Now that we know where to spend for satisfaction, it’s time to train your brain to spend naturally in alignment with your goals. Whether your spending already aligns with your goals or you are struggling mightily to change your ways, training your brain is key to long-term spending success.
Everyone’s life is a story. Money is a primary way we express our stories. You are the author of your story, and yet, you are also the main character.
As every good author knows, excellent stories have twists, turns, and underlying motives the reader (other people) can clearly see even when the main character (you) cannot. This step, Train Your Brain, is about uncovering those motives you act on without conscious awareness. These motives are often:
• stashed in the meaning we give each dollar spent
• buried deep in money scripts and attitudes learned throughout life
• hidden within our purchasing thought processes
• and perpetuated in money habits we have developed
Once we recognize and actively address these underlying motivators, we can shift how we think about money. This adjustment in thinking will drive more positive feelings toward money and ease the process of changing our spending actions.
It’s More Than a Dollar
A key component of our financial journey lies in the meaning we assign to our money.
Dollars are just more than green paper and cents more than pressed metal. We assign meaning and, subsequently, emotion to every dollar in our wallet.
Emotion is a main driver of human actions. If you remove or change the emotion of a situation, people will act differently. Throughout my career, I have been trained in conflict resolution and how to have difficult conversations. All my training has one thing in common – remove or reduce the emotions in the room. However, rarely do I hear this same bit of advice in personal finance classes. Yet, understanding our emotions and resulting relationship with money is critical to spending differently.
Our emotions toward money are complex for sure. Identifying a primary meaning (similar to spending exercises in step two and three) is the first step in handling conflicts we have with our money. Addressing this primary meaning and reducing or changing the emotion it generates, will recalibrate your behavior with money using less effort.
Focus on narrowing your money meaning to one word.
This one-word meaning is an emotional filter through which you view every spending transaction. It influences your decisions at a very core level. This term represents the strong emotional tie with your money. A tie that influences your spending behavior without your consent.
Often this term represents what we either desire or lack most in life.
Fear is arguably the strongest human emotion. Humans will inherently behave to avoid what they fear most. (A key component of many advertisements is to incite fear of not having “it”.) This instinctive, subconscious behavior was a wonderful thing to prevent being eaten by larger predators hundreds of years ago but can lead us astray with daily money decisions.
Thus, we attempt to use money to alleviate our fear of not having [fill in the blank].
Several studies have shown that when humans are in a heightened emotional state, the logical portions of our brain are literally not accessible. When contemplating a purchase, we are unknowingly filtering our decision through a filter of fear – and, sometimes, physically making it impossible to make a rational money choice.
For example, many individuals’ money meaning is security. Therefore, all money decisions are evaluated on how “safe” a spending decision is or isn’t. However, without awareness of this emotional filter, the “safe” money decision isn’t based on their goals, values, or even life a few hours from now. Instead, their individual money decisions are based on what feels safe right now.
However, knowing your money meaning isn’t enough to fully shift your feelings about money. Frankly, your money meaning may take years to shift to another meaning – if it ever does.
To fully understand your spending behaviors, we need to go beyond singular meanings and gain insight into our money scripts and attitudes.
Throughout our lives, we form money schemas and attitudes. The primary source of our money beliefs and schemas are our parents.
Even if you never had a money “talk” with your parents, you learned from them how to think, feel, and act around money. This information was communicated by their behavior, word choice, voice tone and inflection. And, yes, the avoidance of money discussions with you, or others, also helped create the behavioral money scripts and attitudes you act on today.
To discover your money schemas and attitudes, you need to explore your financial past.
Pause for a moment and consider: How was money spent when growing up? How was money talked (or not talked) about?
Similar to where you place your shoes in the house, how you load the dishwasher, or whether the water glasses are stored right-side up or upside down in the cupboard, you unknowingly learned most of your money behaviors. Only when you become consciously aware of how you walk through the grocery store or when you pay bills will you be able to change your behavior.
In addition to specific schemas in our personal spending lives, we also have assigned general attitudes and schemas for other people. These thoughts may prevent us from reaching our goals as well due to an unconscious avoidance of the underlying emotional impact these thoughts generate.
Consider your broad thoughts about money and what assumptions you make about other people’s spending to determine general attitudes and schemas for other people.
After you become aware of your current schemas and attitudes, it’s important to focus on healthier attitudes to make positive change.
Four positive money attitudes I promote are:
- Money is a tool.
- Money is needed to achieve life goals.
- Money can buy anything, but it can’t buy everything.
- You control the money.
Show Me the Money…Script
From these schemas and attitudes, you have formed behavioral money scripts. We operate on these behavioral scripts with little or no thought and often create habits out of them.
Humans have the amazing capacity to operate most of their days based on habits. Some studies even claim upwards of 70% of our days are powered by behavioral scripts and their resulting habits. This is a good thing as it helps prevent decision fatigue for everyday activities like where to leave our shoes and how we brush our teeth.
