Beyond Budgeting: The Deeper Psychological and Emotional Dimensions of Money Management

Trauma

Sep 2

“The poor stay poor, the lonely stay lonely, the busy stay busy, and diets fail. Scarcity creates a mindset that perpetuates scarcity.”

— Sendhil Mullainathan

When it comes to financial advice, the narrative is often simple: save more, budget better, work harder, and you’ll achieve financial stability. This straightforward approach suggests that financial success is solely a matter of discipline and effort, where cutting back on lattes and tracking every dollar will eventually lead to a stable and prosperous life. In recent years, this narrative has been further amplified by the rise of "hustle culture," a movement that glorifies constant productivity, side hustles, and the relentless pursuit of financial success as the ultimate measure of self-worth and achievement. Platforms like social media are flooded with stories of individuals turning their passions into profitable side gigs, promoting the idea that anyone can achieve financial freedom if they just hustle hard enough.

While these strategies—saving, budgeting, and hustling—are practical and can be beneficial, they lack depth and fail to address the complex emotional and psychological relationships that individuals have with money. The constant emphasis on external actions and productivity often overlooks the internal factors that drive financial behaviours, such as deep-seated beliefs, emotional responses, and past experiences with money. This oversimplification not only leaves many people feeling frustrated and inadequate when they can’t meet these rigid standards but also perpetuates a cycle of financial shame and anxiety that prevents meaningful change. People are left wondering, "Why can’t I just get it right?" as they internalise their struggles as personal failures.

To truly transform our relationship with money, we must move beyond the surface-level actions of saving, budgeting, and the relentless pursuit of side hustles. Instead, we need to delve into the deeper psychological and emotional dimensions of money management, recognising how our beliefs about money, shaped by our identities and past experiences, influence our financial decisions. Understanding the psychological and physiological impacts of money on our identity and self-worth is crucial for breaking free from the limiting patterns that keep us stuck.

This article explores how a deeper understanding of financial psychology, identity, and emotional intelligence can empower individuals to break free from financial shame, resist the pressures of hustle culture, and gain control over their financial lives. It emphasises that achieving financial well-being is not just about implementing external strategies but also about cultivating self-awareness, emotional intelligence, and a healthy relationship with money. By acknowledging and addressing the internal emotional responses to financial stressors, individuals can create more effective and sustainable strategies for managing their finances, leading to a sense of empowerment, security, and true financial freedom.

The Limitations of Traditional Financial Advice and Hustle Culture

Traditional personal finance advice often emphasises external actions: saving more, cutting expenses, working multiple jobs, and adhering to strict budgeting. These methods, paired with the rise of hustle culture—which glorifies side hustles and constant productivity—suggest that financial success is solely a matter of working harder and managing money more meticulously. This narrative assumes a level playing field, implying that anyone can achieve financial stability through discipline and effort alone. However, it neglects the psychological, emotional, and systemic barriers significantly influencing financial behaviour.

Psychological and Emotional Barriers: Financial decisions are often driven by deeply ingrained beliefs and emotions. Experiences from childhood, societal messages, and personal trauma can shape one’s relationship with money, leading to behaviours such as avoidance, fear-driven saving, or excessive spending. Traditional advice does not address these internal factors that require emotional intelligence and self-awareness.
Systemic Inequalities: The message to simply “work harder” fails to recognise systemic barriers that create unequal opportunities. Gender, race, and socioeconomic background can affect access to education, job opportunities, and fair wages. This advice overlooks the discrimination and structural inequalities that can limit financial success, placing undue responsibility on individuals rather than addressing broader systemic issues.
Burnout and Disconnection: The relentless pursuit of financial success through constant hustle can lead to burnout and a sense of disconnection from one's true needs and values. The focus on financial gain often comes at the expense of personal well-being, relationships, and fulfilment, resulting in stress and financial decisions that are short-term and reactive rather than strategic and thoughtful.

