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Alex Melkumian

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Darks side of entrepreneurship: Embracing your emotions is your way to success.

Charisma, creativity and enthusiasm are some of the traits that can be used to describe entrepreneurs. The holders of a creative mind that view the world in a different perspective. While the description may be glamorous and fascinating on the surface and while it may be true, it also entails many challenges, and obstacles accompanies with negative emotions. However, there is no such thing as a perfect profession, let alone a perfect person. The importance lies in how we deal with these challenges and turn it into a learning lesson for future obstacles by healthily managing our own emotions.

The characterization of the entrepreneur’s shadow as “the dark side of entrepreneurship”, gives us an idea of how all the success and the money we may see is just the tip of the iceberg. Below it, the reality reveals itself in harsh yet authentic ways. Some aspects include, need for control, distrust for those around them, (Kets de Vries., 20), and the inevitability of failure (Leyes., 2020). However, these traits do not encompass the whole truth, as negative emotions are a large part of this gloomy aspect of entrepreneurship, which include fear of failure, stress, anxiety, loneliness, shame and incompetence. While these emotions are commonly seen among all in various professions, another aspect that adds another level of complexity is the mere fact that many entrepreneurs value money and profit over psychological factors. Whether it be addressing one’s emotions or actively engaging in self-care, management of personal psychological factors are crucial for both mental and physical well-being.

The duality of physical and mental well-being isn’t the only pair that is important when considering one’s healthy decision-making process. An informed decision, a decision aligned with one’s values and beliefs, can be made through the wise mind, which is a combination of the logical brain and the emotional brain. As per the name, the logical brain is located in the frontal lobe and is responsible for logical reasoning based on factual information. On the other hand, the emotional brain is in the amygdala which is responsible for the fight-or-flight response. Contrary to the logical brain, it takes into account our own current emotional state. The union and balance of these two decision making processes allow us to make the most optimal decision based on facts and grounded rationals while still acknowledging our emotions (Schenck.,).

Clearly, our emotions are not negligible in the decision-making process, while it is equally vital to prevent these strong emotions from overpowering the logical reasoning. Entrepreneurs with strong negative emotions may experience amygdala hijack, a state where the logical brain is unfunctional and the decision is made solely based on the emotional brain, leading to a downward spiral of decisions due to the lack of grounded rationals involved in the process. Arlin Cuncic suggests the best way to prevent this imbalanced process is to increase one’s emotional intelligence. Whether that be to practice mindfulness or managing your emotions, it’s the ability to acknowledge and integrate your emotions that allow us to make the best informed decision. A study by Vivianna Fang He, et al. examining the relationship between learning from failure and emotion regulation demonstrates that learning is more positive for entrepreneurs who can effectively regulate their emotions. More simply, it suggests that our emotional management affects the relationship between failure and learning. Furthermore, O’Shea et al. presents a similar relationship between emotion and action in their study where in addition to our current emotional state, our anticipated emotions also influence future behaviour. Whether it be positive emotion or negative emotion, they impact our behaviour in varying ways.

These negative emotions are inevitable. However, emotional management and emotional intelligence are something that can help us cope with it and learn how to integrate it into our healthy decision making. Our emotions may not be the mirror image of reality but it reflects our internal state, don’t ignore it.

References:

Kets de Vries, M. F. (2014, August 01). The Dark Side of Entrepreneurship. Retrieved January 27, 2021, from https://hbr.org/1985/11/the-dark-side-of-entrepreneurship

Leyes, K. (2020, June 17). 5 Things You Didn’t Know About the Dark Side of Entrepreneurship. Retrieved January 27, 2021, from https://www.influencive.com/5-things-you-didnt-know-about-the-dark-side-of-entrepreneurship/

Schenck, L. (2011, October 19). What is “Wise Mind?” Retrieved January 27, 2021, from https://www.mindfulnessmuse.com/dialectical-behavior-therapy/what-is-wise-mind

Fang He V, Sirén C, Singh S, Solomon G, von Krogh G. Keep Calm and Carry On: Emotion Regulation in Entrepreneurs’ Learning from Failure. Entrepreneurship Theory and Practice. 2018;42(4):605-630. doi:10.1177/1042258718783428

O’Shea D, Buckley F, Halbesleben J. Self-regulation in entrepreneurs: Integrating action, cognition, motivation, and emotions. Organizational Psychology Review. 2017;7(3):250-278. doi:10.1177/2041386617705434

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Could COVID positively affect your New Year’s Resolutions?

