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The Emotional Cycles of Saving and Investing Money

I want to start this post with Money Mastery Principle 1: Spending is Emotional. 
Certainly it is!  We want things for emotional reasons, so we buy them.  There is an immediate gratification with many of our purchases.  But then later on important needs arise and we don’t have money enough to pay for them.  One minute we’re dealing with wants and our desire to indulge and the next we are dealing with real needs that perhaps cannot be met. Our emotions get whipped back and forth like a tennis ball!
And beyond spending, there are other emotional aspects of finances, including the taxes you must pay. Are you angry when 25 percent, or more, of your income goes to taxes?
What about reaching retirement age with only $58,000?  How emotional is that for 91 percent of the current U.S. population who will only  have that much to show for all their years of work?
What about investing your hard-earned money, only to watch the stock market take a 43 percent dive like it did in 2008?  Any worker with a 401(k) knows the heartache of watching the market cycle go up and down.
I want to take a look at how emotions change as you spend too much or invest money and watch values plummet, then rally, then plummet again.

EmotionalCycle

In this illustration of the emotional cycle of finances, notice how a person starts with optimism, and then proceeds through all the various emotions, only to end with optimism again.  This cycle is clear and undeniable in every aspect of personal financial management.  After you experience a few of these cycles, you lose confidence in yourself and can become cynical.  When this happens, there is often the temptation to give up and stop even watching after money affairs.  In my experience, this cycle is found in how you spend money, incur debts, handle taxes, and why you may fall short in providing an attractive retirement income.
The way to deal with the emotions of money and finally get control is to have a system for forecasting income and expenses and then track spending to see how it compares with your actual plan. A system will help eliminate the emotional swings we all go through in dealing with finances.  When you are in control of spending, debt, taxes and retirement, you will then be ready to become an actual investor (this is not to be confused with people contributing money to a 401(k) — these people are not real investors), one who can become very good at knowing where to put money in motion in order to create more, when to invest and not invest, and one who has the cash flow and resources such that they can afford to lose money in case those investments don’t pay off.
If you do not have a “system” of controlling spending, eliminating debt, reducing taxes, or maximizing retirement income (and doing those four things at the same time), your success with money is unlikely.  Your entire financial future depends on you learning to forecast, track, and consistently compare the way you spend, borrow, pay taxes, and prepare for retirement. These are emotional, not mathematical issues. It does not matter how much you make or don’t make, it doesn’t matter what money seems to be there or not, if you don’t have a system for controlling your emotions, the numbers don’t mean much.
The only system that teaches how to manage your emotions surrounding money is the Money Mastery program. It does not waste your time on creating a silly budget that you will not be able to stick to. It will not waste your time with credit repair before you even learn how to get out of debt. This program doesn’t waste your time with suggesting you cut up all your credit cards or squirrel money away in a measly 401(k). This program doesn’t waste your time with false hope. This program is based on time-proven principles and predictable formulas that when applied are guaranteed to help you get out of all debt (including your mortgage) in under 10 years, make spending enjoyable again, and help you predict when you can retire with an income you cannot outlive. And best of all, it can teach you how to do all this without any additional money out of your pocket. True wealth can be created on ANY income. It just requires a bone fide system that brings actual results.  Go to www.moneymastery.com to learn more.
And all the best to you, you emotional animal!

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