Speaker A
How's everybody doing? My name's Brad, and this is Teddy. Teddy's an emotion or a feeling, and he's going to be with us today as I try to convince you to forget everything you've ever learned about not being emotional about your money. But
Brad Yeckley explains how financial security is deeply tied to emotions and why embracing emotional intelligence is key to better money decisions.
Key Takeaways
- Financial security is an emotional state, not just a numeric goal.
- Emotions heavily influence financial decisions, making pure rationality unrealistic.
- Integrating emotional intelligence into money management improves financial outcomes.
- Immediate emotional desires often undermine long-term financial success.
- Using frameworks like PERMA can help align emotions with financial well-being.
Summary
- Financial literacy provides information, but financial security is a subjective feeling tied to emotions.
- Financial wellness involves managing daily finances, enjoying life choices, meeting goals, and absorbing shocks.
- People make about 25,000 decisions daily, all influenced by emotions, not pure rationality.
- Emotional intelligence should be integrated into financial decision-making, contrary to common advice to be unemotional about money.
- Failure in personal finance often stems from choosing immediate desires over long-term goals due to emotional impulses.
- Marketers exploit emotional triggers in financial decisions, though society discourages emotional money management.
- Examples like the Colonial Pipeline crisis show how fear-driven financial decisions are irrational but common.
- The PERMA model (Positive emotions, Engagement, Relationships, Meaning, Accomplishment) supports emotional flourishing in finance.
- High emotional finance correlates with increased compassion, kindness, self-esteem, confidence, and generosity.
- Embracing emotions in finance can lead to better outcomes and a flourishing life.
Full Transcript — Download SRT & Markdown
Speaker A
before we get into that, we have to set the stage with a few definitions.
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Financial literacy is the acquisition of the knowledge, the skills, and the information that you need to make more informed financial decisions. And I want you to hold on to that information piece for just a minute.
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Financial wellness, as defined by the Consumer Financial Protection Bureau, is your ability to control your day-to-day finances, to make some choices that you enjoy in life, to be on track to meet your financial goals, and to absorb financial shock,
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which means really turning emergencies into inconveniences. So, those are defined. We know what those are. But financial security is a little bit different. It's subjective.
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It's a feeling or it's an emotion. For some, financial security means a certain dollar amount in your retirement account. For others, it's a certain number of months in an emergency fund.
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For you, it may be home ownership. For you, it may be a certain income level.
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Or if you're like a young lady that I once asked about financial security, it's the ability to go to Trader Joe's, put whatever cheese you want in your cart, and not look at the price tag.
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Um, it's kind of funny, but when you think about it, it's a pretty accurate reflection of financial security, right?
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So, literacy alone will not produce security or wellness. Remember, literacy is about information. The problem is we have access to massive amounts of information. We're choking on it, really.
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What we really desire is the wisdom, the habits, and the behaviors to make informed financial decisions for ourselves. But we routinely can't do that.
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So, if we think of it from another lens, it makes a little more sense, the nutritional lens. We all know that an apple is a really healthy choice for a snack.
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Um, but when it comes time to make that decision, what happens? We are routinely acting in our own defiance of our best interests because some feelings, some emotions, start to have an impact on the decision that we're going to
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make. So, most of us are nutritionally literate, but when we make the choice, we don't make the choice towards nutritional security or wellness. And this happens with almost all of the decisions that we make over the course of our lifetime.
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So, Teddy's back, and he's confused because he hates making decisions. One of the reasons it's so hard to make the literate decision, right, the rational choice in anything that we do is the sheer number of decisions that we have
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to make on a day-to-day basis. So, they've done research on this, and the average human being will make 25,000 decisions per day from the moment you wake up until the moment you go to bed.
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And every single one of those decisions, whether you realize it or not, happens in some emotional state or with some sort of feeling or desire at play.
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So, economics and personal finance is based in rationality, but when it comes to our decision making, we're not rational. We're emotional beings.
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That brings me to emotional intelligence. So, there are mountains of data and research and studies that have been done on emotional intelligence up until this point. Now, you don't have to read all of these. I can sum them up. It
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basically says, learn about it and lean into it. We're told to lean into our emotional intelligence in every area of our personal and professional lives, except for one.
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When it comes to our money and our finances, we're told not to be emotional.
