Many people feel uncomfortable talking about, or even thinking about, their finances. Personal financial planning is not something that is taught in school and unfortunately, many people learn the hard and expensive way how to manage their finances. Even when they realize they need to pay more attention to personal finances, they are often at a loss for where to start.
Living without a clear understanding of your relationship with money and finances can cause a constant overhang of stress and anxiety.
Financial Psychologist Dr. Brad Klontz identifies three main categories of “money disorders”. In part 1 of this 3-part blog series, we will look at money avoidance disorders.
- This is a classic defense mechanism designed to reduce anxiety and shame over our troubles. “Financial denial is when we minimize our money problems or try our best to avoid thinking about them altogether rather than face financial reality.”
- Extreme underspending. This can keep you just as poor as overspending. You can have plenty of savings but you refuse to use and enjoy what you have because you have a compulsive need to be self-sacrificing. In other words, you are tight with your cash – and it makes you very unhappy.
- Excessive risk aversion. This is “an irrational unwillingness to take any risks with one’s money”. If you keep your savings in an interest-bearing account and shy away from investing in growth assets, like shares and property, this could easily be you. You need to take on some investment risk in order to build your wealth.
Do you recognize any of these patterns in your life? As with all areas of emotional discomfort, the best way to move beyond them is to courageously take a self-inventory, and then find the needed help to move through them.
Facing the realities of your personal finances may fill you with anxiety but, as with all areas of emotional discomfort, the best way to move beyond them is to courageously take a self-inventory, and then find the needed help to move through them.
Written By: GROW Counseling Team
