When you’d rather visit a doctor than figure out your financial situation, you know things are unhealthy. It could be that your hands get sweaty by simply contemplating opening up a bank statement, or maybe your heart rate quickens at the thought of handling your debt.
Sound familiar? It’s perhaps time to respond. You could actually have a financial phobia.
In this article, I’ll talk about what a financial phobia is, and how to cope with it.
Table of Contents:
What is Financial Phobia?
Researchers claim financial phobia is a psychological condition that results in crippling fear of coping with finances, to the extent of never reading bank statements or replying to letters regarding financial affairs.
You don’t have to be a spendthrift to suffer from it–anyone may find themselves caught in the vicious net of finance and are now unable to handle it sensibly.
As a legitimate psychological condition, financial phobia not only has its medical symptoms–quickened heart rate, feeling dizzy, sick to the stomach, or immobilized–but it can also put you in a worse place, financially.
What Causes Financial Phobia
Phobias aren’t always rational.
Generally speaking, phobias develop with negative experiences–and money usually brings those. Whether you have too much or too little, money tends to bring out the worst in a situation.
With too little money, you might suffer from anxiety about how you’d get along and develop a fear. Alternatively, with too much money, people often get caught in the trap of wanting more and more and end up suffering as a result.
Even our childhood storybooks talk about how money brings greed with it.
Other times, the causes are more personal. A child seeing their parents fight about finances may grow up with negative thinking patterns concerning money.
Financial responsibilities might also play their part–taking care of money is not an easy task, and bad investments often lead to devastating losses, which might result in you developing a fear of your finances.
Or maybe, on a much lighter note, you just never learned how to handle your finances.
Phobias don’t usually make sense, but many people with a financial phobia feel like they have lost control over their finances but don’t know how to regain it or even how to start.
Keep in mind that avoiding your finances can lead to more problems.
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Risks of Financial Phobia
If you have a financial phobia, you may be at serious risk. Here are just a few behaviors that could cause financial harm:
- Not checking your bank statements at regular intervals holds the risk of overdrawing your accounts.
- Not checking your bills at regular intervals could result in missed payments.
- By avoiding your credit report and FICO score, you may not know if you have been a victim of identity theft.
- Missing payments, overdrafts or banking errors can result in higher interest rates, penalty fees or fraudulent charges.
- Saving, investing, or managing your money becomes very difficult if you don’t monitor your accounts.
Confronting your financial issues can be scary, but ignoring your finances can be scarier. It’s hard to face your fears, but they’re possible to overcome and with the right resources, it’s a lot easier.
How to Deal with Financial Phobia
The first step to solving any problem is to identify it and its source.
If you recognize some or all of the behaviors we listed above, congratulations–you’ve already managed to identify that you may be financially phobic, and probably also know why.
You have also taken the second step now. The fact that you’re reading this means that you are actively seeking a solution to your problem.
Break-In Gently
If the prospect of looking at your statements scares you out of your wits, the best way to go about it is to take it slow. Addressing the issue in small doses is easier than taking the total burden all at once.
You can opt for many ways to keep track of your finances. Many apps help you monitor your monthly spending.
Or maybe you can ask your bank to send you updates of the balance in your account through text so that your statements are never a huge shock.
Budgeting is also very important when it comes to dealing with finances. Try leaving your credit cards at home, and make payments in cash.
Set a fixed amount of cash for the week and try to make it last. If you’re following your budget, despite what statements you have from the past, at least you can be sure that for the future, you’ve managed to regain some control of your finances.
Make Progress
Once you’ve started taking an interest in your cash, you can take it a step further and open up your previous statements.
Work out how much you owe in debt and try to use any spare money to pay it off. Keeping debts will only cause the interest payments to keep growing, and that will add to your already overwhelming fears.
Don’t bother looking for better savings rates if you are already paying double as much interest on a personal loan.
Make sure to follow the budget you set for yourself. Fix a certain amount of money for your clothes, drinks, eating out, etc. Don’t be too strict on yourself, but don’t be too lenient either.
Educate Yourself
You might think – well, shouldn’t I be studying a bit on how to manage my finances first, and then taking steps? Many people get caught into this trap of ‘act later.’
