Psychology of money

Manavi Pathak | December 12,2011 11:29 am IST

Jharkhand computer operator changes fortunes by winning five crores in KBC "Its sad Mukesh Ambani lives in such opulence" commented Ratan Tata few months ago when asked about Antilla, 27 storey Ambani home. Business families are seeking professional help to realize their philanthropic aspirations : Survey Report As a driving force in modern civilization money plays an integral part in our daily lives , from spending a vast majority of our time working hard for money to financial planning for the future.

Research has identified a number of emotions surrounding money, which differs from person to person. For a few people, money can be a source of security or freedom or self-esteem. For others. it is a cause of anxiety or dependence. Then there are various themes associated with money, " A penny saved is penny earned", themes of overspending, not having enough, philanthropy and sharing wealth with the less fortunate.


Money although considered as an instrument of commerce and measure of value is "profoundly influenced by culture and social structures". Our attitude towards money and spending is based on our early life experiences and how we organize these information. We are barraged with messages about money and values associated with money from toddlerhood to older adulthood.


The way each of us processes and organizes these messages is individualistic. Thus, programming towards money starts at a very young age. Even people in the same family are likely to organize their views and their relationship with money very differently. Money had rarely been considered worthy of study by psychologists , perhaps it seem to be a matter of interest for economists and financiers.


More recently, Psychologists and Organizational researchers have examined the meaning of money from several disciplines : sociology, economics, anthropology and management. How does the presence of money influence one's feeling, emotions and intentions ? Psychiatrist Salman Akhtar interestingly points out that " any conversation about money isn't really about money but it's about power, prestige and even sexuality".


He adds further " Extreme wealth gives a sense of omnipotence and you are no longer the same person. You start treating yourself as an exception, meaning ordinary laws of society do not apply to you leading to arrogance and entitlement, however it does not always happen this way".


Money personality 

Money Personality is based on our understanding of how we think, feel and deal with money. Eileen F Gallo, Ph.d studied the concept of money personality and has provided valuable insights. Eileen has developed a model of Money personality which has three dimensions. ( Refer to the diagram below). The first dimension is one of Acquisition : this deals with how we get money. One end of the ruler is the Avoidant, where money is considered as the root of all evil. At the other end is the Insatiable, who can go to any extent, even break rules to acquire money. Most of us tend to be in the middle as we neither fear money nor we go to the extent of breaking rules to acquire more.


Money Personality based on Dimension of Acquisition, Use and Management


The second dimension is Use : this deals with how we save or spend. On the one end is the miser or stingy type which we might have seen in our families and friends who are extremely careful about spending a penny and on the other hand is the compulsive spender who gets satisfaction by spending lots of money. Again most of us are in the middle being reasonably careful and conscious of our use of money. The third dimension is related to Management : how we manage money. It includes everything from paying bills to managing our investment portfolio. Some of these
are often delegated to professional advisors. On the one hand is the obsessive compulsive who micro manages down to the last dime. At the other end is the chaotic individual who is extremely disorganized or procrastinates paying bills most of the times to such an extent that it gets him or her into trouble.


Each of us tends to have different degrees of security or insecurity when dealing with the three dimensions of Acquisition, Use and Management. For each of us one or two of these dimensions tend to be more important than the other. This occurs because either our relationship in that dimension is secure and successful or insecure and problem laden. Even if all our money relationships are reasonably secure we are likely to find that one dimension is more important to you than others. For example, of you are an entrepreneur and your goal in life is creating and selling new businesses acquisition is likely to be more important than either use or management. There is nothing wrong or abnormal if one relationship is more important than others.

However, there are instances when dealing with money or wealth often leads to some sort of pathology or neurosis which will be described in the section below.


Money madness
Often extreme wealth is associated with strife and conflict. Dr. DevadattaPattanaik, leading mythologist explains its very well by saying " Alakshmi is the goddess of strife. She causes quarrels , she is called jyestha or elder one , because she is the elder sister of Lakshmi, goddess of wealth." The candid example he uses to explain this was IPL. As wealth poured into IPL everyone raved about the meteoric rise of the brand, it was clear that Alakshmi was round the corner.


Therefore, the old wise saying goes if you want Lakshmi to come to your life you must never chase her. She should chase you otherwise she will come with her twin-sister. A house filled with wealth as well as strife is the place where both Lakshmi and Alakshmi reside.


How money makes you feel about you ? The answer to this question is complex and helps us understand the pathologies associated with handling money . Different researchers have developed the typologies associated and the one developed by Furnham (1996) is described below. Many of the descriptions below are of serious cases whose money pathology
influences their whole lives. Inevitably, ordinary people may experience some of these problems , however to a lesser extent.What this limited but fascination literature also shows that money comes to symbolize something that meet psychological requirements of safety, security, love and power. While money can in part, satisfy some of these needs, externally it cannot , however buy those psychological characteristics it is sought to achieve. Many people assume that this lack of success is caused by not having sufficient money. Hence, the miser, spendthrift and gambler become worse with time and going ahead they also become ambivalent about money.



Dr Manavi Pathak is an Organizational Psychologist and Consultant....