We are all unique individuals with distinct personalities, likes and dislikes as well as different ways of talking, thinking, solving problems and interacting. We have exclusive modes of expressing ourselves through dress, grooming and our own catchphrases. And all that can tie together with money.

And, we each have our own way of thinking about what may or may not be burning a hole in our wallets.

Some of us are frugal, some are disciplined savers, some are spendthrifts, gamblers, high-risk or risk-averse. But it all boils down to how we view money. It can be a status symbol, a burden or just something that pays the bills. But make no mistake: Our money philosophy is 100% a part of who we are.

According to a behavioral finance expert at JP Morgan, it’s a myth to think we can separate our emotions from things like money or financial health.¹ Money triggers our “emotional baggage” and can affect our decisions. Dr. Brad Klontz, a clinical psychologist and financial planner, calls these individual reactions our “money scripts” and says they are the key to driving both positive and negative financial behaviors.² It’s also a good reason to work with qualified professionals to help address any effects your money persona may have on your money management skills.

And then there are some fairly universal emotional responses to money. For example, would you buy a pack of gum if the only cash in your wallet was a $100 bill? Most people would not. That’s because we put larger denomination bills into a different category than, say, a $10 bill. The price of a pack of gum remains the same — it is our perception of large versus small bills that drives our behavior.³

It’s a good idea to fully understand your money personality before you share your life with a partner. Before engaging in a situation that involves financial transactions, such as living together or getting married, partners should have a comprehensive conversation in which they share their best and worst money behaviors. This includes spending patterns, credit scores, debt balances and payment habits. Do you follow a budget or “wing it” paycheck to paycheck? Are there financial mistakes or bankruptcy in your past? As you consider sharing your lives going forward, you and your partner should identify both separate and shared financial objectives, as well as how you plan to achieve them.⁴

It’s also important to recognize the current cultural norms of one-half of the population: Women. After all, women tend to earn less and take time out of the workforce to care for family members, which doesn’t help their financial situation. Note that a recent study found that within the first five to 10 years of retirement, 38% of women become either widowed or divorced. After 11 years, that number increases to nearly half. Research also found that this situation is not much better for young adults: Millennial women appear to be on the same trajectory as female baby boomers. Generally, lower salaries coupled with lower contribution rates have resulted in lower retirement account balances.⁵

There are a couple of ways to help tackle the issue of women being at a disadvantage during retirement. One is to make retirement income planning for the female partner a separate financial goal for couples. Don’t view planning for retirement solely as a couple; plan for a certain level of income for each spouse after the other one dies.

Second, new research shows that we can make gradual changes to become more emotionally intelligent to help increase our earnings capability and improve our leadership skills. Studies show that people with high levels of emotional intelligence (EQ) earn an average of $29,000 more a year than those with lower EQ. Some of the ways to boost your EQ is to become more self-aware about why you react to certain situations (that make you angry, happy or sad); use this empathy to better understand why others react similarly; practice self-control when confronted with these situations; be a leader in difficult times to use your empathy and self-control to help others — particularly in the work environment — confront situations with patience, calm, understanding and carefully thought-out ideas. This type of EQ tends to get recognized by employers and results in promotions and higher pay.⁶

Content prepared by Kara Stefan Communications.

¹ Caroline Schagrin. The Points Guy. Jan. 29, 2020. “The emotional psychology around money with behavioral finance expert Michael Liersch on ‘Talking Points.’” https://thepointsguy.com/news/the-emotional-psychology-around-money-with-behavioral-finance-expert-michael-liersch-on-talking-points/. Accessed Feb. 24, 2020

² Myriam DiGiovanni. CUInsight. July 17, 2018. “What’s your money script?” https://www.cuinsight.com/whats-your-money-script.html. Accessed March 9, 2020.

³ Ivana Pino. CNBC. Feb. 14, 2020. “You should always keep a $100 bill in your wallet, a psychologist says. Here’s why experts agree.” https://www.cnbc.com/2020/02/14/always-keep-100-bill-cash-in-wallet-says-psychologist-why-experts-agree.html. Accessed Feb. 24, 2020.

⁴ Judith Ward. T. Rowe Price. Feb. 12, 2020. “6 Financial Vows Couples Should Take to Heart.” https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/retirement-and-planning/personal-finance/6-financial-vows-couples-should-take-to-heart.html. Accessed Feb. 24, 2020.

⁵ Judith Ward. T. Rowe Price. Jan. 21, 2020. “Closing the Women’s Savings Gap.” https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/retirement-and-planning/retirement-savings/closing-the-women-s-savings-gap.html. Accessed Feb. 24, 2020.

⁶ Marcel Schwantes. Inc. Feb. 24, 2020. “Research Says You Can Earn Way More Money by Boosting Your Emotional Intelligence. Here Are 4 Ways to Do It.” https://www.inc.com/marcel-schwantes/research-says-you-can-earn-way-more-money-by-boosting-your-emotional-intelligence-here-are-4-ways-to-do-it.html. Accessed Feb. 24, 2020.

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