Your Money Worries Are Holding You Back — Here's What to Do


Does fear hold you back from living a "financially healthy" lifestyle? Often, the money scripts we recite in our heads influence our attitudes toward money and hence, our spending and saving behaviors. Can we "undo" those negative/unhealthy messages? These five strategies can help steer you on the path to financial peace. (See also: 9 Ways to Conquer Any Fear)

1. Assess Your Level of Financial Discomfort

While concern, fear, and phobia can all produce feelings of anxiety, the difference is in the degree and in the ripple effects. Concern can serve as a subtle signal that prompts you to action. For example, you might start thinking about your financial security in retirement, even though it's in the distant future. This concern might prompt you to research investment options, retirement plans, or prudent savings strategies, ultimately leading to action ("I'm going to increase my contribution to my employer's 401(k) plan by $25 every paycheck"). Concern is not usually problematic, and it can be very purposeful. (See also: Retirement Planning If You're Under 30)

Fear lies a few notches above concern. You've been laid off from your job with a six-month severance package. You fear that you won't find a new job before the money runs out. Your oldest child is entering high school, and you fear that college costs might be overwhelming. Or you know you went a little overboard last holiday season and are worried about how you're going to pay off the credit card bills. Fear, like concern, is a signal to take action, but its emotional impact is stronger and the urgency to find solutions is intensified. Still, fear is manageable.

On the anxiety scale of 1 to 10, a phobia can be an 11, bringing on physiological symptoms, from a racing heartbeat to perspiration and muscle tension. Your thoughts race, you find sleep to be a luxury reserved for other people, you snap at your spouse, and you find the stack of unopened bills just too much to handle. Avoidance is easier. This is financial phobia. By definition, a phobia is an irrational fear that takes anxiety to off-the-charts levels.

2. Face It: Financial Phobia Is Real

While some people hate to admit that they have a "phobia," identifying it is the first step to overcoming it. And know that you're not alone. Research in the U.S. and abroad estimates that 20% of adults are afflicted with some type of financial phobia, which speaks to the (often-unspoken) power of money. Fighting financial demons can be more of an isolating struggle than weight loss or even an addiction, because money remains a somewhat taboo topic of conversation.

Financial phobias take many forms. They usually stem from clouded beliefs about money that you picked up early in life, or that you created as an adult based on your own experiences, observations, and interpretations. "My self-worth is directly related to my bank account balance," or "Any type of debt should be avoided," or "I don't really deserve this vacation/car/jacket, etc." are all examples of money scripts that bounce around in our heads, often subconsciously. (See also: Stupid Things My Parents Taught Me About Money)

In "The Financial Wisdom of Ebenezer Scrooge," authors Dr. Ted Klontz, Rick Kahler, CFP®, and Dr. Brad Klontz discuss how money scripts can often be "partial truths about money" that can lead to destructive — or at the very least — non-productive behaviors.

While concern and fear can sometimes serve as a catalyst for action, phobias often leave people feeling overwhelmed or stuck. You become so wracked with anxiety that you push your financial tasks aside, hoping they will just go away. But avoidance is inertia, and it can have a snowball effect as one missed bill can lead to a fine or a ding on your credit score, and so on. The good news is that financial phobias can be overcome.

3. Focus Forward

Picture yourself in the car, driving to the grocery store. Every now and then, at the appropriate moments, you glance in the rear-view mirror. But for most of the journey, you look ahead. Now apply that analogy to your finances. Sure, you need to recognize that you overspent, or that you blew too much money on vacation, or that you didn't prepare well for certain expenses. But consider those your "glances in the rear-view mirror," and shift your attention forward.

Stop beating yourself up for your mistakes. If you notice feelings of guilt, shame, or failure, examine your own money scripts. Recognize that all-or-nothing thinking and the tendency to catastrophize ("I lost my job … I'll never get a new one; I'm such a failure!") may distort the truth. Try practicing new "self-talk." Eliminate negative judgment words like bad, weak, incompetent, or failure.

Look ahead. Envision financial peace in your future, and imagine the positive feelings associated with it. (See also: Brain Hacks for Better Investment Decisions)

4. Chart Your Course

While the road ahead may feel overwhelming, consider another driving analogy used by parenting expert Barbara Coloroso when she explains the concept of "backbone" (or balanced) discipline. Imagine driving along a highway so covered with snow, or so ill-maintained, that you can't see the lines dividing the lanes. How does that make you feel? Perhaps free, but probably a little unsure of how you'll avoid hitting other cars — or how they'll avoid hitting you! Now picture driving along that same road, but with lanes divided by high walls. Feel a little constricted, bordering on claustrophobia?

Most of us feel safest driving on highways with nice, yellow lines acting as a guide to keep us safely on course. Paint your own yellow lines along your financial journey. Picture your destination, and plan how you'll get there.

Let's say you decide that you really need to create a monthly budget, but you get a stomach ache just thinking about it. Avoid placing too much pressure on yourself by expecting to sit down and write your entire monthly budget this Sunday afternoon. Instead, break it into manageable pieces. Tackle "basic living expenses" — food, housing, and utilities — this week. Save "discretionary expenses" — clothing, entertainment, etc. — for next week, and "savings plans" for the following. (See also: Build a Budget in 5 Easy Steps)

Set small, attainable goals, and remain flexible. Don't set yourself up for failure; rather, be gentle as you would be if you were helping a young child learn to ride a bike. Encourage yourself along the way with positive self-messages, celebrating small victories.

If your financial situation looms too large for you to tackle on your own, enlist the help of a professional. A financial therapist is a counselor who combines cognitive, emotional, and behavioral techniques targeted at promoting financial health. You can search for a financial therapist near you on the Financial Therapy Association website. You might also benefit from a social worker, psychologist, or psychiatrist that specializes in cognitive restructuring, where negative beliefs are identified, evaluated for accuracy, and often replaced by more accurate or productive thoughts.

5. Develop and Act on New Money Scripts

Money is an inanimate object. How you perceive it and what you do with it determines its value — not yours. That's an important distinction. One very common money script passed down by earlier generations equated making oodles of money with having "done well." If you buy into that definition of success, keep that script; but if not, rewrite it. Think of the money messages you want to carry into your future or pass down to your children.

Developing a balanced, rational approach to money could be your most freeing — and ultimately, your most prudent — financial strategy.

How have you overcome your financial phobias? Please share in comments!

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