Financial Literacy is the ability to understand how money works in the world. Think about it as tools and knowledge on financial matters to confidently make money decisions that align with their values and goals.
SHANNON RYAN, CFP®My goal in financial literacy work is to teach you how to manage money in alignment with your goals and create a solid financial foundation for yourself and your loved ones. I will do this with a two-pronged approach:
- By helping you identify your unconscious and behavioral biases around money and
- By giving you practical ways to create a financial life that aligns with your values, using the tenets of both behavioral and traditional finance. I will also share with you why financial confidence is so elusive for most people. Spoiler alert: the answer is rarely the need for more money. Monetary success is ultimately about how we react to financial challenges and interact with the resources we have.
What are financial wounds?
Early in my career, I began to recognize the emotional response to money that I was witnessing as financial scar tissue. In our bodies, scar tissue is the residual tissue that remains after a wound has healed. The same is true of financial wounds. What are financial wounds? They come in many forms. For you, they may be memories of your parents arguing over bills, your experience of losing a job, getting divorced, experiencing bankruptcy, living through a recession, going hungry or being told, “Sorry, we don’t have enough money.” These invisible wounds, whether you acknowledge them or not, come to define your money thoughts, creating the behavioral patterns that keep you from attaining your goals. Real work toward financial happiness can only occur when your money wounds and their resulting behaviors are addressed.
Financial behavior patterns describe what we do with our money on an unconscious level. They explain, from an emotional perspective, why and how we make financial decisions. Traditional finance assumes that we are always rational and seek to maximize our wealth at every opportunity. However, behavioral finance acknowledges that we often act irrationally due to psychological biases, emotions, and cognitive errors.