To achieve genuine financial well-being, it’s crucial to move beyond the focus on external actions and productivity. A more holistic approach that includes understanding psychological and emotional dimensions, managing internal responses, and acknowledging systemic barriers can empower individuals to break free from cycles of shame and burnout. This approach allows for the development of sustainable financial strategies that align with personal values and long-term goals, leading to a balanced and fulfilling financial life.

Book YOUR CONSULTATION CALL HERE

Identity and Its Impact on Financial Behaviour

Our financial behaviours are not just shaped by rational decision-making; they are deeply influenced by our identity, life experiences, and the social groups we belong to. Different aspects of identity—such as gender, race, ethnicity, sexual orientation, neurodiversity, and socioeconomic status—can profoundly impact how we relate to money. These factors shape our financial opportunities, constraints, and the psychological scripts we develop about money, affecting everything from our spending habits to our approach to saving, investing, and negotiating salaries. Recognising these diverse experiences is essential for developing a more inclusive and compassionate approach to financial management.

Gender: Gender significantly influences financial behaviour and decision-making. Women, for example, often face unique financial challenges, including the gender pay gap, career interruptions due to caregiving responsibilities, and societal expectations around spending and saving. The persistent wage gap means that women, on average, earn less than men for the same work, which can affect their ability to save, invest, and accumulate wealth over time. Additionally, women are more likely to take time off work for child-rearing or elder care, which can lead to career interruptions and reduced retirement savings. Societal expectations also pressure women to spend more on appearance-related products and services, contributing to financial strain. These factors can lead to a sense of financial insecurity, a tendency to undervalue one's worth in salary negotiations or business transactions, and a greater likelihood of financial anxiety.
Race and Ethnicity: Racial and ethnic identity also plays a critical role in financial behaviour and outcomes. Historical and systemic racism has led to significant economic disparities between racial and ethnic groups. For instance, Black and Hispanic communities often face discriminatory lending practices, which limit their access to affordable credit and homeownership—two primary pathways to wealth accumulation. These communities may also experience higher rates of job discrimination and wage disparities, making it harder to build financial stability. Cultural differences in attitudes toward money, family financial support, and saving can further shape financial behaviours and decisions. The cumulative effect of these barriers can lead to generational cycles of poverty and financial insecurity, impacting the mental and emotional well-being of individuals within these communities.

Sexual Orientation and Gender Identity: LGBTQ+ individuals often face unique financial challenges that stem from discrimination, social stigma, and a lack of legal protections. These challenges can include higher rates of unemployment, lower wages, and limited access to healthcare benefits, all of which can lead to financial instability. Additionally, the lack of familial support—often experienced by LGBTQ+ individuals—can result in reduced access to financial safety nets that many heterosexual, cisgender individuals take for granted. These factors can create feelings of financial vulnerability and insecurity, impacting how LGBTQ+ individuals approach financial planning, saving, and investing.

Neurodivergent Individuals: People who are neurodivergent, such as those with ADHD, autism, or dyslexia, may encounter unique challenges in managing finances. Traditional financial advice, which often assumes a one-size-fits-all approach, may not account for the specific needs of neurodivergent individuals. For example, someone with ADHD might struggle with impulse control, leading to unplanned spending, while someone on the autism spectrum might find anxiety around financial uncertainty overwhelming. Issues with executive functioning can make budgeting and long-term financial planning particularly difficult. These challenges highlight the need for financial strategies that are adaptable and sensitive to different cognitive styles and needs, including tools and resources that support neurodivergent individuals in managing their finances effectively.
Socioeconomic Status and Class: Socioeconomic status plays a foundational role in shaping financial behaviour and attitudes. Those from low-income backgrounds may have limited access to financial education, banking services, and investment opportunities. Living paycheck to paycheck can make it challenging to save for emergencies or invest in long-term goals. The experience of financial scarcity often leads to a focus on short-term survival rather than long-term planning, which can perpetuate cycles of poverty. Additionally, individuals from working-class or lower-income backgrounds may internalise beliefs such as “I’m not good with money” or “wealth isn’t for people like me,” which can negatively impact their financial confidence and decision-making.