However, it can also be a bad thing when it comes to our spending behavior. If we don’t fully understand the scripts and habits behind our purchasing decisions, it can drive us away from satisfied spending.
Review your behavioral money scripts and purchasing habits driven by your money schemas and attitudes.
Write down your behavioral money scripts for the following common purchase activities: grocery buying, clothes shopping, and online purchases.
For each activity think of the typical actions you take when making each type of purchase. Recall as much detail as you can.
Think about and write down other purchase activities unique to you. Reflect on these scripts and how they do or don’t align with your goals and values – or maybe how they are driving you to spend more.
Various research studies have identified key elements of purchases that lead to happiness. We need only to recalibrate our spending scripts to reflect these elements for improved spending satisfaction.
According to Happy Money: The Science of Happier Spending by Elizabeth Dunn and Michael Norton along with Time Magazine’s publication of The Science of Happiness among many others, the following are key predictors of happy spending.
While these “happy” elements may result in happier spending, it does not mean you will be satisfied long-term. In addition to the factors above, consideration of your goals and values is also required.
Even though we know what to do and the questions to ask, we may still struggle to apply these satisfaction principles. This is likely because we base most purchasing decisions on an emotional filter honed by fear. Therefore, a key component of all satisfying purchasing is to be emotionally calm or happy.
Often when we are making purchasing decisions we are under stress of some form. And, because our brains physically do not allow access to rational decision making when under higher emotional influences, it’s critical for long-term satisfied spending to be calm when purchasing. Therefore, before purchases, especially large ones, we need to be calm.
Prior to spending do one of the following activities to help you enter a calmer emotional state:
Doing even one of these calming exercises before entering a store or making a purchase will help you restore a calmer emotional state. A calmer emotional state lessens the likelihood of impulse purchases that will create buyer’s remorse later.
Knowing what we want to happen with our purchasing scripts, to either increase or decrease spending, may not be enough. If you are struggling with changing a particular script or reducing spending in a specific area from step three, the cause of your troubles may be rooted in habits.
Habits are a settled or regular tendency or practice of behavior, behaviors that are especially hard to give up. As it relates to your money, habits can create little steps toward long-term satisfying financial results or create long-term financial mayhem.
I refer to bad money habits as financial habictions (a word I made up).
A financial habiction is an emotionally satisfying behavior with small immediate financial impact that creates compulsive adverse long-term financial consequences. More than just a “bad habit”, habictions are an emotional addiction to a spending pattern. These emotional addictions create long-term financial issues. The “latte factor” is a well-known financial habiction, however eating fast food, daily trips to a vending machine, trolling the clearance section every shopping trip, and shopping when bored can also be financial habictions.
Financial habictions are the root of many a financial woe yet can be terribly difficult to change. However, it is critical to identify and change financial habictions for lasting satisfied spending.
Fortunately, a financial habiction, is just a fancy name for a habit and has the same 3 components: cue, action, reward. These three components create a cycle. The habit cue is a physical environment indicator or thought that starts the habit cycle. The cue triggers the action which includes spending. The reward is emotional need met and the dopamine rush created naturally from completing the habit cycle.
The more often a habit cycle is complete the stronger it becomes and the harder is it to break thanks to the increase in dopamine generated every time the cycle is repeated. The good news is with focus and effort all habits can be changed.
So, if you are struggling to change a script or reduce spending in an area, stop and ask yourself:
- What emotional need (reward) is this spending fulfilling?
- What is the cue?
- What is the action?
- What actions can I take to fulfill the emotional need without spending?
- Can I place a new habit cue before the old habit cue?
When we try to change a behavior with financial implications without recognizing the emotional reward, we can only deny ourselves for so long emotionally before we revert to previous behaviors.
For our fast food example, the emotional need (reward) is stress relief and sugar boost. This relief and boost could be fulfilled by having snacks in the car. A physical cue to put snacks in the car could be placing your keys next to snacks in the pantry. Meal planning with quick supper ideas may also help with stress relief at the end of a busy work day.
Maybe you can’t immediately change an entire spending script or reduce spending five ways in a category at once. That’s okay. Focus on one action within that script or one savings technique for the category and change that first. Often when we successfully change one habit, other habit changes will follow.
Over time understanding your money meaning, schemas, attitudes, scripts, and breaking your financial habictions will lead to satisfied spending long-term with less effort. However, this will take time, patience, and perseverance on your part. After all, Rome wasn’t built in a day and neither is satisfied spending.
Additionally, as life happens your goals will change. Satisfied Spending is not a once and done process. Every time significant changes happen in your life or you are feeling unsatisfied, start over at step one and run through the program again.
Like any workout routine, the first few times will be the hardest but also yield results quickly – but the true power and benefit of working out is to be consistent with it over time.