The longer you put off managing your finances, the worse it is when you start. Plus, you’re already here on Dough Roller – which is a great start.
Of course, you need to educate yourself and read up on the basics, but you also need to pay off your bills and debts and set your budgets. This matter is a more pressing one.
There is no need to go too deep into the technicalities–it might even end up scaring you more if you do. All you need to know is how to manage your day to day finances and debts, and you’re good to go.
Take It a Step Further
At this point, because now you understand how to go about your personal finances, and have gained some level of control over them, you might want to look into saving money instead of just possessing it.
Open a savings account and arrange for regular amounts to leave your account when you have just been paid. This way, you won’t miss it too much, and you’ll also have a decent fund stored up somewhere else.
Related: 6 Ways To Automate Your Finances
Now, try looking at your bank statements when you first receive them. You might be surprised at the progress you’ve made.
But congratulations–that was all you. Make sure to file the statements somewhere safe instead of tossing them into the trash.
By now, you will also have an accurate idea of your expenses and income. If you generally spend more than what you earn, you will have to cut down somewhere.
By looking at your bank statements, you will also know how much you pay for utilities and how much you pay on personal items. That way, you can budget more accurately.
Paying off Debts
By the time you’ve managed to get here, you’ll be well on your way to recovering from your phobia. You’ve managed to control your expenditures to some extent. Now you must face the final challenge: debt.
Debt can ruin people’s lives. One of the reasons so many people run away from managing their finances is because they are in a lot of debt.
People accrue debt due to their reliance on credit payments.
While credit payments can be very useful, they can also be very dangerous. Try to limit your use of credit cards to avoid accumulating any more debt, and start looking into paying off the debt you already have outstanding.
Pay it off as quickly as you can–and not just the interest but also the capital.
Sort out your overdraft so that even if you do drop into reds, you are not penalized very heavily. Maybe your bank offers free overdraft extension, or you can switch to another bank that provides this facility.
Related: Chime Bank Review – Fee-Free Banking
Make sure to go through your bank statements when they arrive so you can make sure that all the money you paid has been accounted for and that nothing extra has been taken out by accident.
Making Financial Decisions
Whether or not you think you still have some leftover anxiety regarding your personal finances, you are now in a position where you have control over them. At this point, you can start making your own financial decisions instead of just reacting to events as they happen.
You can also begin looking into deals and offers provided by financial institutions for investments and financial products. Keeping yourself up to date with not just financial markets but also with current economic conditions will help you plan better.
You’ve already budgeted for the month and maybe you’ve made some small investments here and there to keep you steady for the next year or so. But what about long-term planning?
One of the best ways to manage your money is to have a clear goal in mind about where you want to be in the next two or three decades. This goal doesn’t have to be a monetary one.
It could be that you intend to do one particular thing in your life. Exploring, doing research, developing your own unique business enterprise–the options are never-ending, but you are going to need to have cash for every one of them.
Having an ambition is going to stimulate you to care for your hard-earned cash in the here and now.
An additional tactic is to examine your existing financial commitments and ask yourself if you’d like the exact same standard of life later on. Possibly you’d like a life with much more comfort, or potentially you are happy with exactly where you are.
You need to place yourself in the future and work backward to decide how much money you need to save and how to go about achieving it.
Get Professional Help
No matter how much control you gain over your finances, it’s still always best to get help from a professional.
After identifying the reasons you’re experiencing financial phobia, it becomes easier to get help. This way, you can also manage to pinpoint what exactly is troubling you so that experts can tell you how to go about dealing with it.
Struggling with debt is a problem many people face. Institutions and agencies exist specifically to help people set themselves free of their debts and manage their expenses properly.
Experts can also help you with making smart decisions about where and how much to invest so you can maximize your savings and reduce costs as much as possible.
Bottom Line
Managing money is hard and sounds scary. After all, that’s why there are entire industries around it.
But that doesn’t mean it’s not doable.
At first, the numbers might look intimidating, but by tackling things one at a time, you will eventually be able to fight your fears and face all those scary numbers head-on.
Remember: Phobias are not rational, and running away from them does not fix the problem.
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