It’s Rahul’s 10^th birthday and he is all excited about gifts he is going to get , specially the Blackberry Curve his father has promised followed by a lavish dinner at a five star hotel!!

Prasad wants to go abroad for higher studies but his family cannot bear the expenses. Prasad has always compromised his wishes about new cloths, books due to scarcity at home. His wish is to earn lots of money when he grows up.How will Rahul treat his money when he grows up? How Prasad considers importance of money in his life? What will be spending nature of each of them?

These and many such outcomes are defined by our interactions with money throughout our life. In our subconscious,  a money – mind relationship begins.

Some people find it extremely difficult to hold on to big money. They feel guilty about their wealth. Where as there are others who never feel content with how much ever wealth they accumulate.  There are people who can not stop lending money to same friends inspite bitter experiences in the past. We find these behaviors irrational and illogical as the logic, the facts go totally against.

The science of investing is treated as a logical process. It is believed that investing is about good research and analysis of underlying assets. We as planners are expected to provide client with best  asset allocation strategies by understanding  the mathematical side  of investing.

However, our  experience during financial plan reviews shows that most of the time  while taking financial decisions , client’s emotion wins this ever-going arm wrestle between emotion and logic.

So, from where do these emotions arise? How is the money-mind relationship formed?

The Stimuli

Stimuli are events in the environment that influence behavior. When we try to analyse the stimuli which have their strong influence on money-mind relationships, we come across three important factors.

Family values

We all have families and we all have values. These values are passed from one generation to next  by experiences, interactions and reactions to various situations. The way our parents have handled money situations can define our beliefs as well.

Religion

Religion teaches us great values of life. Views about materialistic happiness versus spiritual happiness are fundamental to these learnings. The firm belief that our fortune and after death experiences will have impact of our deeds towards fellow humans defines how we treat accumulation and distribution of wealth.

Society

Man is a social animal. The acceptance in society, the recognition or the status one gets in society are crucial to all of us. These factors define how a wealthy man is treated in society versus a not so rich one.

Formation of The money-mind relationship : Money Beliefs

These  stimuli  give rise to our beliefs about money. The way we think about money, the way we like to hold it, pass it on to others. The level of comfort with taking risk with money, letting others know how much money you hold, talking about money with you family … all these actions are strongly governed by beliefs.

The beliefs we hold about life, ourselves and people is what’s responsible for who we are, how we behave and who we will become.

Positive beliefs about money can help one trust ones abilities, achieve  dreams and reach the success one ever wanted to achieve.

Financial Life Planning

Every financial plan is a custom made creation for client taking into consideration his life aspirations, current financial position and last but not the least his money beliefs.  Financial coaches have to facilitate the self introspection by client about his own money beliefs. They have to provide him with various  tools  and techniques so as to help him perform an analysis about his past money experiences, his spending and saving habits. This will lead him to self realization of areas of improvement and he will get a fresh perspective about money-mind relationship.

Financial life planners should  endeavour to nurture a positive and healthy relationship  towards money in the minds of their clients. They have to play the role of a financial coach, philosopher and a good friend to accomplish this.

As we all agree, MONEY MATTERS IN “LIFE”.

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