How is your relationship with money? – Part 2

This series of blogs is designed to help people improve their relationship with money. In the first blog and our first step to improving your relationship with money we encouraged you to spend some time trying to recognise the emotions that money bring you. This is based on the ontological principle that once aware of something you can assert some control over it.

The second of these blogs is to dispel the myth that endlessly growing your money will bring you happiness (spoiler - it won’t). Often financial advice can be seen as quite binary in nature, we invest in X to get a long-term return of Y, but this misses the biggest part of financial advice – you.

Because ultimately the binary answers that investing brings don’t incorporate the biggest driver of what being successful with money actually looks like, which is getting the most value from money for you.

Step 2: Consider what’s important

Money and time are similar bedfellows, we’d all like more of both but are pretty good at finding things to waste both on. However, we seem to be a bit better at regulating how we spend our time than how we spend our money.

This might be because studies show that we tend to underestimate how long we will live and overestimate our ability to earn and how much our money will buy. Therefore, if time is a more precious commodity in our psyche then we can delay making financial decisions far longer than we can delay making decisions on experiences.

This leads to the second point, consider what it is that you truly value about money.

Actually sit down and ask yourself what it is that’s important about money to you. Common values can be the security that having money in the bank will provide; for some it can be the driving value to provide for family and loved ones; and/or, it could be the freedom that money can bring.

Even if you identify with some of those values, spend time making them personal because at its root whatever it is you truly value about money is how you should spend/allocate the money you do have.

The benefit of doing this is that it will allow you to set meaningful goals that will bring you the most happiness. For example, if providing for your family is fundamentally the most important thing for you, then spending more now on your loved ones and working longer is the right course of action. Equally if the financial freedom to retire early is the most important, then you should save more. Both courses of action are equally valid, just make sure that you’re spending your money on what’s actually going to bring the most happiness.

To discuss this in more detail with one of our financial planners, get in touch.

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

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