8 emotions that might be sabotaging your finances

When I was a freshman in college, there was a group of girls in my dorm from well-to-do families. They carried Louis Vuitton purses to parties, scribbled offhand notes on Crane & Co. stationery, and wrapped plush pashmina shawls around their shoulders before strolling to class in the morning.

My M.O. was more beaten-up messenger bag and Abercrombie & Fitch hoodie. I would have killed for a Louis Vuitton bag.

So during my junior year abroad in France, I did something dumb. I went to the flagship store and splurged on the cheapest purse they had: a teeny-tiny $150 clutch.

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I knew that $150 could have scored me a train ticket and hostel stay in Budapest, a wine-tasting tour in Tuscany, or a Croatian cruise. But, instead, I opted for a bag the size of my circa-2003 cellphone. I remember walking out of the shop feeling a mix of exhilaration, guilt, and regret.

I'm generally pretty pragmatic and frugal, so I was surprised that I let my emotions hijack a money decision. But financial experts assure me I'm in good company. As it turns out, negative emotions influence our fiscal behavior more frequently — and more deeply — than we may suspect.

"Research has found that negative emotions hit us with an intensity that's two-and-a-half times as strong as positive emotions because they are signaling a disturbance you should tend to," says Maggie Baker, Ph.D., author of Crazy About Money: How Emotions Confuse Our Money Choices and What to Do About It.

The good news is that once you've identified those negative feelings, you can use that knowledge to help get back on the right financial path. "They can motivate you to rectify a problem, and come up with creative solutions," says CFP® Amy Jo Lauber, president of Lauber Financial Planning and author of Living Inspired and Financially Empowered.

Ready to confront these bad feelings head-on, uncovering their roots? With the help of Baker and Lauber, we're shedding some light on how to interpret what your emotions are trying to tell you — to help you then reboot your mindset.

Money-sabotaging emotion #1: Anxiety

Maybe you're gun-shy post-recession and worried about losing money in your portfolio. Or perhaps you recently emerged from debt and you're freaked out that you'll fall back into unhealthy spending habits. Whatever your story, anxiety about money is pervasive — and can affect your finances big time.

"Money-related worries stop people from taking appropriate financial risks because they fear making a mistake and racking up debt — or having to rely on friends and family for help," Lauber says. As a result, you might make poor financial choices — like being too conservative with your investments or not going back to school to get an advanced degree to further your career — that could end up lowering your net worth.

How to reframe it Although it may sound counterintuitive, Lauber says if you can't shake money anxieties, indulging them for a set amount of time — no more than five minutes a day — may alleviate some of your stress. "This gives you permission to do what you want to do — obsess over the problem — but it also limits the behavior so that bothersome thoughts won't creep into your head all day," she explains.

But there's a catch. If you're going to allow yourself to mope, you also have to commit to more productive thinking. Your mission: Come up with one thing each day that you can do to control the situation that's causing the anxiety.

So if you're worried about forgetting to pay your bills on time, think about setting up automatic payments, or create calendar reminders that will alert you the day before a payment is due. Concerned about losing money if the market crashes? Talk to a financial planner about whether the pros of taking a more aggressive position outweigh the potential risks. "Having a plan of action will move you from the fear-based part of the brain into the rational brain," Baker says.

Money-sabotaging emotion #2: Jealousy

So your best buddy just put a down payment on a house. And you're still renting — and bitter. Ok, and maybe a bit jealous, too.

According to Lauber, it's a perfectly normal reaction. "Humans are social creatures in a constant state of comparison," she says.

But if you become obsessed with keeping up with the Joneses — who, for all you know, are drowning in debt — chances are you'll end up overspending and sabotaging your own budget as a result.

How to reframe it "Turn your jealousy into a growth opportunity by using it to instigate a period of self-examination about your finances," Baker says. "Think: What is missing in your life that you don't have?"

Is it a fancy vacation? New car? Let your envy fuel your desire to make smarter money decisions — like forgoing expensive meals out several nights a week or saving the money you throw away on premium cable channels you never actually watch — in order to afford the things you covet.

Another simple strategy: Start a gratitude journal. "Jealousy makes us feel insecure and inadequate," Lauber says. "So try to focus on what you've got going for you, rather than what you're lacking."

Each day, jot down one thing that you're thankful for — whether it's something major, like a loving family, or such small pleasures as catching a pretty sunset on your way home from work. Soon enough, it'll be second nature to focus on the good stuff in life.

Money-sabotaging emotion #3: Regret

If you're still kicking yourself over a lousy money decision you made in the past — say, procrastinating about signing up for a 401(k) or investing in real estate with a now ex — you certainly wouldn't be alone. Ten percent of Americans say their biggest regret is finance-related, according to a 2012 Northwestern University study.

"Regret can put you in a victim mentality, where you're unable to move forward," Lauber says. For example, you might think to yourself, "I didn't start saving for retirement when I should have, and now it's too late." But that attitude of defeat may only help to worsen your situation: if you believe you missed your shot, you might decide to just forget it and not put any money aside at all.

How to reframe it Channel your regret into a learning opportunity. "Regret is a highly useful emotion that signals to us where in life we need to improve and motivates us to make those improvements," says study co-author Neal J. Roese, professor of marketing at the Kellogg School of Management.

So forgive yourself for the mistake — then focus on strategies that'll steer you clear of the same missteps (and subsequent regret) in the future.

