When I first started learning about managing money, I was an emotional mess. I’d just graduated from college, had gone six months without a job and saw no real recourse for getting my finances in order.
The good news is I used this as motivation to start teaching myself about personal finance. The way I saw it, I didn’t have a choice but to get it together in the managing money department.
I’ve now been on this journey for almost seven years, and what I’ve learned is this: The key to managing money is to keep your emotions out of it. Here are some of the tools and practices I use in order to keep my emotions in check when I’m managing money.
This post was written by Amanda Abella, a fantastic writer and speaker of personal finance.
I don’t check my investments everyday.
The stock market is a prime example of what happens when people let their emotions get in the way of managing money. After all, how many times have we seen a sell-off occur when the markets are doing poorly because people are afraid?
Meanwhile, the smart investor knows that it’s time to buy when the market is down. That’s what I did on election night when the markets started tumbling. Was I happy with the election result? No. But I saw an opportunity to make money and I took it. I’ve been riding the markets on the way up ever since.
Had I let my feelings about the election result get in the way of managing money, I might have never transferred some money into index funds that night and I would have left a lot of money on the table.
By not looking at my investments every day, I’m able to avoid all the emotional roller coasters when they occur. That way I can see past a problem and look for opportunity.
Another way I keep my emotions in check while managing money is with an exercise called “bridging.”
“Bridging” is an exercise by Abraham Hicks. It also goes by other terms. For example, motivational speaker Gabby Bernstein calls it climbing.
The idea is simple. The moment you catch yourself freaking out, you reach for the next highest thought. Here’s a recent example from my life:
Situation: “Oh shoot! I made a mistake and now I have a massive credit card bill!”
Beginning thought: “Ahh! I’m broke! I fail! I’m the worst personal finance blogger ever!” (Note: It’s really easy to shame ourselves at this stage. Keep an eye on that.)
If I’m self-aware at that moment, I’ll catch myself and start the bridging process.
Thought 1: “Well, I’m not totally broke. I do have money in the bank.”
Thought 2: “Wait, I’ve gotten myself out of stickier situations. I can do it again!”
Thought 3: “I’m self-employed. I can make whatever kind of money I want.”
Thought 4: “Maybe I can follow up with clients and see if they need work. I also have a couple of leads I’ve been sitting on. Let me email them!”
Thought 5: “Oh! I have two courses I never promote! Let me send an email to my list!”
Thought 6: “Ok. I have a lot of leads now. I’ll be okay.”
It’s a very simple exercise and it doesn’t take a lot of time. What it does take is effort and practice.
As you can see, keeping my emotions in check makes managing money easier because I get out of my feelings and back to work. Sometimes our emotions will cloud our judgment and we won’t see the solutions in front of us, which is why it’s important to become self-aware and partake in these kinds of exercises.
Do you keep your emotions in check while managing money?