The basics of finance are simple: spend less than you earn and invest for the future. So if it’s this easy why do so many of us still struggle with money?
According to a few financial psychologists, Dr. Ted Klontz and Dr. Brad Klontz to be precise, our money problems start in our formative years and may be all in our heads.
In their 2009 book, Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health, Klontz and Klontz explained how each of us develop what are known as “money scripts” in our minds as kids. The scripts ultimately boil down to the way we are both taught to think about money and they way we continue to understand it over time. Moreover, these scripts can impact our financial behavior forever.
The different money scripts, according to Klontz and Klontz, include money worship (someone who is convinced that more money will solve all their problems), money status (someone who believes that owning all the newest gadgets means they’ve made it), and the one script we will discuss today: money avoidance.
Money avoidance, the Dallas Morning News explained, is anyone who believes “money is bad, that rich people are greedy and that they don’t deserve money.”
Indeed, this particular script is incredibly common. Here are four ways it can seriously wreak havoc on your financial life, and a few tips to overcoming them.
You are living in financial denial
Do you loathe seeing checking account balances or credit card statements? Do you avoid discussing money with your partner?
For many, it can be extremely challenging—downright terrifying, even—to face up to an over- drafted account or a growing credit card balance. But the longer you avoid it, the worse it gets.
It’s understandable to want to avoid the difficult emotions associated with financial challenges. Mindfulness practices can help you develop the skills to experience tough feelings without the urge to avoid situations altogether.
Tom Murphy, certified financial planner at Murphy & Sylvest, gave the Dallas Morning News the best advice when he said that people under the influence of this script need to “repeat everyday that money is as important as the food and shelter it provides, the education it buys and the health care it allows.”
You feel guilty about making money
Do you earn money then just give it away? Do you undercharge for your work or settle for salaries way below the market rate?
If so, it’s possible you may carry a deep-seated guilt about accumulating money. This belief may be rooted in learned ideas about money or greed from childhood.
If you struggle to hold on to money, Dr. Brad Klontz recommends setting realistic budgeting goals. Make sure your goals are achievable, adjust them periodically, and celebrate your victories along the way.
“In our society, the way you get money is by providing a good or service others want,” Murphy noted to the Dallas Morning News. “Money is just the measure of how much others value that good or service vs. what it costs you to provide it. Making a profit means other people find great value in what you do.”
You have an excessive fear of risk
Are you afraid to leave a job you hate? Do you have a large sum of money collecting dust in a low interest bank account?
If risky money moves make you uneasy, you’re not alone. The majority of millennials aren’t investing, and risk aversion can severely limit opportunities to build wealth.
Sound like you? Klontz recommends creating a healthier money mantra. Draft a list of reasons why having money is beneficial for you and the world like long-term stability or philanthropy.
You chronically underspend
Do you have plenty of savings, but struggle to spend even on necessities? Do you worry excessively about financial catastrophe?
With national savings rates below 5%, it may seem odd to suggest that spending too little could be a problem. But, being in a constant state of financial crisis takes a toll on your quality of life including on your mental, physical and financial health.
If this sounds familiar, consider adding an item or two to your budget just for pleasure. You’ll still be living within your means but adding to your quality of life without compromising your savings goals.
When it comes to money avoidance, the first step is awareness. Exploring your feelings about money through journaling or talking with a friend may be enough. But, there’s nothing wrong with seeking professional help if you uncover unresolved issues that feel too big to tackle alone. Ultimately, what is most important is working to replace avoidance behaviors with healthier choices. So go ahead, live, and spend, just a little.