Money, in its most literal sense, is just paper. Intrinsically, it holds no value; it’s a currency that makes it easier to exchange goods and services. It’s symbolic in this way, representing opportunity and flexibility. If you have money, you have options.
For many, however, income feels like a measure of self-worth. If you have a lot, you may feel like you have a higher status. Or, if you idealize the starving-artist trope, you may believe that your lack of disposable income somehow proves that you’re more creative and more able to stay true to your craft (you’re no sellout!). Either way, your earnings and identity are intertwined. And indeed, the link between salary and feeling successful may be hard-wired within you—a series of imaging studies from 2008 show that money and social values are processed in the same part of our brain.
“There is a natural biological basis for this association in how we are wired to be social creatures and to perceive ourselves as part of a group,” says Amanda Clayman, a financial therapist in New York City. And that, she says, poses a few problems. For instance, there will always be someone who has more money than you do; if that makes you feel inadequate, you’ll have a hard time finding peace. “What a tenuous basis for self-acceptance,” she says, “as well as a shaky foundation on which to build quality relationships.”
If you’re constantly comparing yourself to others, your identity is never truly stable.
Focusing on money can also harm our sense of well-being, Clayman says. People who use their net worth to judge their self-worth are often “unable to ever earn enough to truly feel good about themselves,” she says. Finally, because you’re constantly comparing yourself to others, your identity is never truly stable—it’s always relative to the proverbial Joneses.
The good news? We can overcome this wiring.
“When we work through our past programming and see that these feelings and associations are not some sort of objective truth, we can begin to let go of that baggage and find a healthier basis for our own self-worth,” Clayman says.
Interestingly enough, the money/identity intersection isn’t just about income—it’s tied up in how we spend, too. This financial concept is known as the Diderot Effect. Named after 18th century French philosopher Denis Diderot, it involves two main principles:
1. The stuff we buy is linked to our sense of identity.
2. If the stuff we buy doesn’t “go” with the rest of our stuff, we will continue to make purchases.
Diderot described this behavior in an essay, “Regrets on Parting with My Old Dressing Gown,” in which he describes a beautiful dressing gown (a robe, basically) he’s received as a gift. Diderot realizes that, compared to this new garment, all his other stuff is shoddy, so he replaces that stuff with new stuff to match his fancy-pants robe.
“I was absolute master of my old dressing gown,” Diderot wrote, “but I have become a slave to my new one.”
Centuries later, this behavior persists—which is why trading up to nicer clothes, nicer apartments, and nicer vacations seems so seductive. When we make purchasing decisions, we’re often making decisions about who we are as people (and you better believe advertisers are well aware of this).
But we actually aren’t summed up by what we buy. “Our financial resources are only a small part of our identity. As humans, we are also relational, emotional, physical, and mental,” says Christine Luken, a certified financial counselor in Kentucky. “We need to understand that the financial part of our lives is just a small piece of who we are.”
“The financial part of our lives is just a small piece of who we are.”
An imbalanced view can become problematic in a number of practical ways, too. If your identity is strongly connected to your sense of self-worth, it might be hard to start investing, for example, because you don’t want to risk losing your money and thus, your sense of value.
“If we confuse our identity with our earning potential, we may sacrifice our relationships and our health to gain more money,” Luken says. That includes our mental health. In a recent study from the University at Buffalo, researchers found that subjects who based their self-esteem on financial success experienced more stress and anxiety. They were also less likely to feel in control of their own lives.
Sound familiar? If so, it’s time to reprogram the way you think. “Identify concrete ways in which this mindset might be limiting you or holding you back,” Clayman says. “Are you not taking on fulfilling work because it’s not high-paying? Do you avoid or sabotage relationships with people because you feel ‘less than’?”
“I tell people to imagine that money is one of their friends, but not their only friend.”
But shifting your thinking isn’t as easy as just hitting the refresh button—you need to actively seek out a new code. “Actively seek out evidence that supports a different mindset,” she says. That could involve being around people who look at money from another perspective. “Spend time with the alternative mindset and you will start to connect with it and see more evidence of it around you.”
Or try this thinking exercise: “I tell people to imagine that money is one of their friends, but not their only friend,” Luken says. “We should strive to be financially healthy and spend quality time managing our finances. However, we need to make sure we’re not neglecting our other ‘friends’: our health, our education, our family.”
And remember, despite its symbolic property, money is ultimately just a tool. “Be mindful of your money,” says Luken, “but not obsessed with it.”