(Written By Katie Momo)

Highlights:

• How to stop subconsciously beliefs from unknowingly driving your financial decisions
• If ‘financial freedom’ feels too overwhelming or unattainable, aim for this instead
• How to ease the emotional rollercoaster of investing

⭐️GIVEAWAY! ⭐️

You could win a free copy of the financial mindset book, Everything But Money!

Just 2 things to enter:

1: “Like” Passiv’s Facebook page

2: Share your love of Passiv by leaving a Facebook review

Winners will be announced January 27th, 2025 on our Facebook page!

I’m dyinggg to get my hands on a copy of Jessica Moorhouse’s new book, Everything But Money. (It’s out on December 31st!)

You probably know Jessica from her top-rated podcast, More Money.

If you like The Psychology of Money book or Money Feels podcast, this is right up your alley.

It dives into all the “other stuff” that gets in the way of our finances - emotions, social conditioning, barriers, and what we learned from family.

Here’s how this affects us as index investors…

Can subconscious beliefs unknowingly cause people to make bad financial decisions?

There are 8 biases and behaviors that, if you’re not aware of them, can end up running the show. And this can be bad news for your finances.

When you give into them, that’s how you end up feeling emotionally dysregulated and anxious - and emotions take over. and logic goes out the window.

That’s when mistakes happen.

A classic example of this is herd mentality, where someone sees other people buying a stock and they feel like they’ve got to get in on it too.

We’ve all been there - you think, “Wow, everyone’s making a lot of money on that stock!”

Suddenly someone finds themselves abandoning their solid investment plan and index portfolio because they saw people on YouTube talking about some ‘hot stocks’.

How does unresolved trauma show up for even disciplined investors?

A lot of people don’t associate money with trauma, but financial trauma is VERY real - and can affect you in surprising ways.

There are 2 main types, and most people wouldn’t even consider the first one…

Personal trauma

This can come from any kind of traumatic experience - something you’ve lived through, witnessed, or even just heard about.

It doesn’t have to be a big event, either. It could be something small, like getting bullied in school.

Trauma lives in your body until you’re able to heal and work through it, and it can sneak into your financial decisions.

If you’ve ever treated yourself to “retail therapy”, you know what I’m talking about!

Of course that term is kind of a joke, but there’s actually truth to it.

When you’re triggered by something that reminds you of your trauma, you find ways to self-soothe.

And this can be pretty disastrous financially - we might go on an unintended shopping spree, or sell off stocks we should've kept.

Basically if you ever find yourself realizing later and moaning about “What did I do?!”, this might be personal trauma showing up in your finances.

Financial trauma

This is trauma that’s directly tied to money.

Maybe you saw your parent’s business go bankrupt, or your family struggled after a layoff.

For me, I still remember when my dad was laid off during a strike in the ’90s. We had to adjust our family budget and shop at a different grocery store.

It was a scary time and, even now, that memory has stuck with me. I lived in fear of losing my job for years, all because of what I saw growing up.

Financial trauma doesn’t go away on its own - it shows up when you’re triggered, even by something as small as a conversation. And suddenly, you’re making decisions out of fear or anxiety without realizing it.

How to break the cycle

First, understand that financial issues can be symptoms of something deeper that has nothing to do with money.

(Your self-soothing mechanism might not even be money-related… like maybe you scarf down a bag of chips when things aren’t going so well.)

That big splurge? It could be because you got into a fight with your mom, and that argument ties back to childhood wounds.

Practical strategies to free yourself from the vicious cycle:

• Get regulated - Work on staying in a calm, connected state. If you’re making financial decisions while emotionally dysregulated, they probably aren’t the best ones for you.
• Recognize patterns - Start asking yourself why you’re making certain decisions. Are you trying to soothe yourself or avoid something?
• Get help - Sometimes, working with a therapist or a financial coach who understands emotional and financial trauma can help you gain clarity and heal.
• Put systems in place - Create rules or automations that take emotion out of decision-making, so you don’t have to rely on willpower in the heat of the moment. (Like sticking to your index investing plan!)

How can we avoid knee-jerk money decisions?

Understanding your behavior and spending habits helps you avoid emotional decisions, like panic selling during a downturn.

Sometimes it’s about that herd mentality - you see everyone else doing something, and you don’t want to feel like you’re missing out.

Other times it’s just reactive. You see your portfolio going red and think, I need to sell.

That kind of reaction can be a symptom of something deeper.

