The Psychology of Money – How the Ego Mastered Being Rich

The id, ego, and super-ego are a set of three concepts in psychoanalytic theory describing distinct, interacting agents, which affect our minds. Visually, they are competing for personas that can make us rich or leave us broke and broken.

Simply put “the meeting of the minds” represents moments right before we do something stupid, or set off in a positive direction. Basically, the moment before you say YOLO!

While the id, ego, and superego interact constantly, the true mediator is the Ego. The ego grounds us in reality, and determines how to meet the needs of the Id, while upholding social reality and the moral standards of the superego.

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The manifestation of our wants – the Id

Crafted through the ages of conflict and scarcity, human nature is primal. At birth, the id manifests first. As such, we run on pure instinct, desire, and need. Part of the first layers of Maslow’s Hierarchy of needs, the id is entirely unconscious and reactive. At rest, the Id is consumption.

As we grow and interact so does the id, however, it never matures. Like a parasite of wants, the id seeks to gratify all impulses immediately.

Unmet needs defined by the Id, creates tension, which often feels like deprivation. This is where we find the notion of sacrifice, discipline, or budgeting.

Since most desires can’t be fulfilled, you can trick the id through the process of thinking or fantasizing. Think of this as promising the id future happiness that is greater than today.

“Throughout life, the id remains infantile because, as an unconscious entity, it never considers reality. As a result, it remains illogical and selfish.”

An unchecked id can leave you broke and destitute, better characterized as low impulse control. Operating on instinct tends to lead to Indebtedness or Brokenness. Because of this, the ego and the superego developed to keep the id in check.

The Psychosexual Ideas of the Super Ego

The superego emerges by age 5. Sigmund Freud chronicles the superego as part of the phallic stage in which psychosexual development takes place.

In this phase, the brain learns to cope with the physical desires and the chemical sensations of touch and lust. The superego also has to learn about right and wrong. The superego serves as the judge and manifests in the voices of authority figures in your life.

The very embodiment of the word “No”.

This is where we find the first instances of money trauma from our parents. Overspending or compulsive spending is a common response to financial trauma created because of the superego’s hyper-perception of the family’s finances.

The superego continues to grow over time, latching unto stories of hope and change. Furthermore, it establishes moral and cultural standards as it relates to experiences and wealth.

Equal part consciousness and ideals, the superego forbids unacceptable behaviors and punishes us with guilt and shame.

When Elon musk purchased Twitter for $40 billion, a myriad of people was outraged. The grievance?

Elon Musk should have eradicated homelessness or world hunger. The verdict, Elon is morally bankrupt. The superego lives in social media’s comment section.

It presents the ideal self; social rules and standards of good behavior that one should adhere to.

As such, the superego often creates high expectations and internalizes shame and guilt. You can feel happy but not too happy, and so on. The superego controls the id’s impulses towards societal taboos, like violence and sex desires. Beyond the conception of the seven deadly sins, the superego bullies the ego into adopting unrealistic moral standards and sadly nothing more than pushing a clock.

The superego abhors risk and reward which is a function of creating wealth. We often revisit experiences with the superego in a negative way or we stop in our tracts with phrases like “money is the root of all evil.” Those who are successful spend less time in moral confusion as it abets growth and change.

Ego and the Socioeconomic Balancing Act

As a spark of mental consciousness learned via nature and nurture, the Ego develops. The main task of the ego is to deal with reality, to ensure that we don’t succumb to our impulses. Additionally, the ego balances what is morally and socially responsible.

The ego is the main pilot of the ship. It satisfies the id’s desires in the most reasonable and realistic ways by delaying gratification or compromise. The goal of the ego is to be rational and moral in a world that is unkind or unjust.

Cognitive dissonance is one of the main tools of the ego.

Since rational thinking is a secondary process of thinking, the ego maintains self-control in harsh times while striving for maximum pleasure and minimum hurt. The ego is not interested in doing the right things versus gaining results. Thus, the ego plays the jury and the judge and often spares the mind of embarrassment and hurt.

In society today, we often see people with the inability to admit wrong or wrongdoing because of their own overdeveloped superego and id. While the ego is a problem-solver, human beings have grown insatiable due to what we see on social media. The best way to develop your ego’s fortitude is to listen and learn.

“The ego operates at conscious, preconscious, and unconscious levels. The ego’s consideration of reality is conscious. However, it may also keep forbidden desires hidden by unconsciously repressing them. Much of the ego’s functioning is also preconscious, meaning it happens below awareness but takes little effort to bring those thoughts into consciousness.”

Finding the Balance and Mediating the Road to Financial Independence

Sigmund Freud coined the term ego to reference one’s sense of self.

The term ego in Freud’s theory of personality refers to functions like judgment, regulation, and control. In the end, a healthy personality is the result of a balance between the id, ego, and superego.

A lack of balance leads to difficulties and financial instability.

If a person’s Id dominates their personality, they will act on their impulses. When it comes to money, this leads to more Amazon purchases.

As technology eases, labor and challenges, it ends up being the perfect breeding ground for multiple impulses. Nothing delights our personal id more than watching other Ids get their way.

On the other hand, when the superego dominates the mind, you find a dogmatic state in which controlling natures compete. The mind was not meant to stay rigid in a space of constant change. As such, we are finding that more people are struggling to stay sane under the weight of their hypocritical moral views.

In the end, the ego seeks to find balance. Ironically, the ego is the matured version of the person we strive to be. The goal isn’t to merely give into our wants and live as monks. Instead, the goal is to experience life with all the vibrant colors while enjoying that, which is good for all not just ourselves.

For me, that’s the fundamental principle of financial independence. Unrelated to this blog post but related to the title, I would highly recommend the book, “The Psychology of Money”.