Physical and Mental Health: Physical and mental health conditions can significantly impact financial behaviour and stability. Chronic illnesses or disabilities often come with high medical costs, reduced earning potential, and a greater need for long-term financial planning. Mental health conditions, such as depression and anxiety, can lead to financial avoidance, compulsive spending, or the inability to manage money effectively. The stigma associated with these conditions can also prevent individuals from seeking help, exacerbating financial difficulties. Understanding the intersection between health and financial behaviour is crucial for creating supportive financial strategies that consider the whole person.
Religion and Cultural Beliefs: Religious and cultural beliefs can shape financial attitudes and behaviours, influencing how individuals perceive wealth, charity, and financial planning. Some cultures emphasise communal financial support, where family members are expected to provide for one another, which can impact personal savings and investment goals. Religious beliefs might encourage practices like tithing or discourage interest-based investments, shaping how individuals manage their money. These cultural and religious influences are essential to consider in personal finance, as they reflect deeply held values and beliefs that guide financial decisions.
Age and Generational Perspectives: Different generations often have distinct attitudes toward money based on their experiences and the economic conditions they have faced. For instance, Baby Boomers might prioritise saving and retirement due to their experience of economic growth, while Millennials and Gen S might focus on debt management and job stability, having faced student loan crises, housing market challenges, and economic recessions. Younger generations may also prioritise experiences over material possessions, influencing their spending and saving habits. Understanding these generational perspectives helps tailor financial advice to resonate with different age groups.

Recognising these diverse experiences and identities is crucial for developing a more inclusive and compassionate approach to financial management. It highlights the need for personalised financial advice that goes beyond the one-sise-fits-all model. By considering how identity influences financial behaviour, financial education can be tailored to address specific needs, challenges, and cultural contexts, empowering individuals to make informed and effective financial decisions. This inclusive approach not only fosters financial well-being but also promotes a sense of equity and understanding, ensuring that everyone has the opportunity to achieve financial security and independence.

The Financial Shame Cycle: How Traditional Advice Can Backfire

The traditional financial advice of “work harder, just get another job, save, budget” is often well-intentioned, and aimed at helping individuals achieve financial stability. However, this simplistic rhetoric can have unintended negative consequences, especially when it fails to consider the psychological, emotional, and systemic barriers that many people face. When individuals are unable to meet these expectations—due to factors such as mental health issues, systemic inequality, or personal circumstances—they may internalise their financial struggles as personal failures. This internalisation leads to financial shame, a powerful and debilitating emotion that can create a self-perpetuating vicious cycle of negative behaviour and worsening financial health. Below we outline the cycle of financial shame:

The Cycle of Financial Shame

Shame and Guilt: The first stage of the cycle involves feelings of shame and guilt about one’s financial situation. Shame is the painful feeling of believing that one is inherently flawed or unworthy because of financial struggles. This can stem from societal messages that equate financial success with personal value, or from comparing oneself to others who appear to be more financially successful. Guilt often accompanies shame, leading individuals to feel that they have not only failed themselves but also let down their families or dependents. These emotions can be overwhelming, creating a sense of inadequacy and self-blame.
Avoidance Behaviour: In response to these intense emotions, many individuals engage in avoidance behaviour as a coping mechanism. Avoidance might include not checking bank account balances, ignoring bills, delaying tax filings, or avoiding conversations about money. This behaviour is a form of self-protection, as facing the reality of their financial situation might exacerbate feelings of shame and anxiety. However, avoidance does not solve financial problems; it often makes them worse by allowing issues to grow unchecked.
Ineffective Decision-Making: The avoidance of financial realities can lead to poor decision-making. Without a clear understanding of their financial situation, individuals may overspend, accumulate debt, or fail to save for emergencies. Stress and anxiety associated with financial shame can impair judgment, leading to impulsive purchases or risky financial behaviours as a way to cope or distract from the underlying pain. These decisions might provide temporary relief or comfort but ultimately result in further financial instability.
Reinforcement of Shame: As financial problems worsen due to ineffective decision-making, the initial feelings of shame and guilt are reinforced. Individuals see the consequences of their avoidance and poor choices—such as mounting debt, late fees, or lack of savings—and this reinforces the belief that they are bad with money or inherently flawed. The shame deepens, leading to a more entrenched cycle of avoidance, ineffective decision-making, and further financial deterioration.

