Our money, our minds, and our morality have been intractably intertwined since the very first transaction of value was consummated.
But interestingly enough, when it comes to a discussion about the history of commerce and finance, historians tend to strip out psychology and morality—rarely straying far from what they contend are the cold hard facts.
More often than not, psychology only factors in when exploring aspects of marketing, negotiating, and/or trading—but usually to explain some sort of Jedi mind trick or how some lurking fiend diabolically exploited some sociological herd-movement quirk of humanity and ‘Madoff’ with $65 billion dollars.
Rarely do we see much in the way of analysis of our psychological relationship to money, probably because it is such a frustratingly complex subject. It is easier to stick to the facts, to focus on the tangible: “the numbers.” Keep in mind that all United States coinage and paper money are embossed with the adage “In God We Trust.” In our culture money has been interwoven with morality since the Civil War era. This motto has appeared on U.S, coins since 1864 and on paper currency since 1957. People need to/must have confidence in the financial system and its currency. This was a brilliant insight on the part of our government.
Ultimately, in our economics classes, in our business schools, in our financial forums, and in the business media, it is much easier to explore the mechanics of money, regurgitate facts, and debate trends related to specific market cycles than it is to unwind the intricacies of the psychological drivers which determine consumer trends and market behavior.
There is some cursory homage paid to the lemming-like phenomenon we see in the run-up on a stock or mass anxiety motivating a panic during a downturn, but rarely does the conversation delve deeply into the relationship between the mind and money on the part of the individual, in particular the financial professional. A full and deep appreciation and understanding of wall street psychology requires the financial professional to explore the intricacies of money-mind connection.
The reality is that the remarkable cyclicality of market trends, spanning hundreds, if not thousands of bubbles and bursts, across all borders, simply would not exist without the psychological underpinnings and idiosyncrasies of human behavior.
When it comes to understanding the historical significance of money to humanity, it’s really that much easier to simply focus on the Who, What, Where, When, and How, and not invest the time to truly capture the Why.
Examining the history and psychology of money through the lens of the psychologist, though, enables one to begin to develop a new awareness of why we do and what we do when it comes to money.
As any competent executive would tell you, when making important strategic decisions, it is important to remove emotion from the equation. When you are motivated by pain, ego, insecurity, frustration, greed, or other emotion, you are not acting objectively, and perhaps not in your best interests, or in the best interests of your partners, employees or clients.
I encourage you to take this a step further. Not only should you identify your own emotions, but how the emotions of others are affecting their decisions and events. Do not just focus on the facts and the trends. Start to assess the emotional drivers. Start to develop a deep understanding of the emotional drivers that have led you to a field where money rules.
You do not have to be a trained psychologist to do this.
You need only be human.
Stop denying your humanity. We learn to understand and control our emotions by embracing them, not denying them.