The most challenging year most of us have ever experienced—or ever will experience—has finally moved into the past. Its significant toll has left millions struggling to clear the financial and emotional wreckage in order to move ahead with their lives.  In the dawn of the New Year we have the opportunity for reflection, and a brief pause to contemplate resolutions and goals for the upcoming year.

 

Whether modest or ambitious, goals emerge from a personal vision of the future. Such visions are rooted in our core values. Whether built upon our own personal experiences or inherited from our elders, our values act as a compass, providing directionality to our lives; they shape our decisions, behavior, and the accompanying emotions. However, for many people, the psychological toll wrought by the pandemic has led to a questioning of basic values and beliefs.

 

Pervasive fear of an invisible, potentially deadly enemy was compounded by instability and economic hardship through loss of employment, decrease in income, and drastic measures undertaken to reduce spending. As the months of adversity persisted, sadness and hopelessness gave way to desperation. But the somber reality of financial privation was not the only source of difficult emotions. The challenges to our values and beliefs also worked to create negative emotions.

 

Our beliefs shape our reality through their impact on our behavior and the subsequent reactions of others (Breines, 2015). When new information or unexpected circumstances defy long-held beliefs, we experience the discomfort of cognitive dissonance. For example, for most Americans the traditions of gathering together to celebrate July 4th and Thanksgiving were disrupted in 2020 in the name of “social distancing.” Likewise, the annual year-end Season of Giving—during which charitable contributions and holiday gift-giving usually reach a peak—met with major reductions in personal expressions of generosity, originating in unanticipated financial duress.

The resultant dissonance causes a host of negative emotions including anxiety and shame. Our psychological health is adversely affected, as ensuing behavioral changes deviate further from our values, the negative cycle of emotions overpowering our decisions.

 

The disconnect between our values and behavior tests our ability to adapt to new situations and prevent internal conflict. An acknowledgement of our emotions’ role in this process allows us to address this discordance and create resolutions for positive change.

 

Dr.Christiane Northrup (2019) offers suggestions for reducing cognitive dissonance through simple changes in behavior. For example, although monetary donations may be difficult or impossible at this time, the decision to sort and donate old clothes and unwanted household items to a local charity may be one way to respect and align with the core value of generosity. Similarly, practices that hold the power to alter negative thinking include daily entries in a gratitude journal and deliberate mindfulness. Another beneficial exercise is to begin each morning with a clear and positive intention for the day, following up with determined effort to align behavior with that intention. Such practices derail negative thoughts and allow one to notice and appreciate the good in life.

 

The difficulties of “the new normal” may persist well into 2021. However, acknowledgment of our emotions and positive resolutions during the early days of the New Year may bring some peace and hope for the future, financially and emotionally.

 

References

  1. Breines, J. (2015, August 30). 3 Ways Your Beliefs Can Shape Your Reality | Psychology … Retrieved December 21, 2020, from https://www.psychologytoday.com/ca/blog/in-love-and-war/201508/3-ways-your-beliefs-can-shape-your-reality
  2. Northrup, C. (2019, January 22). 4 Ways To Reduce Cognitive Dissonance. Retrieved December 21, 2020, from https://www.drnorthrup.com/4-ways-to-reduce-cognitive-dissonance/

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Is your heart K-Shaped

What is K-Shaped economic recovery and how it relates to our emotional financial journey?

The world will at some point in 2021 try to recover from the COVID-19 recession of 2020. Already the economic analysts are predicting that this is going to be a K-shaped recovery. This is what happens when different sections of the economy experience different recovery rates, times, or levels. The opposite would be an even recovery across sectors or groups of people. What this means is we are in for more than just “getting back on our feet” together. The K-shaped recovery has an impact on economic structure of the broader society, fundamentally changing how we see ourselves as a society. It depicts the path that some parts of the economy will take, heading up, and then it also predicts different economic sections to experience and even greater downturn.

