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Use the Power of Emotions to Reach Your Savings Goals

In part three of our series with psychologist Heidi Beckman, we'll highlight ways to put your emotions and mindset to work to help you achieve your money-related goals.

Money & Emotions are Related — Even though budgeting and saving are logical processes, money is an emotionally-charged tool. For example, think about a time when you made an impulse purchase because you were overcome with enthusiasm for the item. Emotions were at the forefront. The important thing to realize is that becoming a better manager of money can be learned, and that taking charge of your emotions can lead to positive outcomes.

Determine What Type of Emotions Motivate You — Think about what types of emotions have motivated you in the past. Was it hope, excitement, fear, disgust or some other feeling? If you're using hope to enhance your motivation, you might envision yourself enjoying a nice vacation because you've saved enough for the trip. If you're using disgust to boost your motivation, you might call to mind a scenario where you realize that you didn't have enough money to pay your bills. Another option is to use "mental contrasting" – picturing a negative scenario followed by a positive one. For example, first imagine how you'd feel if you fell short in saving for your child's education. Then, consider the sense of pride and accomplishment you'd feel when you achieve this goal.

Handling Setbacks — Having a healthy and positive mindset can be a powerful tool in reaching your goals and handling setbacks. Ultimately, you control how you respond to obstacles.

  • Fixed Mindset — People with a fixed mindset believe they simply cannot change the way they are, that they are born with a certain amount of financial savvy, and there's nothing they can do about it. If they fail, it simply confirms their lack of ability.
  • Growth Mindset — People with a growth mindset look at setbacks as an opportunity for change. They accept and embrace challenges and look at them as a way to improve. They understand that defeat in the present does not necessarily mean failure in the long-term.

If you're stuck in a fixed mindset, you can choose to take a growth-oriented action. Psychologist Carol Dweck suggests asking yourself the following questions to get back on track: What is the thing I need to learn from this situation? When will I follow through on this plan? Where will I do it and how will I do it? If you avoid your financial problem areas, they will likely show up somewhere else in your life. Picture it as pushing down on a beach ball in water. The more you resist, the more it gains momentum and pops up somewhere else.

Staying On Track — It takes effort and persistence, but there are easy ways to stay focused on your goal. Go on your journey with a friend who has a similar situation. You can also get support from other trusted people in your life. Sharing your goal with others can help motivate you. Or, use a picture as a motivator. For example, if you're saving for a dream vacation, carry a picture of your destination in your wallet. When you're tempted to spend, the picture will reinforce your goals.

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Heidi Beckman Heidi Beckman, Ph.D., is a Certified Educator in Personal Finance and author of Pocket Change, Using the Science of Personal Change to Improve Financial Habits (to be released early 2013). Beckman is a licensed clinical psychologist specializing in helping people with chronic illness make changes in their lives to support their overall health and well-being.

 

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