Maybe you took a risk you shouldn’t have taken in the first place. If that’s the case, the question to ask yourself is, Why did I do that?

Or maybe you panicked because you don’t trust yourself or your strategy. You’re thinking, I made a mistake. I’m so dumb. I should just sell.

But that’s not the right mindset.

Instead of jumping to conclusions, you need to pause, consider your overall strategy, and ask yourself, What’s really going on here? Should I keep it? Should I sell? What makes the most sense?

By understanding your habits and behaviors - why you react the way you do - you can start making more intentional decisions.

It’s about recognizing those emotional triggers and slowing down so you don’t act on impulse.

That’s why it’s so important to have your index investing strategy outlined so you stay on track, no matter what market or emotional drama comes up.

How can we be less emotional with investing?

The beauty of index investing is that it’s already designed to help you stay logical and unemotional.

There are only a few steps to follow: buy more shares, rebalance when needed, and stick to the plan. That’s it.

It’s straightforward, and that simplicity makes it easier to avoid emotional reactions like panic.

If you had an active portfolio, you’d constantly be tracking individual stocks, making decisions, and second-guessing yourself.

It’s so much easier to feel overwhelmed because there’s so much going on.

But with index investing, it’s almost like the strategy itself discourages you from overthinking or obsessing.

You’re told, “Don’t touch it. Just let it do its thing.” That philosophy helps you maintain a level head and keeps emotions out of the equation.

For anyone wondering how to be less emotional as an investor, my advice is to pick a strategy that aligns with that mindset.

Index investing does this so well - it simplifies everything and reduces the need to make emotional decisions.

And I love it because it works. It’s logical, it’s effective, and it makes it so much easier to stay focused on the long game.

How can your book help investors stay disciplined for the long haul?

The key to staying consistent is clarity - knowing who you are, what you want your relationship with money to be, and what you truly want for yourself.

The title of my book talks about financial freedom, but inside I talk about financial fulfillment.

Here’s the thing: financial freedom feels like this huge, overwhelming goal - like you need to have SO much money to quit your job early and live this perfect, carefree life.

For a lot of people, that’s unattainable or even unrealistic.

But financial fulfillment? That’s about reaching a place where you’re satisfied with your goals - buying a home, retiring in your 60s, traveling, and living a good life.

At the end of the day, that’s what most people want - and it’s attainable!

Money is a tool to help you reach fulfillment. It’s not the end goal itself.

Happiness doesn’t come from money, but from how you use it to support what truly matters to you.

Index investing fits this philosophy perfectly.

It’s about keeping things simple and boring - just sticking to the plan, ignoring trends, and not getting sidetracked by what others are doing.

You don’t need to chase the next hot stock or worry about what someone else looks like they’re doing on social media. You’re on your own path.

Remember the tortoise and the hare? Be the tortoise.

Slow and steady wins the race, especially when it comes to investing for the long term.

If you can focus on your own version of fulfillment and stay true to that, it’ll be much easier to ride out the ups and downs of the market without losing sight of your goals.

What money myths should index investors let go of?

Unlearning is a big part of making progress with money.

In the book, I include exercises to help you think about things you’ve never considered before.

If you find yourself repeating the same financial habits and wondering, “Why do I keep doing this?”, it’s usually rooted in things you learned growing up - whether directly or unconsciously.

Recognizing those patterns is the first step to changing them.

For example, I was an index investor before I even knew what it was.

I first started investing with ING Direct using their index mutual funds.

But they were an online bank that nobody trusted at the time.

I assumed I was missing out, so my husband and I switched to actively managed mutual funds at RBC because it felt like the “grown-up” thing to do.

That decision didn’t feel great. I was self-conscious, unsure of the terminology, and uncomfortable talking about finance.

I realized I was just following trends or doing what I thought I was “supposed” to do because my parents did it.

I had to unlearn those assumptions and deal with the shame of not knowing certain things about investing.

I also had to let go of the idea that it was too late for me to start.

What helped me the most was education.

I’ve found the best way to combat feelings of inadequacy is to acknowledge what you don’t know, and make a plan to learn.

Once I dove into books and resources, I discovered that index investing was the best fit for me.

Listen - Don’t assume you’re behind or that you have to follow someone else’s path.

Educate yourself, let go of the shame, and focus on finding what works for you.

For many people, index investing offers that straightforward, no-fuss approach, but getting there might require unlearning what you thought you knew about money.

How does index investing help break down systemic barriers to wealth?

