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We all have different ways of thinking about how to save or spend our money. But that mindset isn't always based on facts and figures.
ABC7 On Your Side spoke with an expert about how learning money psychology can help you reach your financial goals.
"Money is really not about the numbers," said Tammy Trenta, founder and CEO of Family Financial LLC. "It's about the behavior and the mindset that people have towards it. So that means spending, saving and investing habits are very much influenced by one's emotions values and beliefs."
Financial experts say there are four kinds of money scripts, or patterns, and we often learn them from our parents.
"Money status" ties money to self-worth. These are spenders who are trying to "keep up with the Joneses."
"Money worship" is the belief that money solves all problems, and there's never enough. This often leads to overspending, and credit card debt.
Next up is "money vigilance." These people tend to be big savers and make safe investments, but they may be more frugal than necessary.
Finally, "money avoidance" is the belief that money is evil, and wealth makes people corrupt. This script often keeps people from financial planning, creating instability.
Understanding these can help decode your own money mindset. But our choices can still be impacted by more than just our beliefs.
"Oftentimes, emotions can influence investors' financial decisions," Trenta said. "So if the market's going up, people want to buy in. And when the market is going down, people want to sell."
Many of us have probably also been guilty of retail therapy, or giving in to immediate gratification rather than saving up for a big purchase.
By recognizing how your beliefs and emotions influence your spending, you'll have more power over your financial choices.
And if you need further help, you can always speak with a financial adviser.
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