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Does Money Affect How You Feel about Your Identity?

We like to say that it’s not really about the money, and that we don’t need money to feel good about ourselves. But could money-related items have a bigger impact that you think on how you identify yourself, and how you feel about yourself?

Think about it: Whether it’s the things your money can buy, or the work you do to earn money, your identity is likely wrapped up in money-related tasks.

How You Earn Money and Your Identity

The work we do often becomes our identity. When someone asks you what you do, your first impulse is often to give your job description. The way we earn money has a lot to do with identity, and how we feel about ourselves. Think about the way you make money. If you feel good about what you do, and if you feel like you are making a positive difference, chances are that you like your job and feel good about who you are and what you do.

But it’s not just about your job. Unemployment can have a huge impact on how you feel about yourself. In fact, when you lose your job, you might feel suddenly lost, not knowing who you are. A few years ago, The Economic Journal published a study that was quoted in the Gallup Business Journal [3]. The result? Unemployment could be the only major life event that people don’t recover from within five years. You have a better chance of recovering from the death of your life partner [4] than you do of recovering from a bout with long-term unemployment. That should tell you something about the way most people tie their source of income to identity.

The Institute of Economic Affairs [5] recently released a paper that examines the issues related to retirement. One of the things discovered is that health — mental and physical — goes downhill after retirement. With so much of who you are tied up in your career, it could be a real problem when you leave it behind and have nothing with which to replace it.

How You Spend Money and Your Identity

The you spend your money can also influence how you feel about yourself. Think about some of the ways you identify yourself in terms of spending. Do you identify yourself as frugal [6]? In recent years, it’s become fashionable to be frugal, and show your ability to save money. While my husband and I aren’t into penny pinching, and few would call us frugal, my husband is quite proud of his ability to find a good deal. This is part of his identity, and he feels good about it.

Another consideration is how we attach status to money and to the things that money can buy. Recent studies indicate that having debt can actually lead to greater confidence [7] in young people, since the debt spending allows them to have the gadgets and other items that grant them status — or at least inclusion in a particular in-group. Even spending money on travel can be a status thing, and help you build your identity as an adventurer, or a nomad, or a beach bum.

Stop and think about how you would feel without money, or the ability to spend on certain things, or how you would feel if you lost your job? Would you feel like a piece of you is missing? Is your identity tied to money more than you realize?

(Photo: Tax Credits)