Relationship With Money

People have complex relationship with money.

The push and pull of decisions that should be rational and choices that are emotional makes life difficult all the time.

Depending upon how one is positioned emotions as wide ranging as fear, guilt, shame and envy can impact the rational of ones’ decision making.

Fear of not having enough, guilt on over-spending and even not being able to enjoy; shame of not doing the right thing and envy because of comparisons with others can make money choices very complicated.

Stage of life and priorities can also complicate the equation.

While the rational side of the equation tells us to save more, postpone consumptions, the reality is that Over 60% of Indians are spending 59% of their earnings on living expenses while over 51% admit to not even knowing how much money they would need in retirement.

Let’s examine this in detail.

There are 3 stages of money that an individual can experience:


In a low capita income country, majority experience is scarcity of money.

Limited resources and limitless wants.

Children moving into adulthood and having experience scarcity tend to be like pressure cookers, they have been holding themselves back for too long.

Who doesn’t aspire for a nice phone, car, home etc.,

Frustration is a big part of this experience.

Daniel Kahneman in his new book “Noise” talks about how hunger impacts decision making amongst judges.

Hunger is the noise, and any kind of hunger suppressed for too long beyond the lunch time is bound to have negative consequences for human faculties to make a right/rational decision about money.


With income or increase in income comes freedom.

However, if all that you experience through life is scarcity, what do you think will happen first, “savings” or “consumption”.

This phase has the most complex manifestation of emotions for an individual:

  • First comes heavy duty consumption, lot of money in the beginning of the month. No money around the middle till the end of the month

There are over 20 providers of loan against salary in India

This on top of “buy now pay later” plans on offer

You can imagine the vicious cycle

  • As people grow older, comes the circle of shame combined with guilt
    • I don’t have enough money
    • I spend too much
    • I don’t have a plan
    • I don’t have knowledge
    • I have not saved enough
  • Then comes the random advisories
    • Postpone consumption
    • Don’t’ buy coffee, make it
    • Don’t eat out
    • Cut-back

The vicious cycle can be a crazy ride


This is aspirational. Reaching here is a dream most find unattainable and for a reason.

This is where you want to reach but don’t know how.

You don’t reach here by cutting small expenses, take train instead of cab, make coffee instead of buying it but by discipline around your larger expenses.

It is the large impulsive/emotional spend that just takes the sail off your boat.

You can cut coffee for a whole year, but it will no match for a large unwanted expense.

Reaching abundance is hard.

It needs a coach, a guide, a specialist and whole lot of discipline around your relationship with money.

The idea is not to postpone joy out of your life for some uncertain day in future when you might/might-not even be alive but to prioritize your needs and wants.

When people diet, the dietician allows a cheat day, your consumption also needs a cheat day.

However, whenever the spend is going to be bigger than what you can afford, sleep over it and see if you still need it.

Sachin Tendulkar once said that when chasing a target he doesn’t keep it in from of him but at back of mind.

Keeping it in front puts too much pressure and restricts natural game.

If you think like that about your relationship with money, the ride might seem a bit more smoother if not easier.

Follow my twitter handle irreverentinvestor @manver1974

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