How Hustle Culture Exacerbates Financial Shame

Hustle culture, which promotes the idea that financial success is simply a matter of working harder, taking on more projects, or never stopping to rest, can exacerbate the financial shame cycle. It suggests that if someone is not succeeding financially, they are simply not working hard enough, ignoring the real barriers and challenges they may face. This relentless pressure to always be productive and to equate self-worth with financial achievement can lead to burnout, stress, and even more profound feelings of inadequacy when individuals inevitably fall short of these ideals.

When people internalise the hustle culture mindset and still find themselves struggling financially, the impact on their self-worth can be devastating. They may feel that no matter how hard they try, they are not enough. This belief reinforces the financial shame cycle, making it even more challenging to break free. Instead of seeking help or addressing the root causes of their financial problems—such as psychological barriers, lack of financial literacy, or systemic obstacles—they may continue to avoid their financial situation, leading to deeper financial insecurity and emotional distress.

BOOK YOUR CONSULTATION CALL

Breaking Free From Financial Shame

Breaking the cycle of financial shame requires a shift in both mindset and approach:

Cultivating Self-Compassion: Individuals must learn to separate their self-worth from their financial situation. Understanding that everyone makes financial mistakes and that these mistakes do not define one's value as a person is crucial. Cultivating self-compassion can help individuals treat themselves with kindness rather than harsh self-judgment when facing financial difficulties.

Seeking Support: Financial shame often thrives in isolation. Reaching out for support—whether from trusted friends, family, financial coaches, or therapists—can provide a more objective perspective and helpful advice. Professional guidance can help individuals understand their financial options, develop a realistic plan, and gain the tools needed to improve their situation.
Focusing on Emotional and Financial Education: Education that combines emotional intelligence with financial literacy is essential for breaking the shame cycle. Understanding the psychological aspects of money, recognising emotional triggers, and learning practical financial skills can empower individuals to make informed decisions and take proactive steps toward financial well-being.
Challenging Societal Narratives: Challenging the societal narratives that equate financial success with personal worth and the glorification of constant hustle is necessary for creating a healthier relationship with money. This involves promoting values such as work-life balance, and mental health, and the recognition that financial success is influenced by various external factors beyond individual control.
Building Financial Resilience: Developing strategies for financial resilience, such as building an emergency fund, managing debt, and planning for long-term goals, can help individuals feel more secure and in control of their financial future. Financial resilience reduces the likelihood of falling into avoidance behaviours and reinforces positive financial habits.

The cycle of financial shame is a powerful barrier to financial well-being, exacerbated by traditional financial advice and hustle culture’s unrealistic expectations. Breaking this cycle involves addressing both the emotional and practical aspects of money management, fostering self-compassion, seeking support, and promoting inclusive financial education. By acknowledging the psychological and systemic factors that influence financial behaviour, individuals can reclaim control over their financial lives, reduce feelings of shame, and build a more secure and fulfilling relationship with money.

A New Approach: Integrating Financial Psychology and Emotional Intelligence

Breaking free from the financial shame cycle and the hustle mentality requires a profound shift from focusing solely on external actions—such as saving more, budgeting meticulously, and working harder—to addressing the internal emotional responses that drive financial behaviours. This approach emphasises the importance of developing emotional intelligence around money and understanding the psychological factors that influence our financial decisions. By acknowledging and working through these internal dynamics, individuals can foster a healthier, more empowered relationship with their finances. It’s also crucial to recognise and challenge systemic issues that create financial barriers for many, advocating for broader societal change to support financial well-being.

