Lesson 2.2

6 steps to harness your ‘Financial EQ’


If you’re keen to invest and grow your money, learning to identify and harness your ‘Financial EQ’ is key.

Why? Because emotions play a key role in driving all our behaviours, including how we manage our money.

Your emotional intelligence (EQ) is your ability to effectively identify and manage your emotional states, be they happiness, sadness, fear or anxiety. Your ‘Financial EQ’ is your ability to do this when making decisions about your finances.

Most people think money is about maths, but really, it’s about behaviour. It’s what we do on a daily basis that drives our money outcomes – and our emotions play a key role. Do we engage regularly with our money and check our accounts, or do we stick our heads in the sand? Do we reflect on our purchases, or spend mindlessly? Do we set goals for our finances, or do we just feel too overwhelmed?

In a recent CommBank survey, 49% of Australians confessed to feeling ‘anxious’ about their personal financial situation, with anxiety most common for women (53%) and Aussies aged 18 to 29 (60%).

Indeed, anxiety was by far the most frequent ‘money emotion’ identified by Australians, followed by ‘frustrated’ (37 percent), ‘overwhelmed’ (33 percent), ‘content’ (25 percent), ‘angry’ (12 percent) and ‘proud’ (10 percent). Of course, there are many things that impact our personal finances that are outside our immediate control, such as the current cost of living, a job loss or relationship breakdown. If you need more immediate support, there are resources at the bottom of this article to assist. 

But in good times or bad, identifying what is driving our daily behaviours around saving and investing can be an enormously helpful step towards increasing our overall levels of financial resilience and fitness.


Hear more from Jess Irvine on understanding your ‘financial EQ’


Your money and your mind

Mental health is a key component of our overall health and wellbeing. But did you know your mindset can play an important role in your financial health too?

According to Beyond Blue’s financial wellbeing hub, financial health and mental health are intrinsically linked: 'Financial challenges can cause significant stress, which can impact our mental health and wellbeing. Similarly, the state of our mental health can make it harder to get on top of our finances.’ 

If you struggle with your mental health, seeking appropriate support and guidance via the resources listed at the bottom of this article could pay dividends for your finances too. 

No matter where we are on our financial journey, we can all benefit from thinking about the way our financial outcomes are affected – positively or negatively - by the ways we think, feel and act.

And how does that make you feel?

Psychologists have explored the way our emotional states drive our behaviours.  

Fear, for example, makes us turn away from something and not engage. Curiosity, by contrast, makes us want to explore something. 

So what drives our emotions? Turns out it’s our thoughts. Basically, there’s the world around us - the facts of our lives – and then there’s the thoughts that we hold in our head about that world, often subconsciously. Those thoughts in turn drive our emotional states, such as fear, joy or sadness. And it is these emotional states that drive our behaviours, and in turn, our financial outcomes.”

How our thoughts drive our emotions

You can see how this chain of causation can play out in a negative way. If, for instance, you think money is a scary topic, that may make you feel scared, overwhelmed, ashamed, anxious and that’s going to drive money avoidance behaviours. 

But we can harness the chain of causation and turn it in our favour.

We can experiment with thinking, for example, that money is a powerful tool. We can use this tool to build a life we want. We can encourage the thinking that there are steps we can take to feel more in control of our finances, that no one is inherently ‘bad’ at money. Some of us just need to learn a little bit more about it.

These more positive thoughts are going to drive you down a better path when it comes to feeling good about your money, and when you feel good about your money, you’re going to do better with your money. 

So how can we reframe our money mindset and boost our Financial EQ to not only feel better but experience more positive financial outcomes?

Pump up your Financial EQ

1. Identify your money thoughts

A simple exercise to get you started is to simply get a piece of paper and pen or open a notes app in your phone and write ‘Money is…’ at the top.  

Then write out a list of all the sentences that come to mind.   

Perhaps you’ll write that money is ‘...a source of stress in my life and my relationships’. Or that money is ‘...something I don’t understand’.

These are your ‘money thoughts’ or what you think about money. Go on, give it a try! Just go with the flow and try to come up with at least three.

2. Identify your money emotions

Take a moment to read those sentences and notice in your body how they make you feel. Do those sentences make you feel stressed? Anxious?  

Or, if you have unearthed some more positive thoughts around money, do they make you feel optimistic? Curious? 

If you struggle to identify your emotions, it can help to look at something called a ‘feelings wheel’.  There are many free versions available online you can discover by searching using the term ‘feelings wheel’.

Noticing any uncomfortable thoughts and emotions that arise for you around money is the first step to reframing them.

3. Experiment with a new thought

So how do we reframe unhelpful thoughts and emotions about money? 

One way is to go through your list of money thoughts and simply write those sentences out in the reverse.  

So, if your thought is that ‘Money is a source of stress in my life’, try to flip it and reverse it, for example: ‘If I invested some time learning about my finances, I could feel more in control’.  

Crucially, you don’t have to believe what you write – yet. You just have to go through the process of experimenting with what an opposite thought would feel like.

4. Take action

Once you do have some more positive thoughts about money, it’s about putting them into action.  

This could mean checking in with your accounts, being more mindful when you spend, or engaging with financial education books or podcasts. And these are the daily behaviours that will help drive good financial outcomes in your life.   

It can help to make a list of more helpful money thoughts and stick them on the fridge, or repeat them every so often, to keep you on track. 

5. Remember you can grow

The most important thing to remember when it comes to your money mindset is that everybody can improve their relationship with money.  

It’s called having a ‘growth mindset’ – a phrase coined by psychologist Carol Dweck. A growth mindset, in this context, just means recognising that nobody is inherently bad with money. It’s just a skill set we all need to learn. 

It’s about engaging with our finances and implementing those small daily habits that are going to move you towards your larger financial goals.

6. Seek support

That said, some financial issues and barriers are too big to overcome on our own. If you are struggling with your money, reach out for support. 

If you are struggling to pay bills, reach out directly to the hardship divisions of your utility or credit providers. They can discuss the possibility of repayment holidays or altered repayment schedules with you. 

If you need more support to manage your debts, you can call the free and confidential National Debt Helpline on 1800 007 007. They can connect you with a network of free financial counsellors. 

Mental health support is also available 24 hours a day from Lifeline on 13 11 14 and Beyond Blue on 1300 224 636


Congratulations, you’ve completed this lesson!

Next lesson: 2.3 - Boost your ‘Financial IQ’: Aussies’ most common money goals revealed… 

Things you should know

  • This page provides general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as personal financial product advice. As the information has been provided without considering your objectives, financial situation or needs, you should, before acting on this information, consider if it is appropriate to your circumstances. You should also consider whether seeking independent professional legal, tax and financial advice is necessary.