 

 

Image by Sabrina Jiang © Investopedia 2020

What you can see from this chart is that the recovering industries will create a disparity between those who work for them and those who work for the industries that are still in need of assistance. Friends who once were at the same economic level in different industries may suddenly find themselves at different financial levels than previously equal friends. The lower half of the K represents the decimation of not only entire industries, food and dining, events, hospitality, but the financial security they offered to millions of people.

My client who has worked in the fashion and clothing industry for the past 20+ years is dejected. Even prior to COVID19 that industry was barely surviving. Now with the pandemic, the company is practically on life support. Staff have been laid off, entire orders have been lost, and they are left wondering what will happen next. There is no sense of security a director’s position would normally offer you. Because of this work uncertainty, she has been struggling to keep her perspective and has been experiencing a whirlwind of emotions. On the one hand she considers herself to be lucky that she is still employed. If it wasn’t for a fluke that a major distributor was required to accept an order that then sold in record time, her department would have gone under. In her case, even though she is on the bottom stroke of the K, she has a sense of financial survivors guilt because she still has a job, while struggling with emotions that it may not last until retirement. While she had to take a major pay cut to help the company survive, she understands that she is one of the lucky ones to still have a job. Having conversations with colleagues about still being employed has been extremely difficult. Meanwhile she is grateful her children work in technology and as essential workers.

How is the uneven economic recovery felt at the individual level?

What this example shows us is that just because you are on the bottom of the K in your work area, you can still suffer from survivor’s guilt and celebrate your family’s or friends’ position in the recovering industries but still fear for your own position. In other words:  It is going to create a huge fluctuation in personal emotions.

Originally this pandemic created a fight, flight or freeze stress response and now, with a ½ recovery predicted “just around the corner” many are unfortunately settling into the next phase of financial PTSD, with little sign of a quick fix. Even worse, it will widen the socioeconomic gap all the while increasing the emotional toll of the depressing economy. Managing those difficult emotions will fall to  the individual’s responsibility to process, accept and pivot away from the ones that don’t serve them Being able to be aware of your own feelings and your overall financial psychology will help you in the coming phase keep a more balanced perspective and be less reactionary to the difficult and negative emotions evoked by the K-Shaped recovery.

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How to Survive the Holiday Season with COVID19

From apple pies and turkey to presents and the New Year countdown, the end of the year typically carries its good cheer past the festivities. However, this year’s holiday season might look and feel uncharacteristically different for all of us. Despite the recent uplifting news of a potential vaccine for COVID-19, the unprecedented emotional, physical, and financial toll that the pandemic has caused could possibly persist and even rise in the coming weeks.

Although there are many things to be grateful for during this holiday season, the absence of customary celebrations, gifts, and travel make the financial struggles of the past several months more painfully obvious. According to Simon Restubog (May, 2020), this chaotic year has caused layoffs, downsizing, and involuntary unemployment in vastly different domains of business.1 It is no surprise that people are planning to spend less this year. A recent Deloitte retail survey found a 7% decrease in general holiday spending among households, led by a whopping 34% drop in expenditures on travel.2 Overall, roughly 2 in 5 Americans will likely spend less this year due to the pandemic.

Public health guidelines—of which we are all painfully aware by now—strongly recommend keeping holiday gatherings to a minimum, reinforcing a pervasive sense of melancholy and loneliness. In addition to the effect of quarantine and isolation on mental health, the ongoing uncertainty of income aggravates anxious and apprehensive thoughts regarding the future. Whether it be anger, confusion, loneliness, or depression, people of all ages have suffered unmatched emotional struggle on top of the everyday challenges of COVID-19.

These emotions exert a major influence on our financial decisions. The Wall Street Journal’s Benartzi and Payne emphasized that even ambient emotions—easily disregarded under normal circumstances—play a dramatic role in financial decision making.3 On one hand, our financial stability has been severely tested over the past couple of months; and issues of financial security and responsibility may restrict many of us from holiday spending on gifts and special food. On the other hand, such conscious, sorrowful decisions to hunker down and tighten our belts during a formerly exuberant season can create considerable internal turmoil. Counterintuitive to preserving financial security, such stress sometimes translates into the sudden urge to indulge in palliative shopping.

So, what do we do now?

One key skill for preventing our emotions from overpowering us is to clearly identify them.