Recognise and Reframe Money Scripts: Money scripts are the deeply ingrained beliefs and narratives about money that we often develop in childhood, influenced by family, culture, and society. These scripts can be limiting and disempowering, such as "money is the root of all evil," "I’m just not good with money," or "you have to work hard for every dollar." Identifying these scripts is the first step towards transformation. By challenging and reframing these beliefs into positive affirmations, individuals can shift their mindset from one of scarcity to abundance, from fear to confidence. For example, replacing “I’ll never be financially secure” with “I have the ability to learn and manage my finances effectively” can create a more empowering perspective.
Manage Financial Stress Through Nervous System Regulation: Financial stress often triggers a physiological response known as the fight-or-flight reaction, leading to impulsive, irrational decisions and avoidance behaviours. Techniques such as mindfulness meditation, deep breathing exercises, and grounding practices can help regulate the nervous system, promoting a sense of calm and stability. By managing the body’s stress response, individuals can make more thoughtful and rational financial decisions, rather than reacting out of fear or anxiety. Regular practice of these techniques also enhances overall well-being, making it easier to handle financial challenges as they arise.
Develop Emotional Intelligence Around Money: Emotional intelligence involves being aware of and understanding one's emotional responses to financial situations, identifying the underlying reasons for these feelings, and managing them in a constructive way. This awareness can help individuals recognise emotional triggers—such as fear, guilt, or shame—and prevent these emotions from dictating financial behaviours. Developing emotional intelligence can improve skills in negotiation, such as confidently asking for a raise, charging fair rates for freelance work, or advocating for equal pay. It also enables better decision-making by allowing individuals to approach financial matters with a clear, balanced perspective.
Shift the Focus to Financial Empowerment: Moving away from a shame-based narrative to one of financial empowerment involves creating environments that encourage learning, growth, and self-acceptance. Financial education should be holistic, addressing not only practical skills like budgeting and investing but also the emotional, psychological, and identity-related aspects of money. This approach recognises that financial behaviours are influenced by various factors, including past experiences, cultural norms, and systemic barriers. Empowering individuals with knowledge about these factors, and providing tools to navigate them, fosters resilience and confidence. Financial empowerment also means normalising conversations about money, reducing stigma, and providing safe spaces for individuals to seek advice and support without judgment.
Challenge Systemic Issues and Advocate for Change: While personal growth and emotional intelligence are crucial, it is equally important to acknowledge and address systemic issues that contribute to financial inequality and insecurity. These include gender and racial wage gaps, discriminatory lending practices, lack of access to affordable education and healthcare, and economic policies that disproportionately affect marginalised communities. Advocating for policy changes, supporting financial inclusion initiatives, and raising awareness about these systemic barriers are essential steps toward creating a fairer financial landscape. Individuals and organisations can work together to push for equal pay, improve access to financial services, and ensure that financial education is inclusive and accessible to all.

Integrating financial psychology and emotional intelligence into our approach to money management offers a more comprehensive and compassionate way to handle finances. By recognising and reframing money scripts, managing financial stress, developing emotional intelligence, and shifting the focus to empowerment rather than shame, individuals can break free from the financial shame cycle and build a healthier relationship with money. Furthermore, acknowledging and challenging systemic issues is critical to creating a financial environment where everyone has the opportunity to thrive. This holistic approach not only improves individual financial well-being but also contributes to a more just and equitable society, where financial success is accessible to all, regardless of background or identity.

Journal Reflections: A Tool for Personal Growth and Financial Well-Being

Engaging in regular self-reflection can help uncover the deep-seated beliefs and emotions that shape our financial decisions. Journaling provides a powerful method for gaining clarity about your relationship with money, identifying areas for growth, and shifting toward a healthier, more empowered financial mindset. Set aside time to reflect on the following prompts:

Exploring Your Money Scripts

What are the earliest memories you have about money? How did your family talk about and handle money when you were growing up?
What beliefs about money do you hold that might be limiting your financial success? Are there specific statements you often find yourself thinking or saying?
How can you reframe these limiting beliefs into more empowering affirmations? For example, change "I’m not good with money" to "I can learn to manage my finances effectively."

