A recent survey showed that more than half of all Americans fear for their financial futures. Another study says that 77% of Americans feel anxious about their current financial situation. Even if both of the surveys overstate the numbers, the fact is that many of us have phobias about our finances. Many are rooted in past traumatic events or our upbringing, or from cultural and societal pressures that can trigger the fear of financial failure. Our emotional backgrounds influence our behavior, often negatively, frequently in hidden ways.
Researchers at Cambridge University have identified some of the most common money phobias that will cause our heart to race, or make us feel physically ill, keep us up at night and in the worst case, become immobilized when we should be acting. Some common phobias are (with some difficult names):
Chrometophobia, which is defined as an extreme fear of spending money. (Even the thought of doing so can trigger a panic attack.) It includes the fear of thinking about money and includes the fear of opening financial statements.
Plutophobia, the fear of becoming wealthy due to the associated responsibilities it brings or potential negative impacts on our lives and relationships. (Think: the uprooted lives of lottery winners.) They generally dread money and having to deal with it.
Atychiphobia, or fear of failure, can prevent people from taking even calculated risks in their lives; it may cause you to put off or avoid any activity or scenario that has the potential for an unsuccessful outcome.
Peniaphobia is the intense fear of poverty. The ‘bag lady syndrome’ can trigger extreme anxiety.
What you can do to manage your fears:
Fear of Spending:
It helps knowing that you spend within your means. For this, first track your income and your spending to understand where your money goes. Then make a spending plan that includes fun and entertainment. Set reasonable goals for your spending and keep reserves for overspending a little. Monitor your plan quarterly.
Fear of Becoming Wealthy:
Before we can change our money patterns, we must first become aware that we’re afraid. Although becoming wealthy can uproot your life, not only by winning the lottery, but also by accumulating wealth throughs saving, selling a business, or getting an inheritance. Make a Financial Life Plan for what is really important in your life and stay the course. Your financial advisors can help you managing the money and monitoring your risks.
Fear of Failure:
Although failing is a legitimate fear, don’t let it paralyze you and stop you from trying new ways to make more money. If you want to start a business or try your hand at investing, go for it. Take steps to lower the risk of failure by educating yourself. One of the best ways to combat this fear is to be aware of your financial situation and be prepared for the unexpected and mitigate the risk. A financial plan is invaluable to help you understand your assets, liabilities and plan for your future.
The Fear of Poverty:
Face your fear of money head on. Instead of allowing yourself to worry about your finances in times of crisis — when bills are due, or bank balances are low — think about your finances proactively and plan out all of your expenses. Set up an emergency fund to put yourself at ease; this will save you in difficult times.
The bottom line for managing all financial fears is to know how much income you have and how much you spend. Understanding your assets and liabilities is crucial and a good financial plan will help alleviate worry.
