Want More Money? Beat These 3 Emotional Traps

Last Updated May 9, 2011 1:04 PM EDT

A new study published in the Journal of Financial Therapy sheds new light on the concept of mind over money. Researchers at Kansas State University and Klontz Consulting Group conclude that the way we think about money is correlated to our levels of net worth. "Beliefs about money, whether accurate or not ... impact the way people think about and relate to money in their lives," the authors say.

Some attitudes, they found, can be particularly destructive to our financial well-being. They include:

1. Money Avoidance
Rich people are greedy. Money corrupts people. I don't deserve money. Do you find yourself ever harboring one of those negative thoughts about money? You may be suffering from low self-esteem or a childhood filled with painful money memories. Whatever the reason, the "money avoiders" who think this way - most commonly single and young individuals - consequently have lower levels of income or net worth, the study suggests. "Unless we are able to accept that money is simply a tool that can be used for good as well as evil, we may unconsciously sabotage ourselves," says Dr. Brad Klontz, one of the authors of the study.
2. Money Status
Those who correlate self-worth with net worth suffer from "money status." We need only watch a few episodes of The Real Housewives on Bravo to know what this entails. Common (though erroneous) beliefs include "I will not buy something unless it is new" and "If someone asked me how much I earned, I would probably tell them I earn more than I actually do." As you might guess, this perspective can be financially dangerous. "We may take excessive risks to chase a win, or slip into despair and give up when we fail. Either trap threatens our financial health," says Dr. Klontz.
3. Money Worship
"Greed is good," said Gordon Gekko in the popular film Wall Street. But those who saw the end of the movie (or the beginning of the recent sequel) know that he pays a big price for his point of view. Other "money worshipers" believe that the more money or more possessions you have, the happier you are. Money worship beliefs - which are quite common in the U.S., according to Dr. Klontz - include "More money will make you happier" and "There will never be enough money."
Money worshipers tend to be young, white, and single, with lower levels of income and net worth; they often fail to fully pay off credit card bills each month, ringing up high levels of debt. Money worshipers are also in denial; by now we know of several studies proving more money does not buy happiness. The latest study out of Princeton concluded that there's no relationship between money and happiness above an annual income of $75,000. "The belief that more is better can lead to workaholism -- sacrificing family and health for the pursuit of money -- miserliness, and ironically, lower income and lower net worth," says Dr. Klontz. True happiness, he says, stems from meaningful relationships, following your passions and helping others.

Farnoosh is a personal finance journalist, commentator and the author of Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv, and on Twitter.

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    Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter at @farnoosh.