Who rules your finances?

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What's the first emotion that comes to your mind when you say finances?Bliss? Joy? Anger? Hate? Any other? ...confused?Chances are you are unlikely to associate some emotion to finances or your financial decisions. We have been conditioned to believe that anything to do with finances or financial planning has nothing to do with emotions. Managing finances is pure logic and arithmetic, governed purely by set rules, guidelines and principles. This is where most financial plans fail.Financial planning is a process to make our lives simpler. And irrespective of how good a plan may be its success is directly proportional to your needs, desires and feelings.This is something that a good financial planner will say — you cannot discount the human element of financial planning. An important factor to consider when managing finances is to understand what drives you, what you feel, what fears do you have, and how you react financially under different situations. The more you decipher the motives driving your financial decisions, the higher are your chances of creating and executing a financial plan that is tailor made to your aspirations.The list below will help you identify if you give in to some of the common emotional traits I have observed in people.There is nothing wrong with my financesWhen your financial position is healthy and things are progressing as planes, people tend to become relaxed about their finances. They start believing that nothing can affect their current status or money flow. If at any point the funds start to tighten, they think that they can rely on the next paycheck or bonus to resolve the condition.The problem arises when things don't go as per plans and no measures are taken to arrest the situation. In good times, we fail to plan for the bad ones and do not have a backup plan for emergencies. Work towards setting up an emergency fund to safeguard yourself.If he has it, I should tooThere is an old Indian adage - 'to be happy look at those who are not as fortunate as you are.' Yet, most of us seldom follow this line of thinking. Being in a race to have everything first, we start competing with those around us. "I want a better phone like my office colleague, I want the new LED TV like my neighbour, I want a better watch than my boss," the list of such desires is endless.The impact of such behaviour hits people more since they end up spending more than they can afford, creating a debt trap for themselves.I should have it firstSome of us fall into the trap of believing that we deserve a lot more than we already have. Believing that one is entitled to everything, one tends to start getting into a habit of purchasing everything irrespective of whether it is affordable or not. This is one of the easiest ways for people to get themselves into a credit card debt.Finances can be sorted a little laterThe list of things you should have done earlier is likely to be endless. We all are victims of procrastination, waiting to do things at the last minute and in the bargain not doing it at our optimum. The need of keeping one's finances in order is common knowledge but how many of us actually put it into practice?By postponing decisions about money management, one runs the risk of a negative impact on overall finances. The worst part is that at the end of everything one keeps regretting that despite knowing what needed to be done, the result is disappointing.Finances = fearHuman tendency is to stay away from anything that can cause us pain. It's easier to refuse to face the truth rather than accepting it. I have come across many individuals who refuse to look at their finances simply because they fear it. They become so afraid of problems in their finances that they never put serious effort in addressing the issue at hand. Eventually, this pattern continues to erode the finances further. If one knows that a situation is difficult, running away from it cannot help. The only way of overcoming this is by facing your fear.Tiredness and fatigueLearning to manage your finances is a long term process, one that takes discipline, time and effort. Unless the importance of money and timely management has been imbibed in people at a young age, they do not develop the drive to maintain finances. You might have seen many colleagues, who have a pile of papers on their desk, just playing games online or updating their facebook accounts when they should actually be clearing up the backlog. Ask them about it and you get a prompt reply, "Just took a short break since I felt tired."Finances are too confusing for me to handleOften half knowledge is more dangerous than no knowledge at all - and this really applies to people who are not adequately informed about their own financial matters. One ends up consulting friends and relatives when there is confusion about the course of action related to finances. And more often than not, every one gives a different view point or suggestion. The worst part is that the people we consult may not be qualified to respond to such queries. At the end of the day, you end up confusing yourself about how you need to proceed. Many just cease to resolve things at this stage and give up.Anger or resentmentFinancial problems are an inevitable part of one's life. Some people are unable to withstand the pressure created by such troubles and over a period of time develop anger or resentment towards themselves, their situation and their finances. In such a frame of mind, they are unwilling to disentangle their problems or make a sustained effort at improving their finances. Consumed by resentment, they just end up ignoring means to pick themselves out of their financial woes.Are any of these demons haunting you? If yes, then try to figure out how did you first got pulled into such emotions. It may also be a good idea to consult a financial planner, who can guide you in identifying and confronting these traits. However, ultimately the state of our finances is in your hands. Recognising the bond between these emotions and your finances is not enough, you need to exhibit an unrelenting determination in overriding these factors.The writer is a Mumbai-based financial planner and heads freedom Financial Planners

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