If You’re Struggling Financially, It’s NOT About Money... Here’s Why!

Ever feel like you're pouring water into a bucket with holes? You work hard, earn a decent income, but your money seems to vanish before the month ends. Meanwhile, others with smaller paychecks somehow manage to save, have an emergency fund, invest, and thrive. Strange, right? But here's the kicker: financial struggles often have less to do with how much income you earn—and more to do with how you manage the leaks.

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Financial challenges often stem from deeper psychological factors rather than simply a lack of funds. Understanding these underlying causes can be the first step toward transforming your situation and having a more secure financial future.

Money Scripts: The Stories We Tell Ourselves

Our relationship with money begins in childhood. The beliefs we form early on—what financial psychologists call "money scripts"—shape our financial behaviors as adults.

For example, if you grew up in a household where money was a constant source of stress or where financial planning was avoided, you might unconsciously replicate these patterns in your own life. These deeply ingrained beliefs can sabotage the health of your personal finance without you even realizing it.

Think about it: Did your parents frequently argue about money? Did they avoid discussing finances altogether? Or perhaps they always said things like "we can't afford that" or "money doesn't grow on trees." These seemingly innocent phrases become powerful internal narratives that guide our financial decisions decades later.

As research from Integrative Psychology shows, these subconscious beliefs significantly impact how we save, spend, and invest.

Emotional Triggers and Financial Decisions

Financial decisions are rarely made in a vacuum of pure logic. Consider these common emotional drivers:

• Stress and anxiety often trigger risk-averse behaviors like avoiding investments or hoarding cash.
• Retail therapy temporarily alleviates negative emotions but creates long-term financial strain.
• FOMO (Fear of Missing Out) can lead to impulsive purchases, especially in the age of social media.

Maria, a 34-year-old marketing professional, noticed she'd always shop online after difficult meetings with her boss. "It was my way of soothing myself," she admits. "But I never connected these emotional purchases to my dwindling savings until I started tracking my spending patterns with a simple budgeting app."

Recognizing these emotional triggers is crucial. Techniques like mindfulness or journaling can help you pause and reflect before making financially impactful decisions. Taking just five minutes to ask "Why am I buying this right now?" can reveal surprising insights about your emotional state and true needs.

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In order to truly shift your financial trajectory, it’s essential to develop a new money mindset—one that focuses on long-term wealth-building habits rather than short-term satisfaction.

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Loss Aversion and Risk Aversion

According to Investopedia, people tend to prioritize avoiding losses over pursuing gains—a concept known as loss aversion. This can lead to suboptimal decisions like:

• Holding onto underperforming investments
• Avoiding reasonable financial risks that could improve your situation
• Keeping money in low-yield savings accounts rather than investing it

Consider how many Filipinos keep substantial amounts in basic savings accounts earning minimal interest, when even conservative investment options could provide significantly better returns over time. The pain of potentially losing money feels more intense than the pleasure of equivalent gains, keeping many trapped in financial stagnation.

This bias becomes even stronger during uncertain economic times, potentially keeping you stuck in a cycle of financial stagnation.

Herd Behavior and Social Pressure

Have you ever bought something because "everyone else has it"? Social pressure to mimic others' spending habits—especially visible on platforms like Facebook or TikTok—can lead to significant debt accumulation.

In the Philippines, where community and family ties are particularly strong, this might manifest as:

• Overspending during celebrations and family gatherings
• Feeling pressured to match the lifestyle of peers or relatives
• Contributing to group expenses beyond your means

The traditional concept of "bayanihan" (communal unity) is beautiful in many contexts, but it can sometimes transform into financial pressure. When your kolehiyala classmate is getting married with a lavish celebration, or when relatives expect substantial financial help despite your own struggles, saying "no" feels almost impossible.

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Financial Literacy Challenges

Limited understanding of financial concepts can lead to poor decisions. For instance, not fully grasping how compound interest works might result in:

• Relying on high-interest loans
• Underestimating the long-term impact of small, regular savings
• Missing opportunities for wealth building through investments

This knowledge gap is particularly pronounced in areas where access to formal banking and financial education is uneven.

