Archive for the ‘Psychology of Money’ Category

Feeling Fear about the Future of Your Money?
August 4, 2009

Essential Knowledge interacts with many people through our programs. Fear is everywhere. It is in the air we breathe and the water we drink. As a result, people are jumping to some pretty crazy decisions. Recently, one of our team members shared this personal rule she sticks to:

In times of great change, change as little as possible. What does this mean? When craziness is all around you, do not hit the panic button. Sure you should look at your overall financial picture, but be smart about it.

This means not to give in to Money Madness. Here are three ways to avoid doing so…

Do NOT put your money in your mattress! Now is not the time to take money out of your bank and keep it at home, unless your bank is not FDIC insured. Despite the rumors, banks will continue to be the best way to house your money for checking and savings.

Do NOT withdraw your money from your investments completely. Too many people are concerned that because the stock market is shrinking, that they are better off holding onto their money in a savings account or at home. This is a simple question of math. If you have five years or more until retirement, your best bet is to keep that money invested. The taxes and penalties to withdraw those funds will most likely never be made up in the interest on a savings account. You may want to visit with your advisor to talk about your risk tolerance and make changes along those lines.

Do NOT be late paying your bills. Now, if you are unemployed, this statement may not apply to you. However, if you are gainfully employed, make sure that your payments are made on time. Most major credit card companies are increasing interest and fees to make up for default losses. Do not give your creditors an excuse to rack up additional charges on your accounts. Need to make a budget? Go to

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Is Your Relationship Dealing with “Financial Cheating”?
July 23, 2009

Money is the number one reason for divorce. How does that happen? Typically, relationships are eroded through financial infidelity. Cheating with money occurs in 1 out of 3 marriages, destroying trust in its wake. This can have just as much of an impact on your relationship as any other type of infidelity. A lie unravels the emotional connection, which is the foundation of a relationship. In the 2005 Harris poll, 96% of those surveyed stated that it was the obligation of each partner to be honest about expenditures.

Is this impacting your relationship? Here are some of the signs. Do you (or your spouse):
– Hide new clothes in the back of the closet, or the trunk of the car
– Lie about purchases, and how much money was spent
– Use shopping as a form of therapy
– Have a secret credit card

Recognize where this behavior comes from. Was this a part of your childhood? How did this behavior impact your parents and family? What were some of the long term effects? What can you do to prevent this in your home?

One of our program users recently had several “aha” moments about her childhood. Her parents always fought about money. Her mother is a spender, who frequently used credit cards to their limit. It is hard to say whether the arguments started because of the credit card use, or the credit card use started because of the arguments. Typically, her mother would hide those purchases, hide credit card statements, and was evasive about spending. Their marriage was always on the brink of divorce and financial ruin. As an adult, Jennifer fights the urge to spend when she is unhappy. What keeps her on track, is remembering those arguments, and how hurtful they were to her father. She is motivated to stay on track as a commitment to her husband.

If you see this problem in your own relationship, talk with your spouse. Before you can change your bad habits you must first identify them clearly. Make a commitment to be completely honest about all income and expenses. Just like any other issue, communication is the key to overcoming this issue and building a strong relationship with a successful financial future.

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