I could write all day on the topic of people’s psychology surrounding money. Perhaps this is because I have been in business for a while … over 20 years. In that time, I have controlled squillions of dollars. I have seen how even the topic of money makes people squirm. Sales representatives may love to show their product, but when it comes time to ask for the money, it is the scary and uncomfortable moment of “yes” or “no”. Money is a top cause of divorce, and yet, seldom the top cause of happiness. I can say these things about money and back them with statistics, and I can say them from experience, because I demystified it by making a ton of money. I have earned money at rates that would make some countries jealous. I have also lost money at rates that would make most people leave a pucker mark in their seat. I know both sides of the money deal. I also know that overcoming money and doing great things for great purposes and putting the fears away can create even more joy, inspiration, and success than chasing the dollar. I even wrote a great (of course I say “great”) book about creating joy and inspiration. No, I didn’t write it for the money, either.
Basics of Money and Psychology
So, let’s look at the basics first: A business needs money to survive. They use their money to create more money. Of course, without money, a business cannot survive. Tragically, when left to their own devices, many businesses will focus more on what they sell, and forget to properly address this one essential fact: Every decision about money is made by a person. Even decisions coming from the most brilliant boardrooms and teams of financial experts still come down to people. They make decisions the best they can based on information, and some of the most important information comes from their experience. This means that their psychology plays an enormous role in whether they decide to do business with you or not. Regardless of the job role, whether it is as a spouse, executive, or etcetera, they rely on their decisions to please themselves and / or others around them. Making the wrong decision of buying from your company could come in the way of the things they seek. Are you surprised? Probably not, but how much do you consider this in your marketing?
The topic of psychology of money came to mind while I was on the phone with my wife as she was driving home from taking our kids to her parents home for a visit. Our kids will spend about a week with their grandparents, as they do each summer. They will catch toads, get muddy, and ride horses. We will miss them very much, but it is a great adventure for them.
We got to talking about the years we have spent together and the ways our upbringing still influences our companies. We will soon celebrate our eighth wedding anniversary, and we have spent nearly every day of the last ten years together, working, playing, and raising our family. We talked about the way her parents once really doubted our decisions and our ways of being self-employed and owning multiple companies. When we merged two of our companies back in 2001, I recall her parents liking me and hating me at the same time. We spent every dollar we had to build a business and create something big for our future. Her parents have always worked for companies and had a great sense of security from that. They raised their daughter (my wife) to think that way, too. They often did not understand our ways of sacrificing today for tomorrow, and the struggles it would require. I understand how a parent thinks. I have three kids. I want good things for them and I want them to always be secure.
It made me think of two dramatically different psychological approaches to money. There are the kind like them, who feel more secure with other people’s decisions about money. The company will handle all of the money, and they will give the employees their cut, in the form of a paycheck. Then, there is the kind who run the companies, make hard decisions about money for other people, and have what some would consider a risk taker mentality. I was raised by entrepreneurs who never understood the idea of having a job. It rubbed off, and I think working for somebody as an employee would be about the scariest thing. Actually relying on the mood or means of a boss to feed my family spooks the heck out of me. It seems to me that either approach has its risks. Either has its long term and short term advantages and disadvantages. I think most people live their lives in a safe space somewhere between my wife’s parents and my parents. They find a comfort zone that keeps them feeling good.
Companies have had a lot of shake-ups in the last couple years. People are doing jobs they never expected to do. Many have entered business ownership against their will or their plans. Markets have changed, and jobs are scary … self-employed or otherwise. Many people react with more caution than ever, and it is hard to call them “wrong” for this. Much of the reaction in a marketplace comes from psychology, and when it involves money, there is sure to be a look-back into their upbringing and the things which made them who they are.
Be careful how you address these matters of money and psychology. You may have to justify your cost more than ever. You may have to develop a more meaningful call to action and a better value proposition. It will make your company stronger and better than ever. It will probably cost money, too. Don’t fight it when it is for your benefit.
