Our society doesn’t like discussing money. Ally Bank conducted a study where 7 out of 10 people find it rude to talk about money. Unfortunately, these numbers also include family members. Parents hesitate discussing money with children, thus hindering the ability to gain financial skills to prepare for adulthood. Luckily, as a recent Nobel Prize winner said, “Times are a Changin’.”
Millennials are beginning to break this taboo by sharing more about their personal finances with their partners. Loads of research contribute financial difficulty as one of the leading causes of divorce. This fact motivates many millennials to confront this issue head-on.
However, discomfort with money still remains while society is evolving. You might have some issues with money and you find it easier to live in the world of Ignorance is Bliss. These are behaviors explained by Brad Klontz, Psy.D. and Ted Klontz, Ph.d. in their book Mind Over Money: Overcoming the money disorders that threaten your financial health. It’s a great read and I recommend you check out the book for yourself (Click here for the Amazon link).
The authors created three categories of money disorders which will be discussed separately in a series of three articles on this blog. The first article was posted last month (3 Money-Worshiping Behaviors) and the final will be posted next month. Keep reading to learn which money disorder plagues you.
1) Financial Denial – You hate talking or thinking about money.
Ignorance is bliss until you realize your mistakes. If only you confronted the issue beforehand. Some people don’t open bills and then incur unneeded fees. Some people don’t talk about money with their families to avoid looking dumb or it’s uncomfortable to “address the elephant in the room.”
- Letting one partner handle all of the household finances
- Avoiding education about personal finances
- Frequent procrastination to address financial responsibilities
2) Financial Rejection – You think money is bad.
People who feel like they don’t deserve money fall under this category. Common situations are whenever someone inherits money, comes from a wealthy family, or receives a large death benefit from a loved one through life insurance.There’s guilt attached to the money in some form linked to low self-esteem, grief over a loved one, or self-righteousness.
- Negative views about money and the people more wealthy than you
- Feeling uncomfortable to upgrade your lower socioeconomic class
- Limiting your own potential to prevent future pay increases and opportunities
3) Underspending – It’s a fear to look well-to-do in the eyes of others or it’s terrifying to see a shrinking savings account.
Thrifty living is admirable. But when it’s taken to the extreme, people don’t allow themselves to enjoy their own money. The nervousness of losing money causes people to do whatever it takes not to part with money. Even though these underspenders have financial resources, people often mistake them for being poor on account of their extremely simple lifestyle and visible assets.
- Nervousness about losing savings
- Extremely frugal lifestyle despite financial resources
- Pain when parting with money
4) Excessive Risk Aversion – You have a paralyzing fear whenever taking any form of risk with your money.
Many people fell victim to this money disorder after 2008’s Great Recession. Millennials are known for being extremely risk averse since they saw their parents get burned by being risky in the stock markets. The people who fall under this category typically witnessed someone else lose everything. Thus these risk-avoiders do whatever it takes not to make the same mistake.
- Doing nothing rather than risking losing anything
- Not asking for promotions for fear of losing current job
- Immediately selling positions intended to be long-term when those positions lose a small amount of value
If you’re suffering from any of these financial disorders, there are plenty of resources, support groups, and professionals to assist you as you help yourself. Feel free to contact me and I’d be happy to share strategies that make sense for your unique situation.
The next article in this Money Disorder series will be released in December, 2016. Thanks for reading!