Does thinking about money make you anxious, or is is just a tool that gives you choices?

Business owners often transfer their feelings about their own money to their business and this can cause lots of problems, so we asked Money Coach, Dennis Harhalakis, to answer questions on “How to have a healthy relationship with money”

What is money coaching?

Dennis Harhalakis I spent many years working in the finance industry and I noticed that most of the people I worked with were pretty bad at managing their money.
The whole industry is set up to take your money and do things with it, but there was very little understanding about what enabled some people to have healthy saving and spending habits, whereas others – and there is no relation to income or social standing – struggled with everything money related.
In the late 90’s there was a book called the Millionaire Next Door and this analysed the behaviour of people that built wealth over their lifetimes. They identified 4 positive financial behaviours:
1. Frugality – spending less than you earn
2. Confidence – financial literacy and learning about how the system works
3. Responsibility – taking ownership of your financial outcomes
4. Social indifference – not being influenced by what other people are buying and what society tells you should have.
Understanding the emotional aspects of your relationship with money is the key to developing these behaviours.
It’s hard to budget if thinking about money causes anxiety.
It’s hard to be indifferent to the opinions of others if your self-esteem is low.
So, money coaching helps people to recognise and understand those patterns so you can make the changes you want.

Using money as a measure of success

Andy Boothman There are many ways to define and measure success but in business, money is the usual measure, why is this?

Dennis Harhalakis Money is the simplest measure society has for success. As hierarchical mammals our brains are always looking out to see how we compare to others. It’s a core survival issue and it’s totally subconscious.

Ann Hawkins Some people are easily able to separate how they deal with business money and how they deal with their own. So its obviously not money per se that’s the issue but having a different relationship to ownership. Is that right?

Dennis Harhalakis Yes correct. Our relationship with our own money is entirely emotional. Money is a core survival need and so dealing with it triggers our core survival processes and responses. That’s why it’s so emotional. For small business owners, the problem is often that there is no neat separation between personal money and business money. So, personal issues with money will leak over into the business side. This goes beyond simple competencies, and extends to issues of self worth which can then limit your ability to drive your business forward.

What we learn from our parents

Helen Lindop In your experience, what’s the most common thing that gets in the way of having a healthy relationship with money?

Dennis Harhalakis The biggest cause of unhealthy relationships with money is bad messaging during childhood. Depending on how the adults behaved, money becomes associated with anxiety, shame, conflict. In households where money wasn’t talked about it’s really hard to develop a positive relationship. The sad thing is, children tend to internalise this and we find ourselves ashamed that we cannot manage our finances properly.

Helen Lindop I’ve found it’s not too hard to understand where my beliefs about wealth and money come from but it’s much harder to change them – what do you advise?

Dennis Harhalakis We often don’t understand how and why we feel the way we do, but we blame ourselves. As a society we don’t talk about these feelings and we are embarrassed. If I had to give you one message only, it’s that we all have money issues and it’s perfectly normal. Unless your parents were incredibly enlightened, you will have some negative patterns.

The path to developing positive emotions, patterns and behaviour around money 

1. Understand your money story
2. Moderate extreme behaviour
3. Change negative patterns and scripts.
This is really, really hard to do on your own because you brain will shy away from things/thoughts that make is feel uncomfortable.
Understanding your neurobiology – how the brain works – how the brain handles money – is probably the key to all of this.
The aim is develop greater consciousness in your behaviour around money. What is driving those emotions, what is driving your behaviour.
95% of our behaviour is subconscious and driven by deeply ingrained processes that keep our species alive for millions of years.
The good news is that it’s possible to change all these lifelong habits and beliefs and there are incredible benefits to it.

Technology and money

Andy Boothman Technology is changing the way we handle money and that this is something that looks set to grow significantly in the future. Do you see technology improving peoples relationship with money?

Dennis Harhalakis Technology will help us to deal with the complexity of managing our finances – I love Monzo and Money Dashboard – but the emotional dynamics of our relationship can’t be changed by technology per se. If technology can be used to support financial literacy and budgeting, then yes… it is extremely useful. But there is also a downside. When spending becomes frictionless, we spend more.

Andy Boothman Is that because we cannot manage/control our own desires or that we just don’t follow the figures?

Dennis Harhalakis We are wired for instant gratification. As we evolved, if we saw something we needed, we just took it (and usually ate it). We don’t need to do that now, but the urge is still there. So, when the process of instant gratification becomes frictionless, it becomes really hard to control.

Andy Boothman What about pay forward systems where you have a self imposed limit to your spend?

Dennis Harhalakis All friction is good….. and ‘control’ mechanisms will vary from person to person. It’s about choice architecture and designing the process that will achieve the outcome you desire. Neurologically speaking, handing over cash versus waving  a card or phone are completely different processes.

Resources and help

Helen Lindop So many books/resources/experts on relationships with money rely on new age ideas like manifesting – can you recommend any that are based on things like psychology and solid financial principles instead?

Dennis Harhalakis The resources page on my website has a good list of useful books and I suggest you have a quick look at those that seem interesting. If I had to pick 1 it would probably be Wired for Wealth and I would also highly recommend Money Magic by Deborah Price. She is the founder of the Money Coaching Institute and has been doing amazing work for over 20 years. I trained with her.

Dennis Harhalakis is the founder of Cambridge Money Coaching and a Certified Money Coach (CMC)®.  Money Coaching deals with the unconscious patterns, beliefs and behaviours around money that we all have.  Understanding these behaviours and patterns is the key to achieving true financial independence and success.  This understanding is particularly important when facing the challenges of a sudden change in circumstances.

With over 30 years’ experience in financial services, Dennis offers clear, practical guidance on how to address the common problems associated with money choices, patterns, and the day-to-day management of money issues.  He holds an Investment Advice Diploma from the Chartered Institute of Securities and Investments (CISI).

Dennis believes strongly in supporting financial literacy and helping young people prepare for the challenges of today’s world.  He has been a Business Adviser with Youth Enterprise and worked with Cambridge schools as a mentor and guide to careers in Finance.