Identifying Emotional Triggers

What emotions do you typically experience when dealing with money (e.g., anxiety, fear, guilt, excitement)? How do these emotions influence your financial decisions?
Recall a recent financial decision you made impulsively. What emotions were driving that decision, and what were the consequences?
How can you better manage these emotions moving forward? Consider strategies like mindfulness or seeking support from others.

Understanding the Impact of Hustle Culture

Reflect on how the hustle culture mentality has influenced your views on work and financial success. Do you feel pressure to always be productive or have multiple income streams?
How has the pursuit of financial success impacted other areas of your life, such as your health, relationships, or personal fulfilment?
What would a more balanced approach to work and financial goals look like for you? How can you begin to prioritize self-care and rest without feeling guilty?

Challenging Systemic Barriers

Have you encountered systemic barriers (e.g., gender pay gap, racial discrimination, limited access to education) that have affected your financial opportunities? How have these experiences shaped your beliefs about money and success?
In what ways can you advocate for change or support initiatives that promote financial equity and inclusion?
How can you educate yourself and others about these systemic issues to foster greater awareness and understanding?
Reimagining Financial Success and Self-Worth
How do you currently define financial success? Does this definition align with your personal values and life goals?
What steps can you take to separate your self-worth from your financial worth? How can you remind yourself that your value as a person is not determined by your income or wealth?
Imagine your ideal financial future. What does it look like, not just in terms of numbers but in terms of how you feel and live day to day? What small changes can you start making now to move toward that vision?

Set aside regular time each week to write in your journal, using these prompts to guide your thoughts. The goal is not to judge yourself for past financial decisions but to gain insight into your current mindset and emotional patterns. Over time, these reflections can help you build a deeper awareness of your financial behaviour, allowing you to make more intentional and informed choices.

BOOK A CONSULTATION CALL TODAY

Conclusion: Redefining Financial Success and Self-Worth

As human beings, we are inherently worthy, and our self-worth should not be tied to our financial worth. The hustle culture mentality and traditional financial advice often perpetuate a false equivalency between financial success and personal value, suggesting that those who do not achieve financial prosperity are somehow less valuable or capable. This mindset is not only limiting but also damaging, fostering feelings of inadequacy, anxiety, and shame that can impede personal growth and happiness.

To truly take control of our financial lives, we need to reimagine how we think about money. This means moving beyond the simplistic narratives of hard work and endless hustle as the sole routes to financial success. Instead, it involves recognising and understanding the internal emotional responses that shape our financial behaviour. Money is more than just a tool for transactions; it is tied to our emotions, beliefs, and sense of security. Acknowledging this connection allows us to take a more compassionate and comprehensive approach to managing our finances.

Integrating financial psychology, emotional intelligence, and nervous system regulation into our approach to money enables us to address the root causes of financial stress and mismanagement. Financial psychology helps us identify and reframe limiting money scripts that dictate our behaviour. Emotional intelligence allows us to become aware of our emotional triggers and manage them constructively. Nervous system regulation provides tools to manage stress responses, ensuring that we can approach financial decisions with clarity and calmness.

This holistic approach not only empowers individuals to make better, more informed financial decisions but also fosters a healthier, more sustainable relationship with money—one that is based on awareness, compassion, and true self-worth. It emphasises that financial well-being is not just about the accumulation of wealth but about feeling secure, balanced, and in control of one’s financial life. By redefining financial success to include emotional and psychological health, we move toward a more inclusive and humane understanding of prosperity.

Moreover, recognising the impact of systemic barriers on financial behaviour reminds us that financial challenges are not always a reflection of personal failure. By advocating for systemic change, such as fair wages, equal opportunities, and access to financial education, we can create a society where everyone has the chance to achieve financial well-being, regardless of their background or circumstances.

In conclusion, achieving financial health and well-being requires more than just following traditional advice or adopting a hustle mentality. It requires a shift in perspective—one that values emotional and psychological well-being as much as financial stability. By embracing a more nuanced, compassionate approach to money, we can break free from the cycles of financial shame and stress, and cultivate a life of genuine security and fulfilment.