One of the things I love about index investing is how accessible it is. It really levels the playing field.

When robo-advisors came along, I thought, “This is amazing!” because they gave people who weren’t necessarily ready to be self-directed investors a way to start index investing.

Before robo-advisors, your only real options were to do it yourself or go to an advisor, who would likely push you into actively managed funds.

Robo-advisors changed that by making it easier, cheaper, and more approachable for everyone.

It’s become much more accessible for self-directed investors.

You don’t have to pay high commissions anymore because discount brokerages offer no-commission trades.

For example, I use Questrade where ETF purchases are free, and ETFs themselves are so affordable. You can start with as little as $30 or $40, which is incredible!

Compare that to buying individual stocks, where you might need $200 or more for just one share. With ETFs you;ll own a portion of a bunch of stocks and build a diversified portfolio.

That’s why I think index investing is one of the most accessible ways to invest, regardless of your income level or background. It’s a great way to bring more people into the world of investing and help democratize wealth.

How can improving our money mindset improve our relationships?

Your relationships with everyone - whether it’s your partner, family, or even friends - can improve once you have a better relationship with money.

Sometimes people use money as a way to create distance, like if they have an avoidant attachment style. They might put up walls by controlling finances or keeping things separate.

But when you work through those personal issues with money, you stop playing those kinds of games, which can make a huge difference in how you connect with others.

When you feel more secure and less ashamed about money, you’re more likely to have honest conversations about it.

That vulnerability can actually strengthen your relationship because it builds trust.

Talking about finances as a team instead of “your money, my money” can shift the dynamic. The data even shows that when couples work together financially, they’re more successful in the long run.

Every couple is different, and how you handle money depends on your situation and what works for both of you.

For example, my husband and I kept our finances separate for years, even after we got married.

Looking back, part of that might have been tied to my own avoidant tendencies - I wanted to protect myself in case things didn’t work out.

Especially as a woman, I felt it was important not to be financially dependent. But in a healthy relationship those fears should be addressed through honest conversations.

Understanding your “money story” and how attachment styles influence behavior can help you and your partner approach finances in a way that supports both your goals and your relationship.

What’s the first step to improving your relationship with money?

If you’re feeling a bit overwhelmed after reading Everything But Money and wondering where to start, I suggest keeping it simple.

Begin by asking yourself a few reflective questions, like:

• How does money make me feel?
• What was money like when I was growing up?
• Was it a positive or negative presence in your life?
• How was it talked about?
• Were there ideas about money you picked up as a child that you might still be holding onto - even if they no longer serve you?
  

There’s an exercise at the start of the book where you explore your very first money memory.

It’s a great way to pinpoint where your relationship with money began.

For me, it started when I was 4 years old and got caught stealing a gumball at the grocery store. My mom was furious, and understandably so - I was stealing!

But that moment stuck with me because it was the first time I associated money (or the lack of it) with shame.

That feeling of shame became a recurring theme in my money journey, and recognizing where it all began helped me start untangling those emotions.

And there’s so much more in the book

If this was helpful, it's just a taste of what I cover in Everything But Money.

Plus, keep your eyes peeled for a book tour starting in January 2025!

Ready to put these insights into action?

As Jessica points out, index investing is one of the best ways that anyone can invest.

And we make it even easier!

With Passiv’s “one-click magic” you’ll invest and rebalance at the touch of a button.

See how Passiv can help you!

⭐️GIVEAWAY! ⭐️

You could win a free copy of the financial mindset book, Everything But Money!

Just 2 things to enter:

1: “Like” Passiv’s Facebook page

2: Share your love of Passiv by leaving a Facebook review

Winners will be announced January 27th, 2025 on our Facebook page!

“Everything But Money” Giveaway Terms & Conditions

1. Eligibility

• This giveaway is open to individuals who:
  • Like Passiv's Facebook page
  • Leave a review for Passiv on Facebook
• Participants must be 18 years or older and reside in Canada or the United States.

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• To enter the giveaway, complete the following steps between December 6, 2024, and January 26, 2025:
  1. Like Passiv's Facebook page
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• Only one entry per person will be considered.

3. Prizes

• Three (3) winners will each receive a copy of Jessica Moorhouse's book, Everything But Money.
• The prize is non-transferable and cannot be exchanged for cash or any other item.

4. Winner Selection

• All eligible entries will be entered into a randomizer.
• Winners will be selected at random and announced via a Facebook post on January 27, 2025.

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