The Psychology of Wealth: Understand Your Relationship with Money and Achieve Prosperity

UPDATED: May 14, 2024
PUBLISHED: March 15, 2013

Whatever you think you can do, or believe you can do, begin it. Action has magic, grace and power in it. —Johann Wolfgang von Goethe

In my many years as a practicing psychotherapist, I have met, counseled, and learned from people in a wide variety of financial situations. Through listening to people from affluent executives who live like pashas to workers who live from paycheck to paycheck, I have been privy to the cares, woes, and joys of having and not having much money.

As an executive coach and trainer, I have worked with many well-to-do clients, some of whom simply are not comfortable in their financial skin. Their relationship with money is fraught with the fear that their riches may disappear or that they will be exposed as impostors. Before I worked with these people, I had assumed that it was perfectly natural for people with meager financial resources to worry about money. But why were these well-off individuals not feeling the psychological benefits of their enviable position? And what about my associates and friends with very modest means who were confident, happy, and secure about their finances? These fortunate souls seemed to share a sense of comfort and control in their relationships with money. In short, they led rich and rewarding lives without having many “riches” in the conventional sense.

I wondered: What’s the difference? Why do people of many different financial stripes feel a perpetual state of lack and fear about money, while others, also found across a wide spectrum of financial situations, feel genuinely prosperous? In short, why do some people possess what I had come to see as a psychology of wealth, no matter how financially wealthy they may or may not be? I also wondered whether deeper traits or habits are common to this psychology of abundance and whether they can be learned. What can people who have created lives of a more encompassing wealth teach us, if anything?

I had been casually pondering these questions when the economic crisis hit in 2008. Against the backdrop of a faltering national and global economy, my questions about financial confidence and empowerment became more pressing. Like many people, I was troubled by the state of the economy and its impact on my neighbors’ lives. I was concerned about the implications of runaway debt, the loss of so many homes and jobs, and the collapse of trust in our financial institutions. Suddenly, what had looked like the perfect environment in which to gain wealth and to create a better life was being exposed as a house of cards. As a citizen, I wanted to know: how did we get into this mess? And as a psychotherapist, I wanted to discover: how might we, as individuals, get out of it? How could we climb out of the frightening morass of poor choices and gloomy prospects that, in many ways, seemed to be beyond our control? At least part of the answer seemed to lie in understanding our individual and collective psychology concerning finances. And so I considered what more I could learn about a psychology of wealth that would help answer these questions—that is, how did we get here, and how could we move ahead with more hope and confidence?

I began to investigate this psychology in earnest. I started reading, and I started seeking out people who displayed a healthy relationship with money. I wanted to find out what they know about prosperity that many of us do not. How do they think, and what do they do differently? I interviewed people who seemed either to intrinsically possess a psychology of wealth or to have acquired one. I also spoke with finance professors, legislators, consultants, and credit counselors. I traveled to seminars and attended press conferences, where I listened to people who have been affected by the economic downturn. I talked with owners of booming international businesses, people with limited resources who have created balanced lives, and people who dedicate their days to nonprofit organizations and feel prosperous in their personal choices. In other words, I looked for people who I felt might hold a clue. Their wisdom and stories are the heart of this book. From these stories, a picture of a wealth psychology began to emerge. In it I saw fascinating elements of self-esteem, responsibility, risk taking, achievement, and determination. I also learned how people with a wealth psychology deal with obstacles and setbacks. I observed how they approach giving to others from a sense of gratitude and also intuitively sense that giving is part of their own forward momentum. And in the stories of folks who either choose or are forced to restart their lives, I found heartening lessons about the near-infinite capacity of human beings to adapt and thrive.

One aspect of the global economic crisis that continues to play a central role for both individuals and the economy is debt. Debt is getting a great deal of press and is at the forefront of many discussions; the subject stirs both argument and anxiety. I knew that looking at debt would be key to understanding a psychology of wealth. Among the most unexpected things I learned is that, while debt has recently been the undoing of some homeowners and consumers, many people who use credit regularly are not in trouble. On the contrary, I learned about ways of borrowing that are helping people move ahead, both materially and psychologically. And so I dug deeper. I learned that debt, while much maligned, has actually been a major engine of growth, progress, and prosperity throughout history. For both individuals and the economy, debt, when used wisely, has been, and can be, a good thing. What appears to have gotten us into trouble, both individually and collectively, is behaving unconsciously. In many ways, we have fallen into a kind of inattentiveness in our borrowing and spending, unhitching these activities from broader goals, achievement, and genuine advancement. Perhaps not surprisingly, in people with a healthy psychology of wealth, I found habits of spending, borrowing, and—most important—living consciously. It is these habits of consciousness that seem to hold the secret to turning even the most limiting circumstances into psychological and material gold.

Today there is vigorous public debate about how we should and shouldn’t spend, invest, save, and borrow. Financial advisors, economists, and entire governments take positions on how we should use our money. In writing this book, I have tried not to add another financial strategy to the conversation, but instead to share answers to the question of what it takes to create an inner sense of abundance and meaning in our financial lives. These answers provide tremendous optimism about our prospects. The people whose stories are gathered here have a great deal to tell us about how we can prosper and achieve wealth in the fullest sense of the word. As Goethe said, “Action has magic, grace and power in it.” Creating our own stories begins with action—with the small steps and seemingly small choices that we make each day. Once you begin, each step can be golden, and the next step is right in front of you.

Excerpted with permission from The Psychology of Wealth by Dr. Charles Richards. Copyright 2012. Published by McGraw-Hill.

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