A separate study by Roese found that learning from mistakes is one of the most meaningful ways to grow. Remorse helps people make sense of the world, avoid future behaviors with negative consequences, gain insight and embrace their decision-making approach.

Money-sabotaging emotion #4: Embarrassment

Between paying off student loans and trying to make a living off a modest salary, your food budget is more Five Guys than five stars. But you want to impress the girl you asked out, so you take her to the trendy new bistro in town — even though it means you'll be eating pasta for a week.

Or how about this: While out to dinner with a friend, you order the cheapest entrée and red wine on the menu, while she gets the King salmon and a lychee martini. When the check comes, she suggests splitting it, but you're too embarrassed to protest that she should pay more.

How to reframe it When you're with someone you know well, it pays to be honest. If you're catching up with an old friend over dinner, tell her upfront that you're looking to save money, and would prefer separate checks. A good friend will understand where you're coming from — and encourage you not to overspend.

On the other hand, if you're in a social situation with someone new who you aren't as comfortable with, try to avoid budget-busting scenarios altogether. Instead of taking your date to a posh restaurant, go for a walk along the waterfront or grab a casual drink. "Ultimately, you have to realize that it's about who you are inside, not what you have or don't have," Baker says.

Money-sabotaging emotion #5: Sadness

Sometimes windfalls arrive in a cloud of grief, like that large inheritance you received when your grandparent passed away or the divorce settlement that marked the end of your marriage.

"When there is a sense of mourning attached to money, people may go into avoidance mode, where they don't want to think about it, touch it or spend it," Baker says. "The money becomes a symbol of loss and they think that if they just obliterate it from their mind, they won't feel sad."

How to reframe it Even if you're grieving, you still need to make decisions about your new financial scenario. "Find a trusted financial planner who can triage the situation, and tell you what needs to be done," Lauber urges. Putting it in someone else's hands helps take the pressure off — and knowing that things are under control may even help lift you out of your depression.

At the same time, it's important to find a more appropriate outlet for your feelings. "Talking to a friend who knew the person you're missing can 'unstick' you, helping put this in perspective," Baker says.

Money-sabotaging emotion #6: Guilt

You hit the jackpot! Maybe you sold your home for twice the amount you paid for it, or invested early in Twitter. All of a sudden, you're flush — but instead of being psyched, you feel like you don't deserve this lucky break.

"Spending relieves the guilt temporarily," Baker says. So as a result, you might open your wallet 24/7, picking up the dinner tab or buying extravagant gifts for less fortunate friends and family.

How to reframe it Having a financial plan for your money can be absolutely essential. Even if you're well-off, spending limits can help you focus. "Without some kind of structure, people tend to wander and squander," Lauber says.

A healthier way to deal with your guilt? "Consider channeling some of your resources charitably," Lauber suggests. "This takes the focus off you and allows you to use your good fortune to do something helpful."

Some ideas to consider: Pay a tithe, where 10 percent of your earnings for the year go to a church or charitable organization of your choosing. Sell stock with large capital gains and gift the appreciated stock to a nonprofit. Include charities in your will, or name them as beneficiaries for your retirement accounts.

Bonus: Many of these strategies happen to be tax-efficient, as well!

Money-sabotaging emotion #7: Feeling overwhelmed

Whether you're a recent grad who's totally confused about making financial decisions for the first time, or you've got a mountain of credit card debt and don't know how to dig your way out, feeling overwhelmed by a money issue can paralyze you — preventing you from tackling what needs to get done.

How to reframe it At its root, feeling overwhelmed may be the result of a lack of control. So taking action — even if it's something small — will help counter your "freeze" instinct, and give you the nudge you need to get working toward your goal.

You can begin by making a list of specific, doable steps that will enable you to start hacking away at the money to-do you're grappling with. "For example, vow to Google one investing term a month and learn about it," Lauber says. As you slowly beef up your knowledge about things like IRAs, mutual funds, and securities, you may feel like you have a better grasp on — and therefore are in better control of — your money.

Physical activity can also be helpful, so take a walk or hit up a spin class whenever you're feeling overwhelmed. "Getting your body moving can unlock a 'stuck' mindset," Baker says. "Plus, the endorphin rush gives you a more positive perspective."

Money-sabotaging emotion #8: Overconfidence

So you hit your credit card limit this month (again) — but you tell yourself it's no big deal. Things will turn out fine in the end!

While it's great to have a cheery outlook, optimism can undermine your finances if it crosses the line into denial. "Overconfidence is the state of mind that gets people into more financial trouble than anything else," Baker says. If you are hesitant to face the cold, hard facts about where your bank account stands, that's a red flag that you might be in deeper trouble than you think.

How to reframe it In an effort to change up this money mindset, don't go too far in the other direction. Having a positive outlook can be a key to overcoming money problems because it can help give you the confidence to believe that you can turn things around.

"So don't deflate your hopefulness — just pepper it with a little bit of reality," Lauber says. "Confront the numbers, one at a time." Do you have enough for retirement? Pull up a retirement calculator online and do the math. How is your credit report? Download a copy of yours.

Once you know where you really stand, you can get your logical side involved in fixing things. Optimism + clear-headedness can add up to a money dream team.

This story was originally published on LearnVest. LearnVest is a program for your money. Read their stories and use their tools at LearnVest.com.

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