The start of a new year holds a lot of promises for everyone. It ushers in new beginnings and, to some extent, a clean slate. We are able to look at the whole year coming from the starting point and plan ahead on how to make it better than the previous year. We welcome the new year as it symbolizes the opportunity to turn in a new leaf and the aspirations of becoming a better person.
But all these are easier said than done. If the new year means weight loss, it entails getting on a diet and a complementary physical activity. For most, this season is a time to improve on personal finance decisions and this commitment is a great first step. But the work will just start from this desire to be financially wiser and this should be the springboard to bring us to concrete action.
Starting anew should not be too hard – unless you have some hidden fears hindering you from your true potential.
The fear of money is real
Believe it or not, a lot of people are kept from improving their finances because of financial phobia. Also called chrometophobia or chrematophobia, this is the fear of money or the things associated with it.
In 2003, BBC.co.uk published an article that revealed how one out of five Britons suffer from money phobia. This research revealed that these consumers are unable to implement financial management simply because the fear paralyzes them. The study is conducted by EGG, an academic and finance group in Cambridge University. Here are more revelations from the study.
People under the age of 35 are most likely to suffer from financial phobia.
More women are affected than men.
54% of the people suffering from money fear is usually apprehensive.
38% does not show any interest in personal finances.
45% feel their hearts racing.
12% feel physically unwell.
11% feel dizziness.
15% feel immobilized.
The article mentioned that the people suffering from financial phobia are those who are intellectual and are not irresponsible. They do not spend recklessly too. They simply have the fear of managing their money – more than the others. It is not like they are incapable of dealing with the mathematics of it. Their psychological and physiological condition is paralyzing them from doing the responsible task of managing their personal finances.
If you think that this condition is exclusive to the Britons, think again. FinancialPost.com published an article last 2012 that revealed the debt phobia of Canadians. They refuse to believe that debt can be good for them. In fact, 55% believe that credit is not a tool that consumers can use to build their personal net worth. While 76% of them believe that there are good debts – they only think it is true for home loans and student loans. They do not think that business loans and other investment-related debt is a good idea – even if it is done properly with low interest rates and high yields.
In truth, any kind of debt – even credit card debt is not good or bad. They are simple financial transactions between a borrower and the lender. It only becomes bad depending on how we react to it. If we abuse it, we get negative results in our financial lives. That is what causes financial phobia. But if we learn how to manage debt and use it to our advantage, then we do not really have to fear anything.
What causes money-related fears
But what exactly causes these money-related fears? We have a couple of theories that may help explain what fuels the financial phobia of some consumers.
Too much debt
First is too much debt. The Canadians suffering from debt phobia probably had to deal with a lot of credit obligations. They must have lost a lot because of too much debt and that made them shun even the debts that can bring them good. They reacted by eliminating debt completely even though it is not the root of the problem. The actual solution is not to shun debt, but to change how we use and react to it. This is probably the most important advice that you can give people living with too much debt.
Another reason for people to develop financial phobia is a recent financial crisis. Obviously, knowing how you can lose a lot in investments after a market crash – this will keep people from taking on risks. While all type of investments are risky, this is the only way that you can grow your money. Even the most secure investments carry a level of risk in them. You need to conquer this fear so you can grow your money exponentially. Use it to your advantage and learn as much as possible about the investment landscape you are trekking.
Fear of complex things
There is not one person in this world who knows everything. Much more if we look at financial instruments that keep on evolving over time. This is another basis of people’s fears with money matters. Not knowing enough and at the same time, playing catch-up with a continuously changing industry is a daunting task to say the least. In this situation, research and asking questions can negate this fear. Knowledge on the matter will best address the fear of not knowing.
What can you do to heal your personal finance phobia
So if you are going through financial phobia, what can you do to deal with the situation? There are steps that can be closely looked at to curb financial fears and money-related concerns. Following the steps below can help check the cycle of these psychological fears evolving into physiological manifestations.
Recovery. Majority of people with money phobia are usually from a bad experience. This could be credit card debt, mortgage problems or even bankruptcy. These are tough situations and undoubtedly can strike fear even before starting on any finance-related tasks. The best approach would be to keep on track on the recovery phase and stick it out no matter what. Being surrounded by an environment of people and hobbies that can echo your financial goals at every corner is a great idea as well.
Assessment. There is wisdom in knowing your weaknesses as you identify your strengths. By simply assessing the cause of you fear, you should be able to determine what you need to do to overcome them. It helps to know the options that you have before you. That is how you overcome the fears that hinder you from living a full life.
Planning. No one ever got to where they wanted to be by accident. Stumbling into your dreams happens only in the movies. Everything starts from a dream and a plan that goes with it. That plan serves as the guide and checklist as well in reaching your dreams. Planning is essential in getting over the fear of money. It clearly shows you concrete steps you can take to realize your dream.
Communicate. Lastly, you need learn how to communicate. Some people refuse to talk about money – even with their loved ones. If you are in trouble, it helps to talk to someone about it. Sometimes, what we perceive is okay is already destroying us slowly. Do not let this happen. Make sure you are open about your financial life – especially in your marriage. Money problems are the leading cause of conflict in any relationship. Do not let money ruin it.
Basically, changing your mindset will help you deal with your financial phobia. Conquering your fear is never easy – but it is possible.
Diana hates debt just as much as you do. She is a finance writer for National Debt Relief. She aims to provide the best information to win the battle against debt.