Welcome to all things finance. I will be writing monthly to discuss a range of financial topics including terminology, options, and strategy.
You can expect segments on budgeting, credit, vehicles for retirement savings, qualified vs. non-qualified funds, tax implications, risk tolerance, investing, compound interest, and the zero floor.
If you can’t make heads or tails of all the acronyms, 401K, 403B, IRA, TSP, ROTH, you are not alone. Understanding the lingo and what these various products do will give you a head start on your journey to financial wellness.
We will tackle the financial psychology that shapes our views and attitudes about money. Financial psychology is the study of beliefs about money and how it influences behavior.
Why is this important? The deep-seated financial beliefs established in earlier years drive our financial decisions and habits.
How our beliefs about money develop fit into four categories.
1.) Developmental. Our beliefs are influenced and shaped by our upbringing. Our parents’ behavior and beliefs often become our own.
2.) Generational/ intergenerational. Behavior & beliefs about money are passed down from one generation to the next.
3.) Societal. Beliefs about money are influenced by the people we hangout with, friends, coworkers, and neighbors.
4.) Systemic. Beliefs about money are influenced by our socioeconomic status, race ethnicity, gender, etc.
We can function from an abundance or a scarcity mindset and that depends a lot on whether we have experienced financial trauma. Financial trauma results in signs that show up in our behavior including financial avoidance, overspending, underspending, and lack of financial boundaries.
As we move through the topics I’ve outlined we will discuss how financial psychology impacts our decision making. Come back for more in the next issue of FireWatch.
___________________________
EDITOR’S NOTE: Sara Bachelder is a retirement planning specialist trained under Shirley Luu, a nationally recognized expert in financial planning. Sara provides personalized guidance on maximizing military retirement benefits, optimizing TSP investments, and integrating other sources of retirement income. Her goal is to empower veterans with the knowledge and strategies necessary to achieve true financial freedom.