Why do many hard-working ordinary people have debts and money worries, and how can financial psychology unlock the door to lifelong financial independence and freedom?
Understanding the financial psychology of a person’s chronic inability to achieve financial independence is a big step towards learning how to change ingrained beliefs and patterns of behaviour. These beliefs and behaviours are thought to prevent people from learning how to manage debt and money worries and can lead to destructive self-sabotage and financial depression.
Cognitive behavioural psychologists believe that negative lessons learned in childhood and beyond can have disastrous effects on someone’s ability to develop the skills necessary for a healthy and productive adulthood. Some of those skills include the ability to handle money management and prevent long-term money worries, and those destructive messages in the formative and adolescent years need to be unlearned so that people can take full control of their money. With help and support, people can learn how to manage their money and eventually will be able to take advantage of independent expert saving advice for future financial security.
As personal money expert Suze Orman says in her book The 9 Steps to Financial Freedom, “Financial freedom is when you have power over your fears and anxieties instead of the other way around.”
The Impact of Financial Psychology on the Likelihood of Money Worries and Fear of Money
Many people who have never been able to manage money may have grown up in households where money was the root of arguments, strife and financial chaos. Parents or caregivers may have told them they were worthless, or treated them as financial burdens, or even damaged them physically or emotionally.
People growing up in those environments can reach adulthood without acquiring basic, healthy strategies for personal and financial management, and they can spend years in debt, living on or below the breadline, or getting caught in a downward spiral of financial depression and crippling money worries.
Living With Money Worries and Debt
Perhaps those unhelpful starts in life may explain some of the reasons for “fear of money” netting nearly 35 million results on a Google search. According to the American Psychological Association, more than a quarter of Americans say “they feel stressed about money most or all of the time.”
It’s difficult enough to resist the push to overstretch the budget or take on credit, even if people do have good financial awareness. Everywhere they look, people see advertisements glamourizing wealth, prestige and materialism. Banks advertise the illusion that if people only save with them or use their financial products, their lives will be changed and they will go to college, go on that holiday, buy that house in the country, none of which are within reach of anyone struggling to make ends meet, let alone hoping to achieve financial freedom.
Conquering The Fear of Money and Learning How to Deal With Money Worries
One of the obstacles to achieving financial freedom is that the prospect of being financially stable with a working budget and savings to fall back on can be more frightening than the known and familiar chaos of financial instability and poverty. It’s a hard habit to break, and can be as difficult as changing destructive beliefs of low self-worth or learning not to be drawn into abusive relationships.
The good news is that just as someone can learn a habit, so it’s absolutely possible to unlearn it with time and support. Even decades of difficulties and financial mismanagement can be turned around and a fear of finances can be confronted and faced down.
In his book Healing Your Financial Soul, David Hicks offers an overview of the reasons why people may have a blind spot in relation to financial management, and suggests that for them to continue to feel bad about their debts, finances, and the strategies that got them there in the first place is to continue punishing themselves.
One of the quotes he offers on his website reads, “Blame looks backward and generates condemnation, shame, discouragement, resentment, helplessness and a wasteful, consuming anger that does nothing but glue defeat into place. Don’t go there! Responsibility, while acknowledging what is past, is also forward-looking, objective, compassionate, empowering, and encourages solutions.”
Using Financial Psychology to Learn How to Save Money, Dealing With Money Worries and Getting Out of Debt
The financial psychology underlying the continuance of constant money worries, long term debt and financial instability appears to be the most crucial factor in understanding why people struggle for years with money problems. Changing the learned behaviours and coping strategies which enabled them to deal with the pressures and devastations of earlier times can be key in giving them the self-awareness and confidence to take control of their finances.
Not only can they gain financial freedom and independence, but for the first time in their lives they can keep their every New Year Financial Resolution to become solvent, and finally gain freedom from the destructive influences of those who limited their potential growth in their formative years.