The power of compound interest becomes clear with a simple example: Saving just ₱1,000 monthly from age 25 to 65 at a modest 6% return would grow to over ₱2 million, while starting at 35 would yield less than half that amount. This mathematical reality isn't intuitive without proper financial education.

Financial Literacy Resources

To close the gap in financial understanding, consider these valuable resources:

• BSP Financial Literacy Program: Bangko Sentral ng Pilipinas (BSP) offers excellent programs and tools to increase financial literacy for Filipinos.
• Finmerkado’s Financial Guides: Start Building Wealth – A comprehensive guide to get started with investments and wealth-building tools.
• Psychology of Money: Understanding the Psychology of Money – Learn more about how emotions influence financial decisions.

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1. Build Financial Awareness

Start by tracking your spending for at least one month. This simple practice can reveal patterns you weren't conscious of, such as:

• Emotional spending triggers
• "Invisible" recurring expenses
• Areas where small changes could yield significant savings

Many people are shocked to discover how much they spend on daily coffee, convenience store snacks, or subscription services they barely use. These realizations aren't about deprivation but about intentional choice—knowing exactly where your money goes empowers you to align spending with what truly matters to you.

2. Challenge Your Money Scripts

Identify and question the money beliefs you inherited. Ask yourself:

• What did I learn about money growing up?
• Which of these beliefs might be limiting my financial potential?
• What new, more empowering beliefs could I adopt?

For example, if you grew up hearing "rich people are greedy," you might unconsciously sabotage your earning potential. Reframing this to "wealth gives me the resources to help others" creates space for both success and generosity.

3. Automate Your Financial Success

Set up automatic transfers to savings accounts to counteract impulsive spending. This "set it and forget it" approach removes the psychological friction of manually saving money.

The most successful savers often describe their strategy simply: "I pay myself first." By automatically directing a portion of each paycheck to savings before it hits your main account, you eliminate the willpower battle entirely. What you don't see, you won't miss.

4. Seek Knowledge and Support

Consider these practical steps:

• Enroll in free workshops offered by organizations like Bangko Sentral ng Pilipinas
• Use budgeting apps that make financial management more accessible
• Join peer groups where you can discuss financial goals with a financial advisor and stay accountable

As JA Malta notes, workshops that teach budgeting and goal-setting can significantly empower participants to overcome financial literacy gaps.

5. Practice Emotional Regulation

Replace emotional spending with healthier stress-relief activities:

• Exercise or meditation when you feel the urge to shop
• Institute a 24-hour "cooling off" period for non-essential purchases
• Create a list of free or low-cost activities that bring you joy

Ramon, a 29-year-old teacher, transformed his finances with this approach: "Whenever I feel stressed, I used to immediately browse online shops. Now I go for a run instead. Not only has my savings grown, but my physical and mental health have improved too."

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Moving Forward: From Struggle to Strength

Financial well-being is a journey rooted in self-awareness, education, and consistent action. By addressing the psychological and behavioral factors underlying your financial challenges, you can transform not just your bank balance but your entire relationship with money.

Remember, your financial future is shaped not just by your income, but by how you think, feel, and act. Small, consistent changes today can lead to transformative outcomes tomorrow.

At Finmerkado, we believe that better financial choices start with better insights. Take the first step now: identify one money habit that might be holding you back, and challenge it with a new perspective. Your path to financial freedom begins with one insight, one new habit, and the courage to believe that it’s never just about the money.

References:

1. Integrative Psychology – Money Mindsets: The Psychological Influences on Financial Decisions
2. Investopedia – Behavioral Finance
3. Psychology Today – Understanding the Psychology of Money
4. Bangko Sentral ng Pilipinas – Financial Literacy Program
5. JA Malta – Financial Behavior: The Psychology Behind Your Money Decisions

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