“Am I worried that we are not going to have enough money?”

“Am I sad that I cannot travel this year?”

Flagging these key emotions helps us digest our feelings in a non-destructive manner. And conscious awareness helps us to manage difficult mindsets through seeking positive, alternative ways to ease strong, unpleasant feelings.

Although spending on quality gifts and celebratory travels may not be possible this year, why not shift our focus to spending quality time closer to home? Because as painful as it may have been for many of us, it is in these challenging times that we realize the value and significance of family and friends.

Happy Holidays!

  1. Restubog, S., Ocampo, A., & Wang, L. (2020, May 08). Taking control amidst the chaos: Emotion regulation during the COVID-19 pandemic. Retrieved November 19, 2020, from https://www.sciencedirect.com/science/article/pii/S0001879120300658?casa_token=4mdrB4qjMYMAAAAA%3AM_TdljHzF34HHZyv_Qxb0vHZe3muH02DJ2yUwS0nLyThZJ2Vg2lmRMskjpzITygYocUrMVrOBAE
  2. 2020 Deloitte holiday retail survey: Reimagining traditions. (n.d.). Retrieved November 19, 2020, from https://www2.deloitte.com/us/en/insights/industry/retail-distribution/holiday-retail-sales-consumer-survey.html?id=us%3A2el%3A3pr%3A4di6890%3A5awa%3A6di%3A102020%3A
  3. Benartzi, S., & Payne, J. (2020, October 19). How Covid-19 May Be Unconsciously Affecting Your Financial Decisions. Retrieved November 19, 2020, from https://www.wsj.com/articles/how-covid-19-may-be-unconsciously-affecting-your-financial-decisions-11603065600

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How Financial Therapy Can Help You

Blog 3 of 3 in the Introduction to Financial Therapy blog series.

Introduction to Financial Psychology blog series

This brief blog series will illustrate how the growing field of Financial Psychology can revolutionize people’s turbulent relationships with money. Through understanding the roots and influence of their personal financial psychology, individuals find themselves able to discard the inherited programming that drives their financial decisions, and that no longer serves them.

The complete list of blogs in this series are at the bottom of this article.

How Financial Therapy Can Help You

Modern American culture projects a faulty reality of wellbeing and status largely based on large amounts of consumer debt and fueled by immediate reward. This external view is far from the truth. People in high-earning jobs often feel pressured to maintain the status quo or keep up with friends of a similar income level. They may indulge in overspending based on expected continued high-income, estimated bonuses, and anticipated promotions. Those unable to keep up with associates’ financial successes may be distressed by jealousy, shame, and low self-worth. The truth is that all of these related negative emotions have led to a taboo around personal conversations about money. While experiencing financial anxiety, depression, or stress—or even excitement over a big raise and promotion—any disclosure of such feelings may feel unsafe, exacerbating the discomfort.  So, instead, as a society we tend to bottle up any confessions about personal finances, and carry on with our silent struggle to mitigate our stress.

There is a Financial Solution

As highlighted in the previous blog, Why the world is turning to Financial Therapy, it has become more and more obvious that the solution to personal finances doesn’t merely require education and information regarding the basics of financial management. Although certainly helpful, knowing what to do does not always lead to effective decisions and execution. It is imperative that individuals with financially dysfunctional behaviors work toward a comprehensive alteration of their thoughts, feelings, and habits with money. These habits and feelings typically arise in childhood and early adulthood when initial financial blueprints are established by experiences and role models.

As adults, we find we may have unconsciously adopted problematic financial habits, creating roadblocks to our own personal success. For example, your parents may have managed money perfectly, but may not have shared the details with you—leaving you both ill-equipped to deal with adult life and resentful of their inattention to this crucial skill. On the other hand, they may have had intense arguments about money, leaving you uncertain about how to manage finances and fearful of a topic that appeared to create friction. Every money story is unique, made of individual experiences that require awareness and discernment in order to right-size and balance one’s relationship with money.

This is where the financial therapist comes in. A trained and experienced professional can provide a safe haven, with proven tools to help clients navigate the maze of their own money stories. Through careful work with an empathetic specialist, a financially stressed individual is empowered to identify and overcome economic roadblocks. Relief from constant pressure around money opens up new possibilities for individuals to expand their life experiences, create and maintain better personal relationships with their partners, and rid themselves of the shame and guilt too often associated with finances.

