Here are four incentives that may make it easier to reduce personal debt and save more money -- and they all focus on personality and psychology.
Be a Financial Role Model
In How to be a Financial Role Model, the finance experts at Women & Co. explain why being a financial role model for children is so important, and offer ways parents can teach kids how to save money and stay out of personal debt. If parents realize they’re teaching children how to handle money by reducing their own debt, they may find themselves more psychologically motivated to pay the bills and rebuild credit. They’re not just trying to achieve financial goals for themselves; they’re realizing the impact their money attitudes and personality has on their kids. This can increase their motivation to reduce personal debt.
Consider the Connection Between Debt and Pain
Losing money activates fear and pain in the brain, according to Dr Ben Seymour of the Wellcome Trust Centre for Neuroimaging at University College in London. When research participants lost money through gambling, the area in their brains normally associated with fear and pain was triggered.
To increase motivation to reduce debt, remember that the body doesn’t know the difference between real pain and perceived pain. Thus, the negative stress hormone cortisol will flood the organs and cells even if the pain isn’t physical – even if it’s just “financial pain.” Cortisol, fear, and pain can create disease, fatigue, and even depression (which should be motivation to pay off the bills and save money as quickly as possible!).
Learn How Money Buys Happiness
Psychology research shows money increases life satisfaction, but psychological wealth is just as important. To increase motivation to reduce personal debt, learn how and when money can buy happiness.
Remember that buying material possessions isn’t a source of happiness; true happiness comes from experiencing events and activities with other people.
Discover How Personality Affects Spending Habits
Whether people are “savers” or “spenders” depends on their personalities, their childhoods, their parents’ attitudes toward money, and their current relationships. The more insight people have about their money psychology, the more control they have over financial goals…and the less they’ll have to worry about debt and unpaid bills. The key is to gain insight into how personality traits affect spending and saving habits.
The first step towards reducing personal debt and saving money is to learn why the debt occurred in the first place (which is often rooted in personality and the past). The second step is to find the psychological motivation or incentives to pay off those bills. There’s no easy way to get rid of debt fast…but there is long-term satisfaction and even financial freedom in this type of self-knowledge.
Related Reading on Money Psychology
For more information on saving money, paying off debt, and investing, read the Top 10 Articles on Paying Off Debt and Saving Money.
Laurie Pawlik-Kienlen - Laurie Pawlik-Kienlen is a full-time writer and blogger in Vancouver, BC, and the creator of the Quips and Tips blog series.
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