The Camouflage Couch

Mental health topics for service members and their families

by Bret A. Moore, Psy.D., ABPP

The Psychology of Finances

There is a psychology to saving and spending.

Published on January 30, 2011 by Bret A. Moore, Psy.D., ABPP in The Camouflage Couch

In many of my past columns I've talked about how our thoughts influence our moods, attitudes and behaviors. From how we perceive our relationships, work situation, and overall satisfaction with life, what we say to ourselves greatly determines our present and future. This applies to our financial situation as well.

Believe it or not, there is a "psychology" to saving and spending. How we pay our bills, save for a rainy day, or whether or not we ship a few dollars off to our retirement account, that inner voice we all have is guiding us down our financial paths. Where we end up is determined by what that inner voice is telling us.

The good news is that we are in control of our thoughts. At any time, we can decide to view things differently. If we have gotten off track, we can shoot a new azimuth to a point of financial stability and security. However, it's important to be aware of the different thoughts that can cause us to veer off in the wrong direction.

I need to have what others have. Trying to keep up with SGT Jones is a huge mistake. So what if he has a flashier car than you do. Who cares if he his Harley costs more than your house? Chances are SGT Jones is in debt up to his neck and wakes up each morning wondering if today is the day the repo man shows up for a visit. By the way, nobody else really cares what you have. They are too busy worrying about what they don't have.

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I can pay for it later. One only needs to look at the current housing crisis and the fact that the average American household has over 8,000 dollars in credit card debt to appreciate this faulty thinking. If you can't pay cash or pay it off within a month, don't get it.

I'm too young to worry about retirement. You are never too young to start saving for retirement. Consider that a thousand dollars socked away when you're 20, which grows at 10 percent per year, will be almost $73,000 when you're 65. The same thousand dollars when you're 50 will grow to $4,200 at the same age. This is due to compound interest. Look it up!

I don't have any extra money for saving. This is the biggest lie we tell ourselves. Most every person can find money each month to put into a retirement account. Granted, you may have to stop eating out ten times a week or forego buying those new rims for your car, but you can find money in your budget.

Keep in mind that these are only a few of the things we say to ourselves which keep us from becoming financially set. Take a few minutes and ask yourself what your inner voice is telling you about saving and spending. It will pay off in the long run.

*A version of this article was published in my column "Kevlar for the Mind" published by Military Times.

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Tags: american household, credit card debt, different thoughts, financial situation, financial stability, inner voice, moods, psychology, rainy day, retirement account, saving for retirement, thousand dollars, today is the day, work situation, wrong direction

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Bret Moore, Psy.D., is a former Army psychologist, a two-tour veteran of Iraq, and author of several books including Wheels Down: Adjusting to Life after Deployment (APA).

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