Financial Literacy Tips for Self-Worth

How do you maintain your self-worth when money defines everything about life. Here are great tips and perspectives on finances that can help with protecting your personal identity and build confidence.

This is the second part to my article on Financial Literacy Tips for Mental Health which were takeaways from The Financial Diet Zoom talks.  Here I’ll go through topic areas affecting one’s idea of self-worth in regards to finances. 

Hedonic Adaptation

  • The concept that we constantly adapt to more money and it doesn’t bring more happiness
  • Money can quickly change quality of life, but does not impact well-being above a minimum amount to survive

There is a lot of information out there now about hedonic adaptation and how we get really used to new things.  Dr. Laurie Santos’ popular Yale course The Science of Well-Being does a great job of distilling all the known research and applying the lessons to your life.

Basically, most of our present societal ideas about money are wrong. Money is just a tool, whereas society treats hoarding it like the actual goal.  We hear often in popular media that money doesn’t bring happiness and it’s surprising to see even Silicon Valley billionaires subscribing to advisors, coaches and gurus.  What is the point of money then? 

Santos’ has tips to thwart hedonic adaptation such as to discover your true inner goals that bring happiness to life, and treat money as simply the bridge to that goal.  Importantly, it means to see your self-worth in terms of what is valuable and authentic to you rather than the amount of money itself.   

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  • We give ourselves labels and identity based on our financial situation
  • Question oneself, “Where did I learn to speak to myself this way”

Poor is a description of lacking money and it also describes inferiority. No wonder it really sucks to use it to describe ourselves. Other words like cheap and modest further define our relationship to money in a way that we also embody as an identity. Looking deeper into why we use labels for ourselves is a way to start unlocking our real motivations.

For the longest time I was a thrifty person and everything I did had to be considered old and used.  I only shopped at vintage stores and was modest about my appearance. My furniture was all hand-me-downs and I relished in shabby chic. 

Then one day I just woke up realizing that I was perpetuating my mom’s idea of what our lives were to be like in middle school. We were indeed a thrifty family once, the immigrant experience.  I realized I no longer needed these survival skills and I just gave everything away and started from scratch. 

Marie Kondo popularized cleaning house and then only bringing back things which sparked joy.  In that case if your house is full of just things meaningful and valuable to you, then that’s one way to consider yourself rich.  Nonetheless be wary about using labels as they inherently box oneself in.

False Narratives

  • Pay grade equals success
  • Your financial upbringing or trauma:  I’m not worth spending money on

It’s obvious to me that my parents didn’t set the greatest financial example. Money was a chaotic instrument in the home. But it’s not enough to just know who to blame for your money woes, I needed to look deeply at how I formed a relationship with it. I saw that thoughts of self-worth and fitting in with others, transferred over to money. I deserved money but I didn’t deserve the joys that came of it. I didn’t feel like I belonged in the teenage world, so buying things didn’t bring joy either. 

I was harsh on myself and still am. Sure we need to save for retirement or a rainy day but I also place impossible standards on all of that. If I was serious I’d actually set realistic goals and work towards meeting them, understanding there is hope and possibility. This is how I’d approach a friend, I’d console them and show them a path forward.

We can combat our false narratives by asking questions about where we learned our habits, and why we feel the way we do about money. 

Healthy Relationship with Money

  • Break down goals from large ones to small ones
  • Reward myself for my progress
  • Create a dialogue with your guilt (or trauma)

The obvious approach with money or any large problem is to break it down into smaller pieces and work each one. Directing your focus on what is immediately in front of you is more effective than trying to juggle the entire plan. Within those little sprints toward milestones, reward yourself for progress. I’m reminded of the book Before Happiness by Shawn Achor which details brain hacks related to rewarding oneself to cross the finish line.

Creating a dialogue with guilt (over money) is an interesting idea because I think of guilt as the symptom than the problem itself. But I can see how it’s a key to understanding the original problem. Guilt from money feels displaced for me, meaning I can not see the original reason I would feel that way. Guilt implies that we’ve seen suffering and want to help, but because we did not help, we are drawn back to do something about it. For example if you feel guilty buying nice clothes, it’s not the clothes, it’s something about the clothes or related memory. Maybe an estranged parent who shopped like that, maybe body image.

Dialectal Approach and Radical Acceptance

Out comes the fancy therapy words! As I understand it, a dialectical approach is acknowledging opposing beliefs can exist and from there, developing a common truth or relationship between them. For example, I have the urge to throw everything into the stock market but I also want to save money for a home. If approached as two opposing problems where one must win, I will be forever in conflict because there is no actual right answer. Both are right!  Yet society tells us there are a lot of must dos and must don’ts. 

A dialectical approach might say accept they are both true, so how can you make both happen. Stop seeing it as black and white. In that case, I think a home is more important right now so I’ll save money and invest less in stocks.

Radical acceptance means to accept a bad situation wholly and fully without judgement. No soothing yourself by saying “it’s okay.”  This might come up if you had your wallet stolen.  It’s an awful situation and after a while of processing it, you are asked to simply give up being mopey completely. 

Seems easy for a wallet, but what about a spouse gambling your savings away. In that case, this concept is hard to swallow. For me, to understand radical acceptance is to gauge what my limits are for financial chaos and to plan for those contingencies. That way, you can avoid being too wound up in a crisis and protect your self-worth.


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