How Words Fuel Money Decisions

I recently had a conversation with an individual that completely demotivated me. It hit my confidence so hard that I put off executing a project I was working on.

Since it was a friend, I mustered up the courage after a month to let her know. Her reaction surprised me. She was profusely apologetic and said that she never meant to convey what “came out of her mouth”, and went on to say that she always felt that people never paid much attention to what she said, so she was very callous with her words. She ended with, “I never realised you would take my words so seriously”.

A few days later, a Mumbai-based professional, Ashish Verghese, posed these questions to a group of us on a Sunday, “Whose words do you pay attention to? What are the words you are saying to yourself?”

Ashish’s context was that we are constantly listening to words, but what is grabbing our attention? Are we listening to the words of our enemies or of our friends? Are we paying heed to the words of cynicism, pessimism, or encouragement? Are the words of gossip filling our heads or the words found in scripture?

We underestimate how impactful words can be. Words are powerful tools that shape our thoughts and fuel our emotions, and these emotions propel our behaviour.

I was so deeply challenged that I decided to dig deeper. When I told Ashish that he inspired me to write on this, he was the most amused. So I can’t wait for him to see this post.

A caveat though: my context will not be self-esteem and self-worth, but about money issues (obviously).

Having Money Conversations With Family

A few years ago, a financial adviser, on a social platform, invited people to ask questions. A young man presented his case. His fiancée doesn’t want to save and wants to live it up. On the other hand, he wants to save for their future but ends up giving in to her. As a result their savings are abysmally low. How must he break this impasse?

The adviser asked him why, according to him, did his fiancée think so differently.

He explained how she stood by him when he had nothing, and now when both are doing well, she felt that they could afford to live the life they were denied earlier. So why not?

The adviser told him that he needs to convey to her that saving for a future together is also living the life they were earlier denied. That saving money for stability is as important for their future as splurging.

The goal of saving is to feel secure while simultaneously enjoying the freedom and opportunities that money can provide. For instance, keeping money aside gives the freedom and the luxury to walk away from a toxic work situation.

In retrospect, it was my very first exposure on how one can control a conversation and the vibe by using right words. The advisor completely refrained from judgement and gently listened to him. She then encouraged him to approach the conversation in a non-combative tone and use collaborative words. Let me explain this approach with a few examples.

AVOID: Why do you save so little?

TRY: Could you share what’s holding you back from saving more?

AVOID: Why do you want to retire so early?

TRY: To get the best out of your move, you should have complete clarity on what exactly it is that you want to retire from.

AVOID: Why do you hate equity?

TRY: I would love to know what really makes you stay away from equity when it’s an asset class that builds wealth and helps beat inflation.

Can you see what has happened here? The word “why” has been completely replaced by could, should and would. On the face of it, there won’t be much of a difference. But you should understand that at the subliminal level there will be a tectonic shift in how the other individual is responding to you and how they are perceiving you. Words make or break the entire conversation.

Money is a very sensitive issue. No matter who is on the other side of the table, people get defensive when it comes to conversations about their investing, saving and spending habits. Don’t further exacerbate the situation by making it a bone of contention in the family.

When you use words like should, could, would—it appeals to the other in a relational mode. When you talk to them using “why”, it signals a transactional mode and a combative stance. The moment you are perceived as getting aggressive, the other will get defensive and the conversation ends up in a heated argument. The words you choose to frame the questions will go a long way in cementing the bond and understand where each of you is coming from.

Request information, do not demand it. Be collaborative, not combative. Engage, don’t talk down. Force the other to dig deeper without appearing intrusive.

Having Money Conversations With Yourself

What if the market crashes abysmally this year? What if inflation soars to double digits? What if the tariff wars lead to global chaos? What if?!

How do you manoeuvre your cataclysmic thinking? By not focusing on your money but on your mindset.

Dr. Jim Grubman, a neuropsychologist and financial expert, helps people have healthy financial mindsets. He has advised turning each “what if” into a “so what?” The goal of this is to face our fears and acknowledge that while hardship may indeed come, you are resilient, and you can survive the setbacks.

So don’t stop at “what if?”, but carry it to “Well, what if it does?” Is there anything you can do about it? Won’t you continue with your investments? Do you need to reconsider your investment strategy? Do you want to change the spending pattern?

This way, instead of wallowing in the fear of a vague “what if”, you think about what is in your control.

A 2013 UCLA study on “The Effect of Language on Economic Behavior” revealed that who speak languages with strong future tense do not save as much money on an average as those who use weak future tense.

English is forceful with the use of past and future tense (It will rain tomorrow), while Chinese has a weaker future tense (It rains tomorrow). The researchers suspect that if the present and the future are starkly separate in one’s wording, then the feeling of cohesion between present actions and future rewards may also weaken. To apply this practically, instead of saying, “I will rebalance my portfolio in April,” rephrase it to “I rebalance my portfolio every April.” This mental trick becomes a commitment that will nudge you to follow through.

Use Words For Your Benefit

Behavioural scientists are learning how the subtleties of language affect the way we make money decisions. It is no secret that the words we hear have a strong impact on our life. But the way we speak to ourselves is equally important.

By Larissa Fernand, Behavioural Finance Expert