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Be rational, right? Who's heard the statement, "It's not personal, it's business," right? Yeah, I don't believe that. It's all personal all the time.
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So, when we start to think about the decisions we're making, the 25,000 decisions, and then we come to the realization that they're all emotional, we have to start integrating those within each other as we make financial decisions specifically.
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And the reason being is that the reason most people fail financially or really otherwise is their inability to give up what they want now for what they want most out of life.
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So, I'm going to say that again because I want you to take this, take that away from this talk. The reason you will fail is your inability to give up what you want now for what you want most. Because
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what you want now has emotions at play. It has feelings and desires that are taking over some of your rational decision making.
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So, all of these—these aren't all the emotions that we feel, but these are some that we're going to highlight today.
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We now know that all of our decisions are made in an emotional state. So, every time we make the choice to spend, to save, to borrow, to invest, to protect, or even earn, we're making that decision with a feeling at play. And the
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sooner that we accept this, we assimilate this, and we utilize this, the sooner we can position ourselves for a life where we feel like we are flourishing.
Speaker A
You know, it makes me think, you know, we're continually told not to be emotional about our money, but what do marketers and advertisers target? Right?
Speaker A
Yeah, I heard that's right. Um, when you flip through the channels, but I don't know if people still flip through the channels, when you're scrolling through your streams and you see commercials, those commercials are never about rational decision making,
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right? They're all emotional all the time. So, marketers and advertisers get this, but we try not to be emotional with our money.
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Teddy's back, and he's worried now. Um, show of hands, how many people in here have ever made a financial decision in a state of worry or fear?
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Most of the room. Think back, um, just a couple years ago, Colonial Pipeline. Remember when that happened?
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That ransomware attack? I remember turning on the TV and seeing people lined up at gas stations filling up plastic grocery store bags with gasoline and then tying them in knots and throwing them in their trunk.
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Is that a rational decision? Absolutely not, right? A completely emotional decision impacting them financially. So, we need to start thinking about this in our own lives.
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And the way we do that is by getting a sense of PERMA to help us thrive with our emotions.
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Martin Seligman is a professor at the University of Pennsylvania. He's one of the founding fathers of positive psychology and studies on happiness. And in his research with his team, he has found that human beings need these five things in their life to
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feel like they are flourishing. They need positive emotions, engagement with others, positive relationships, a sense of meaning, and a sense of accomplishment.
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So, I want you to keep these in mind as I start to tell you about what we see people experiencing that are financially emotional. And what I mean by that is that they have a high feeling of financial security, but they're letting
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their emotions play when they make financial decisions. So, in these individuals that have a high level of emotional finance, there tend to be increases in compassion and kindness.
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And this kind of makes sense. So, tonight when my alma mater wins their second round NCAA tournament game, joyful Teddy is going to be dancing around in my head. I'm pretty likely to buy a round of drinks for my friends,
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maybe even a couple strangers. Who knows? So, my emotion is leading to compassion and kindness for others.
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People with high emotional finance also tend to exhibit increased levels of self-esteem and confidence.
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This also makes sense. If somebody uses self-awareness, motivation, and self-regulation to build six months of an emergency fund on hand, they feel confident, right?
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That builds confidence for them. And then, when you feel good, you do good. People with a high level of emotional finance tend to give back more. You see higher levels of volunteerism. You see higher levels of charity. Not only do they no
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donate their money, but they donate their time, their resources, and their expertise. And they can do this because they have more slack. It's really what we all want, right? They're not walking the razor's edge of their personal finance.
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So, they can give some time. They can give some money. And then one of the last thing we see or that that is indicated in these individuals is an increased sense of purpose and meaning. So, if we think
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back to that PERMA model that was developed by Martin Seligman, meaning is on there.
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And this comes about because your horizon can shift when you have financial security and emotional intelligence. You're not focused on the next day or the next week. You can start to look long-term. What's next month or next year look like? And this helps us
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develop meaning and purpose in our life. So, Teddy's back and he's kind of bored.
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Show of hands, who in here has made a financial decision out of a state of boredom?
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Yeah? I think every hand went up. Um the pandemic, right? Think that's been an overarching theme today, a lot of pandemic stuff.
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So many boxes, huh? How many boxes did you all break down? Yeah, exactly. Uh my wife and I started the pandemic just the two of us, no pets.
