Does your relationship to your money define you? It’s an important question, because your emotional attachment to money can significantly influence your investing results.
Money of course is neutral—it has no feelings and it doesn’t care*. When you identify your emotional connection to your money; and learn to deal with it objectively, you can move from a “present orientation” in your thinking towards a “future vision” for accumulating more capital (saving rather than spending), taking better care of it (stewardship) and sharing it with family members (reciprocity).
This is important because you may think you want to get rich more quickly these days, given all the market volatility. In reality, it’s important to keep your eye on the ball.
Most people simply want to be affluent. I like to define affluence as having three main outcomes:
- Independence, resulting from the use of your financial skills
- Peace of mind, resulting from use of your financial knowledge
- Confident and purposeful decision-making, behavior which enables you to live and retire in dignity, with enough resources to cover both needs and wants.
Most important, thinking about affluence over time, rather than just for today, requires an afer-tax focus. In the end, it’s what you keep that matters.
Evelyn Jacks is President of The Knowledge Bureau, a national educational institute focused on excellence in financial education, and a member of the federal Task Force on Financial Literacy. For information about self study courses and books visit www.knowledgebureau.com