Bruce Helmer and Peg Webb
Money isn’t only a matter of arithmetic. It is deeply tied to how we feel about our lives and our futures. Even investors who pride themselves on rational decisions know that fear, excitement or uncertainty can often enter the picture.
Recent surveys reflect this unease. The University of Michigan’s Index of Consumer Sentiment fell to 58.6 in August, signaling growing concern about inflation and economic stability. At the same time, Americans now say it takes $840,000 to feel financially “comfortable” — a sharp increase from last year, according to Charles Schwab’s most recent Modern Wealth Survey. These benchmarks tell us less about balance sheets and more about psychology: Comfort is harder to grasp, even as asset values and income rise.
Why our emotions shape financial outcomes
Behavioral finance has shown for decades that the greatest risk to long-term success is often our own behavior. Markets fluctuate, but it’s the way we react, selling in panic, chasing performance, or freezing up that undermines progress.
Some of the most common patterns include:
• Loss aversion. Losses weigh roughly twice as heavily as gains, making it painful to hold steady in a downturn (Tversky and Kahneman,1979).
• Mental accounting. We treat identical dollars differently depending on the “bucket” they are in (a bonus, say, or a refund or savings) which can lead to inconsistent decisions.
• Status quo bias. We stick with outdated allocations or policies simply because change feels riskier than inertia.
• Present bias. Immediate gratification often outweighs long-term goals, creating a constant tension between saving and spending.
• Mood effects. Stress or overconfidence distorts risk perception and influences decisions far more than spreadsheets.
Moving from academic theory to action
There is a way to frame the challenge of managing these biases in personal terms: every financial decision has a feeling attached to it. Before acting, it helps to name the driver. Is it fear, pride, or the desire to keep up? Identifying emotion makes it easier to separate genuine needs from less-essential wishes.
We always encourage our clients to broaden their definition of wealth. Assets on a statement matter, but so do time, health, skills, and relationships. Money should be viewed as a tool to protect and expand those forms of wealth.
Relationships add another layer of complexity. Disagreements between spouses, awkward conversations with friends, or mismatched expectations with a new partner can all magnify financial stress. Honest communication can reduce emotional charge and make planning feel collaborative rather than confrontational.
Setting guardrails can help quiet your emotions
Awareness alone is not enough. Putting structures in place keeps emotions from steering decisions off course. A few that work in practice:
• Pause before acting. A 72-hour delay on emotional money moves often prevents regrettable choices.
• Automate the important. Automatic savings, debt payments, and portfolio rebalancing reduce the influence of mood swings.
• Label your goals. Rename vague “buckets” into specific purposes, e.g., a “five-year house fund” or “sleep-at-night cash.” Labels bring clarity which can make trade-offs easier.
• Audit your defaults. Replace one outdated choice, whether it is a 401(k) allocation that has moved from your ideal target, or an unused subscription, with something more intentional.
• Convert anxiety into action. When stress builds, channel it into one tangible step: raise contributions, rebalance, or schedule a review. Taking action can restore a sense of control.
Wealth beyond the numbers
Despite the headlines, most Americans already report feeling wealthy in the areas that matter most. Eight in 10 say they feel rich in relationships, happiness, and time, according to the Schwab study. This suggests that while money fuels opportunity, it is not the sole measure of a well-lived life.
Financial wellbeing, then, is not about reaching a fixed number. It is about aligning money with values, setting boundaries against emotional impulses, and remembering that true wealth extends beyond what markets deliver.
Emotions and money may appear to be inseparable. Emotions can cloud judgment or serve as useful signals depending on how we respond. By naming the feelings behind financial choices, setting up guardrails against impulsive behavior, and broadening our sense of what it means to be wealthy, we can quiet some of the anxiety and focus on building lives that are not just financially secure but genuinely fulfilling.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Advisory services offered through Wealth Enhancement Advisory Services LLC, a registered investment adviser and affiliate of Wealth Enhancement Group.
