The Psychology of Personal Finance

The reason I like studying and writing about money, specifically personal finance, is that it’s not about the numbers. Money management is really all about psychology and how people think about themselves and the world around them. I enjoy people and learning the hows and whys of behavior and thought. The reading material on the subject is endless.

I’m enjoying Financial Peace University so much because it is so hopeful, so optimistic and inspires positive change in people’s lives. Money management, and specifically self-discipline, is a strength of mine and that’s why I like studying it and employing techniques that can only enhance that strength. Which is why I was so looking forward to this week’s FPU lesson, “Working In Our Strengths”. From the notes it looked like the class was about maximizing income by finding your strengths and using them to increase earning potential. Great concept, right? The workbook even had a list of potential home based businesses and part-time freelance jobs. This is stuff I love because Mike and I both have side incomes and I’ve seen the potential in freelancing and building a personal business by reading Ramit Sethi‘s book and blog “I Will Teach You To Be Rich” which focuses mostly on earning more.

Except that’s not at all what the video lecture from Dave Ramsey was like. I know I’m totally paraphrasing but my general impression of the bulk of the lesson was if you don’t go to work every day giddy because you love what you do so much, you’re screwed. That’s totally bogus in my book. It talked about looking at your personality and strengths and finding a career that allow you to use those, which of course is good. But the way it was worded and phrased was more depressing to me than hopeful. I can only imagine how it would feel if you were nearing the end of a long career in one industry, only to be told you may have been in the wrong job for all that time.

Additionally when it came to talking about earning some extra income, Dave referred to it as “the DREADED part-time job”. He emphasized that it was only a temporary situation aimed at paying down debt and talked about taking jobs like delivering pizza. This is so ridiculous! Freelancing on the side is AWESOME and so easy when people are motivated. This whole lesson could have been framed so much more positively, encouraging people to use their talents and skills to find freelance work or start a small home business on the side.

Maybe the lesson was built with the kind of people who usually take FPU in mind, people in desperate situations who have already piled up mountains of debt. Perhaps Dave assumes that these people aren’t self-disciplined enough to make good money on the side freelancing and are better suited flipping burgers for awhile? If so, that’s really sad. I’d like to think that people in FPU are motivated to make positive changes in their lives and that could include finding ways to make more money. It leaves me wondering if I could do something to help people in this class see this potential.

So it begs the question, have you ever found a way to earn some extra money outside of your main career? Have you thought about it?

WFMW – Some Great Money Resources

Kids and Money Round-Up: Money Management International is an awesome resource for all things related to financial literacy and they have created a new character, the Money Bunny, to help teach kids about money. Here they’ve compiled a list of other great resources, including ten tips from yours truly. 

The Family That Saves Together: A great example of how children can learn to think about money wisely when parents are proactive.

How Much of Your Finances Should You Automate?: I’ve written before that I’m a big fan of Ramit Sethi and his book and blog.  He’s all about completely automating your finances to help you save more. But I’m also a huge fan of Adam Baker, and he has some great reasons not to automate everything.

Eat, Pray, Spend: This is an insightful article about what the author calls the “priv-lit” genre, where women are encouraged to spend money and ditch their responsibilities in search of wellness and enlightenment.  I love how Eat, Pray, Love is referred to as “Wealthy, Whiny, White”. Definitely reflects my sentiments about the book.

 But Will It Make You Happy?: The New York Times examines people rejecting consumerism in favor of simplicity during this recession and the relationship between “stuff” and happiness.

Your Lifestyle Has Already Been Designed: Why is it than when we make more money, we spend more money? A look at the American culture of consumerism.

Walk Away From Your Underwater Home and Get An iPad: This story makes my stomach turn. It’s a perfect picture of what’s wrong with our country’s attitude towards money.

And that’s what works for me this week.

works for me wednesday at we are that family