For a free consultation about your best course to financial stability and health, call 818.600.2264

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Introduction to Financial Psychology blog series

This brief blog series will illustrate how the growing field of Financial Psychology can revolutionize people’s turbulent relationships with money. Through understanding the roots and influence of their personal financial psychology, individuals find themselves able to discard the inherited programming that drives their financial decisions, and that no longer serves them.

Blog 1 – What is Financial Psychology
Blog 2 – Why the World is Turning to Financial Therapy for Help
Blog 3 – How Financial Therapy can Help You

By

Why the World is Turning to Financial Therapy for Help

Blog 2 of 3 in the Introduction to Financial Therapy blog series.

Introduction to Financial Psychology blog series

This brief blog series will illustrate how the growing field of Financial Psychology can revolutionize people’s turbulent relationships with money. Through understanding the roots and influence of their personal financial psychology, individuals find themselves able to discard the inherited programming that drives their financial decisions, and that no longer serves them.

The complete list of blogs in this series are at the bottom of this article.

Why the World is Turning to Financial Therapy for Help

How low-income, middle-class, and wealthy individuals alike are all beginning to realize that financial wellness begins in the mind.

There is no mystery to managing personal finance. In spite of money management being woefully absent from school curricula, most people manage to understand the basics: earn more than you spend, save as much as you can, invest in a future day. However, an entire industry is built on educating people on the finer points of financial management. Books, articles, television programs, and radio shows all devote countless words over countless hours to provide insight into the details of handling personal finance. Yet millions of Americans find themselves grossly in debt, having saved little or nothing for retirement, and unable to enact the simplest changes to their financial lives. The impact of the COVID pandemic has greatly exacerbated the already alarming state of personal finance and sent our society into a K shaped recovery.

The financial industry suggests that if you are more educated about money management, retirement plans, and investment programs you should be able to grow your wealth. Likewise, the education industry aligns with the narrative that a more advanced degree would enable you to obtain a higher-paying job—your financial stress evaporating because of the increased income. When both strategies show minimal results, many people blame themselves and internalize the narrative as being defective or irresponsible. But for a large number of individuals who are trapped in living beyond their means, underearning, neglecting savings, or compulsively spending high incomes, there is good news.

The financial industry does provide significant benefit in certain areas of personal finance. However, most financial advisors’ ideas about personal decision making are based in rational choice theory, which states that human beings are rational and will make optimal decisions, resulting in outcomes aligned with their own best interests. But humans are not always rational in all areas of their lives—including their behavior with money. Thus, financial therapists in corporate elements from the field of clinical psychology to examine how emotions, beliefs, and personal narratives impact both short-term and long-term financial behavior.

A new awareness of how behaviors with money are influenced by childhood history has created a driving force to uncover, understand, and discard the money stories that don’t serve us in our current, day-to-day lives. Such stories underlie financial disorders that manifest in a variety of patterns such as underearning, over-working, or see-sawing as a high-stress, feast-or-famine intermittentincome earner. All of these behaviors result in shame, leaving the sufferer feeling incompetent or paralyzed and unworthy.

A Solution to Financial Stress and Emotions

Awareness is the first element of the solution. This is where Financial Therapy comes in, as more and more people are coming to recognize as the solution to their self-sabotaging financial habits and accompanying financial stress. Working with a financial therapist, individuals find a safe place to examine the money beliefs that drive their flawed financial habits. This allows them to identify and interpret the money stories rooted in their personal history, and to acknowledge economic mistakes with grace and self-compassion. This awareness leads to financial transformation and feelings of empowerment.

For a free consultation about your best course to financial stability and health, call 818.600.2264

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Introduction to Financial Psychology blog series
This brief blog series will illustrate how the growing field of Financial Psychology can revolutionize people’s turbulent relationships with money. Through understanding the roots and influence of their personal financial psychology, individuals find themselves able to discard the inherited programming that drives their financial decisions, and that no longer serves them.
Blog 1 – What is Financial Psychology
Blog 2 – Why the World is Turning to Financial Therapy for Help
Blog 3 – How Financial Therapy can Help You