Many of us have experienced money anxiety at some point in our lives. Whether it’s buyer’s remorse after a spontaneous splurge, worries about a big bill coming due or fears over rising inflation and living costs, it’s pretty normal to feel a little apprehensive about money. But what happens when those nerves dictate how we behave? Could the weird ways we think about our money actually be considered, well, normal?
According to Dr. Karyn Hood, a Toronto-based clinical psychologist, people run into trouble when they let their dread around money disrupt their lives. Here’s one example: You intended to make regular contributions to your investments but haven’t for the last three months because news headlines have made you nervous about the market. Instead, you’ve been spending all the money you intended to save and have been feeling badly about it to boot.
“While the thought of money or making financial decisions can be quite overwhelming for some people, it really becomes problematic when that anxiety begins to interfere with day-to-day life,” she says.
We spoke with Dr. Hood about four common money-anxiety behaviours, how to recognize them and what you can do to help loosen their grip on your finances.
Behaviour #1: Avoidance
What it looks like: Lindsay, a university student advisor in Toronto, says she’s been avoiding her finances for years now: “For some reason, paying a bill or even looking at my bank account…it just makes me so uncomfortable.” Even though she’s never had a problem with affordability, Lindsay admits that her tendency to “avoid” has led to unnecessary credit card interest and late charges over the years. It’s even prevented her from accepting money electronically because that would mean logging in and confronting her discomfort.
Dr. Hood says this type of behaviour is often based on feelings of shame, fear and anxiety. To manage their emotions, people who exhibit avoidance may neglect their bank accounts, skip bill payments and mismanage other financial responsibilities. Although not always the case, Dr. Hood says people may feel overwhelmed by their finances because they grew up in households where money wasn’t discussed and parents looked after everything.
When it causes problems: Those who avoid their finances may find themselves with more debt, frequent late payment interest charges and a lower overall credit score. This type of behaviour can also prevent you from forming smart saving and investing habits you’ll need to achieve your long-term goals (like buying that house!).
How to work on it: Dr. Hood says awareness of the issue is the first step. “The next might be to use the 15-minute rule,” she says. “Essentially, taking 15 minutes each day to make some headway on whatever is piling up. Often we avoid taking action because the task seems insurmountable. Breaking it up into smaller steps can help.” Setting up automatic payments for regular bills and automatic contributions for savings and investment accounts can also work.
Behaviour #2: Splurging
What it looks like: In her book, The Real Life Money Journal, financial coach Clare Seal says although splurging may look like a simple lack of impulse control, it’s actually often deeply tied to our emotional or psychological state. With shopping, people who habitually spend indulgently may be trying to relieve a negative emotion, such as boredom, fatigue, stress, grief or loneliness. Dr. Hood says, “Buying something is that quick fix of instant gratification. But it doesn’t last long.” For more on financial wellbeing, here’s our conversation with Clare Seal.
When it causes problems: Most of us enjoy treating ourselves every once in a while. It’s when that splurge occurs again and again that we begin to run into trouble. Regardless of your financial situation, you may soon find yourself having difficulty saving for long-term goals and even paying your bills.
How to work on it: Dr. Hood says that those who find themselves overindulging at the mall or online may find relief by taking a closer look at the emotional side of their shopping habit — rather than just the financial. “Ask yourself: What is it that makes me feel like I need to shop?” she says. “Are there other ways I can manage this feeling?” In practice, this might mean making a new rule for yourself, like “no shopping past 9 p.m.,” or resolving to pay yourself first — that way, you can help ensure your spending decisions don’t come at the expense of your future. Limiting your time on social media can also help, particularly if your purchasing habits stem from an urge to “keep up” with the crowd.
Behaviour #3: Keeping money secrets
What it looks like: Money secrets come in many shapes and sizes. People may lie about how much money they’re making (or how little), how much debt they’re carrying and how much they have in savings. Dr. Hood says that these secrets are kept because the person either feels embarrassed by their financial situation, or they have pre-existing issues around trust. Others may have an addiction they want to hide, like gambling.
When it causes problems: The tendency to keep secrets is particularly detrimental for romantic partnerships and families. Because these types of relationships are built on trust and honesty, keeping a secret can often have a negative effect. Moreover, for couples who are interested in building a future together, it’s important to be transparent about your finances.
How to work on it: “It starts with awareness. Once you’re aware of how your behaviour is affecting your relationships, change is possible,” says Dr. Hood. She adds that these issues can be complex and those struggling with secret-keeping behaviour may want to reach out to a therapist for help. More on money secrets here.
Behaviour #4: Oversaving
What it looks like: This one might surprise you. After all, saving money is typically seen as a good thing. And it is. However, like the urge to spend money, the urge to save can become problematic when it starts to take over.
Here’s an example: Carly, a stay-at-home mom from Kamloops, British Columbia, says that her fear of the unknown means that she spends very little on the unnecessary. “For me, the anxiety comes from the things that pop up unexpectedly. Like, our washer just broke, or the furnace fan is going to need fixing. Being a homeowner, you’re often left with the question of: ‘What next?'” As a result of her apprehension, Carly says she spends very little on fun things. It’s not that she can’t afford the odd vacation or dinner out — it’s that she worries she won’t be able to afford something more important if bad luck strikes.
In tough times, Dr. Hood says that being frugal is reasonable for many Canadians, “but other times, that behaviour may be based on other things, like an upbringing where there was a financial hit — perhaps a job loss or a divorce. As a kid, you may have learned money can be here one day and gone tomorrow.” Another example of oversaving may be keeping all your savings in cash “just in case.”
When it causes problems: The difference between saving and oversaving is, of course, in the word “over.” Dr. Hood says, “You can be frugal and budget well, but when it crosses that line and starts to affect your quality of life. That’s when it becomes problematic.”
How to work on it: To resist your urge, Dr. Hood suggests oversavers start by building a budget to better understand how much money is coming in and going out. Next, she says you may want to try thinking with an “abundance mindset” rather than a “scarcity mindset.” Ask yourself: “What would I do if I knew I had an abundance of money?” Often, it’s our beliefs about a situation and not the reality that cause us to act a certain way. By realizing the two are not always the same, she says we may be able to relieve some of our anxiety.
It can also help to be smart about the savings you do have. Rather than stowing everything away in cash, you may want to consider putting that money to work in your Tax-Free Savings Account or a Registered Retirement Savings Plan. Unlike cash savings, which tend to grow slowly and may be eroded by inflation, well-diversified investments made over time can mean you have more of a financial cushion if and when you need it.
Ultimately, while money worries are common, Dr. Hood says the behaviours that result from this type of anxiety don’t have to be: “Becoming more aware of your money situation and hang ups can be very powerful. You can get more control over how you think, feel and act around money — putting you further ahead as you move toward your future.”
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