Understand why talking about money may feel stressful

Many articles about the Top Tips for Financial planning will concentrate on why it’s so very important to save, use your tax allowances and invest in shares.  They often also use unfamiliar and confusing language.

Whilst those subjects are important as tools for long-term financial health, they may cause a cold sweat and actively stop you from engaging in conversations around money.

I hope that this top tip and those that follow in coming blogs will help you to take a different perspective towards your financial wellbeing.

Top Tip No1:  Understand why talking about money may feel stressful

Our beliefs about money are formed at a young age and have a huge impact on us as we make our way through adulthood.  They are informed by our personal experiences and the messages we receive – I’m sure many of you will have been told that “money doesn’t grow on trees..” when you ask for something, but what exactly does that mean?  It is likely that there is a very different meaning for each of us.

Our thoughts and feelings around money are driven largely by the subconscious. In 1952 neuroscientist Dr Paul MacLean introduced the concept of the Limbic System, suggesting that we each have three brains – the Reptilian Brain, the Mammalian Brain and the Neocortex or Thinking Brain.

As humans developed, so our earlier brains were not replaced, rather the new evolutions wrapped themselves around earlier stages and learned to interact with them.

Each of the brains has specific functions:  The Reptilian Brain controls our survival instinct – think “fight or flight.” The Mammalian Brain controls our feelings and memory formation and the Neocortex Brain controls language, reasoning, logic and forward planning.

What on earth does this have to do with money?  The brain is a safety seeking, pattern forming engine and much of our behaviour operates at a subconscious level.  Money is a core need.  We require it to survive – to put food on the table, clothes on our backs and a roof over our heads.  So it could reasonably be argued that decisions around money are driven by our Reptilian Brain – survival instinct, with all reasoning, logic and forward planning disappearing as soon as we start to think or talk about money.

The Reptilian Brain cannot differentiate between reality and imagination.  If we are worried about money-related issues our brain believes they are real and when we experience a high stress or dangerous situation, our Reptilian Brain takes over, shutting other parts of the brain down.

This makes it very difficult to make logical decisions around money and therein lies the rub.  Financial planners are comfortable around money.  They try to make discussions logical which in turn often increases the feelings of stress!

Chris Budd* points out that one of the biggest enemies of our general wellbeing is stress and one of the biggest causes of stress is concern about money.

That stress may be caused by feeling a lack of control (“I don’t have a clue about finance”) or perhaps a lack of clarity (“I don’t know how to make a plan”). Our beliefs, assumptions, experiences and sense of personal responsibility all determine how we make money and life decisions.  Money is an enabler.  It simply helps us to do and feel the things that are important to us and that will be different for each and every one of us.

Understanding that we may not have control over our initial reactions when thinking and talking about money is a good first step in the journey towards financial literacy.

Catherine Greeves is co-founder and director of Greenstone Financial Planning, a financial planning firm with based in Tunbridge Wells and with offices in London.

She is a Chartered and Certified Financial Planner and sits on the regional committee of the Chartered Institute for Securities & Investment (CISI).  She is involved in the Chartered Insurance Institute’s My Personal Finance Skills programme, delivering free financial education workshops in schools and acts as an assessor for the CISI level 7 Certified Financial Planner certification, helping the next generation of financial planners.

*The Financial Wellbeing Book by Chris Budd. Published by LID Publishing Limited