Money reflects the value that we inherently place on things on a personal level. For example, a diamond is just a pretty rock. But we pay enormous sums for them. Why? Because of the emotional and symbolic value that they have in our relationships. That all important ring represents commitment, future wealth, and social status. Think about how publicly we flaunt and discuss a beautiful engagement or wedding ring. Admit it, ladies. You want that big rock. Why? Because it makes us feel worthy. It makes us feel important. It makes us FEEL. And we would pay anything to feel that way.
Questions:
- What objects do you own that make you feel a certain way? List out each thing (jewelry, vehicles, your house, things on your shelves, clothes, cash itself, etc), and how it makes you feel.
- What else could make you feel that way?
- Are there activities, people or experiences that could make you feel that way?
Similarly, we overvalue the things that we already own. When you list something of yours for sale – a piece of furniture, a house, a vehicle – you will tend to overvalue it. This is called the Endowment Effect, a term coined by Richard Thayer, considered the first to deeply explore the idea. He suggests that to have something and then not have it, feels like loss and loss is painful. We, as humans, will do just about anything to avoid loss. And so we overvalue the object to soothe that loss. When you sell something, and you ask yourself what it’s worth, you are really asking asking yourself what it will take to make the loss of it feel OK. For someone on the other end of this transaction, they are going from not having it, to having it, which is a position of gain. What are they willing to pay to feel the triumph of gain? The answer is: to nearly as much as you need to assuage the loss.
Unless, of course, they attach emotional value to the thing. Because we won’t pay big bucks for something that is just a thing. But we will pay anything for love, freedom, security, or worthiness.
But it’s not all about loss. It’s about the ownership of the thing. You chose this thing. When you bought it, you made a choice. And you crave validation for that choice. You want to be right in having chosen that. If nobody wants it, if it has lesser value, then maybe you were wrong. Ouch. Being wrong hurts too. Having your preferences called out as lesser feels like social rejection. And deep in our subconscious, social rejection equals death.
These objects represent ourselves, our history, our growth and a dozen other things. To undervalue the thing is to undervalue our selves and our time on this earth. So we are compelled to overprice it, just because we want to be worthy and we want others to validate that worthiness.
Questions:
- Consider the objects that you listed in the last question.
- What do these things represent to you? What do they represent about you?
- Who are you without them?
Placing too much emphasis on the objects we own can lead to buying as an addiction as we seek meaning and worthiness in our lives. Buying to soothe yourself is nothing new. They call it retail therapy and we laugh and encourage it. Buying something new makes you feel temporarily alive, valued, appreciated and rich. But this temporary escape from your current reality soon wears off, leaving you feeling just as empty as before, if not more.
The credit card industry was built around your need to soothe yourself with things. And it is all too common. According to the Federal Reserve, the average US household had over $8,000 in credit card debt as of June 2019, accounting for over a TRILLION in credit card debt across the country. That is how desperate we are to feel safe and worthy.
Questions:
- What are you wanting to buy lately?
- What are you escaping?
- What emotion are you seeking to acquire?
- Why do you not feel alive, valued, appreciated, rich, etc already?
- What can you do to feel that way without derailing your finances?
As with most challenges, the cure for financial self sabotage is connection. Financial self sabotage involves yourself and your money so the key is to focus on these connections. That is, connection to yourself and connection to your money. After considering the questions above, take some time to explore the cycle of human development. See which stage you are spending the most time in. And do the exercises to move yourself forward towards more complete connection to yourself and your money alike. These are all detailed in the book, Purna Asatti, and in my writings at KathrynColleen.com.