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We finished the pandemic just the two of us and a flock of chickens. Um true story. It's not not just for the audience.
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Um totally out of boredom. I don't I don't Well, we don't have those chickens anymore, but uh it was it was a boredom play, right? So so this is real and we have to think about it. We have to think
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about the emotions that we're utilizing day-to-day week-to-week month-to-month when we make financial decisions. And we can do this. I like to give an actionable takeaway when I do presentations or I do talks. So we can do this by thinking about our decisions
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whether to spend money or not spend money because there is an emotion tied up to it every time we decide to spend or not spend.
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How many of us, I'm not going to make you raise your hands for this cuz you'll be embarrassed. How many of us have bought something for ourselves and then got overly excited a day or two later when we pull into our driveway and
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there's a box on our porch? Right? I see Don't you don't have to admit it.
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Um right? I bet some of us, myself included, right? And I live in this world, run up to my front porch, I grab that box, I go in my house and before I take off my jacket or my shoes or hang
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up my keys, what am I doing? Opening the box. Why do we do this?
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Why do we get excited like that? You don't have a secret admirer. Santa Claus didn't bring you anything.
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You bought that for yourself and you still got joyful and happy when it showed up. Right? Because it feels good to get things.
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Show of hands, who's heard of retail therapy? See? Really? Good good for you. Yeah, so retail therapy, right? I'm having a bad week. I go I go home, my best friend comes over, sees that I'm sad, he says,
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"Hey buddy, you want to go shopping? We'll go spend some money." Feels good to get things.
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The opposite is also true. It's a weird phenomenon that when we are about to buy something and then we make the good financial decision not to buy that item and we walk away from it, we get this icky feeling, right? We don't feel
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great. So we make a good financial decision, yet we don't feel good about it because we don't like not getting the things that we want, right? It's painful. It's why we overspend on things.
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But what we can do is flip some of those for one another. Now, there are always emotions at play when we decide to spend or not spend. I was looking at this this morning and I'm ad-libbing a little bit here, but love,
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right? You know You know that song, "Love Don't Cost a Thing"? Yeah right right?
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Fake news. Um or hunger. Definitely hunger plays a role. But let's get back to my point. I want to focus on the joyful or happy feeling and that icky feeling when we give something up.
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So over the course of a year, all of us make hundreds, if not thousands, of individual transactions from very small ones to very big ones. And every one of those transactions is an opportunity for us to ask ourselves, "What emotional
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state am I in? Is this a need? Is this a want? Will this bring me joy and for how long?
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Is this something that is going to inhibit me getting what I want most?" And if in that moment I can decide that I don't want to do that, I can forego that purchase, what I do is pull out my
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phone, transfer whatever the dollar amount was going to be for that item from my checking to a saving or an investment account and then boom, there it is. The icky gets tamped down. The happy comes up. You get a small dose of
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joy because now you got something, right? You didn't have something taken away. And you've also taking a step further towards what you ultimately want most by giving up what you wanted right now.
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So imagine if you will, think how many transactions have you had in the last year?
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If you took even a fraction of those transactions and did what I just told you to do, how much better off financially would you be?
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How much better off emotionally would you be? How much slack would you have in your life to give back, to volunteer, to express kindness and compassion towards others? I think it could be a significant amount.
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So to kind of wrap up this talk, financial security is pretty simple what it gives us. It gives us control over our most finite resource and that's our time.
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Financial security gives us time. Emotional intelligence or emotional security gives us grace as we navigate the world because we understand how we operate within the communities that we're in. We just know ourselves better.
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Combining these two things together as you navigate the world gives you increases in kindness, compassion, self-esteem confidence charity volunteerism, and it could even help increase your sense of purpose and meaning.
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So my message to you is be emotional about your money. Lean into the emotions. Be intentional every time you spend money. And if you ask yourselves those questions and you want that item, by all means get it. Live your life, but
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just be intentional. Know what you want most and what drives you to thrive in the community that you're in. And if you do these things, not only will you feel like you are living a life where you are thriving and
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flourishing, but the community you operate in will be better off than when you entered it.
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And to me, I think that's an idea worth sharing. Thank you.
Topics:financial securityemotional intelligencefinancial literacyfinancial wellnesspersonal financemoney managementemotions and moneyfinancial decision makingpositive psychologyPERMA model
