Here's how to break the 4 key bad money habits
Why are some of us tormented with guilt every time we spend, yet others will fritter their wealth away? Why do some couples argue incessantly about money, and others harbour financial secrets? According to therapist Vicky Reynal, we all have unique ‘longings, fears and internal conflicts’ shaped by our experiences that express themselves via money. Left unchecked, they have the power to influence our relationships, health and financial futures.
In her book, Money On Your Mind: The Psychology Behind Your Financial Habits, Reynal examines some of our more extreme money behaviours, from a difficulty with overspending that speaks to a deep-seated desire to fit in, to a pattern of self-sabotage that’s borne out of an inner sense of shame. Here, she shares four common challenges, and how we can go about resolving them.
Overspending
I’m often asked: ‘How do I know if I have an overspending problem?’ Most overspenders that come to see me have usually tried a few things: getting rid of credit cards, budgeting carefully, enlisting a friend or family member to report back to on their spending. But these tools and strategies can only go so far.
For some, the reason behind overspending can be quite straightforward: if you grew up in abundance with a sense that money was unlimited and your parents didn’t guide you in thinking about choices and trade-offs, you might turn into an adult who spends carelessly.
For others, there’s a more intricate web of psychological and emotional reasons, such as a fear of abandonment or a desire to fit in. Buying objects can become, temporarily at least, a triumph of self-reliance, a seemingly perfect defence against an unconscious fear of being let down. And it can be our feelings from the past, such as inadequacy or even humiliation, that are sitting in our unconscious when we buy yet another pair of shoes.
Dig deeper
Take a pen and a piece of paper and see if you can name some of the feelings behind this behaviour. Once you’ve identified them, try sitting with them. If it’s sadness you’re trying to distract yourself from when you spend, what is the sadness about? Can you find a healthier way to defend against it?
It can also be useful to think about how the purchasing starts. When do you spend? If it’s when you’ve just left a social setting, could your spending relate to insecurities about how others will ‘see’ you or your discomfort in that environment? If it’s at bedtime, is your spending triggered by loneliness?
Lastly, consider what it is that you spend excessively on. Is there a pattern in the sorts of things you purchase? Is it cosmetics and surgeries? Gadgets? Food? Where could the desire for these particular things be coming from?
Underspending
A difficulty with spending money can take on many forms, from living a miserly life despite having enough cash in the bank, to wrestling with feelings of guilt any time you spend. While we all have different definitions of what are frivolous versus necessary expenses, an underspender may wish that they could enjoy their money more, or feel envious of people who spend (this can also manifest as being openly critical of people who ‘over-indulge’).
Generally, there are two camps: those who are self-denying while managing to be generous with others, and those who are financially withholding with others, while having no trouble spending money on themselves. The reasons people find it difficult to part with money range from a lack of entitlement to wealth shame, to feeling pride in deprivation to issues of control.
People who struggle with underspending often don’t even make it to therapy, because investing in their own wellness and self-improvement can even feel too indulgent.
Dig deeper
The first step is in understanding if your struggle is a general difficulty letting go of money, which could very well be linked to greed and anxiety about not having enough. If this doesn’t resonate, ask yourself which things, people or events you find it easier to spend on, and which feel more problematic or guilt-inducing. It will help establish if you’re ‘classifying’ expenses in your mind and what that might mean.
Now think about how you feel when you deprive yourself of things. Do you feel pride? Shame? Is there a part of you that believes not spending is more noble than allowing yourself to have good things? It can be helpful to look at other areas in your life: are you a person that lives on the ‘bare minimum’ of everything?
Self-sabotage
While the drivers of self-sabotage are varied, the common thread of this behaviour is an unconscious perception that there is some sort of a psychological benefit in financial avoidance, destruction or failure. Examples can include continuing to invest in a failing venture, not opening bank statements for months, or rushing into financial choices without doing much due diligence.
In my experience, self-sabotage is predominantly driven by three feelings: guilt/shame, anger/resentment and fear. Perhaps you grew up in a family where there was contempt for wealth, so you feel guilty about having something ‘good’. Or perhaps you keep yourself in a place of financial need as a powerful defence against the fear of finding out that money won’t get you what you hoped for. The key to exiting this negative cycle is to understand and manage these feelings.
Dig deeper
We’re often unaware we’re self-sabotaging, so it can take some digging to understand the motives and unconscious thoughts behind our behaviours. Once the light bulb has gone on and we’re able to see what it is that we’ve imagined there is to gain through self-sabotaging, we can choose to continue paying the price of that psychological victory or find a different way.
If it’s anger you feel, is there a way to manage the anger or even express it so it loses its power, so you end up in a healthier place than where you’ve been headed? Avoiding facing difficult emotions can come at a very high cost, so ask yourself: is it really worth it?
Money secrets
There are all sorts of money secrets that people keep, from hiding purchases to lending money without consent to concealing a source of income or debt. According to research*, around two in five of us have committed a form of financial deception, with 38% admitting to hiding savings from a partner (£1,600 on average).
Money secrets often mask our insecurities, and, in reality, a partner is only as critical of us as we are of ourselves. Sometimes we intend to ‘confess’, but that confession keeps getting postponed out of fear.
Whether it’s anxiety about being taken advantage of that makes us stash away an emergency fund, or being overburdened or smothered by a parent that prompts us to open a separate bank account from our partner, money secrets are often driven by irrational psychological processes. Those that involve helping others (such as supporting children financially or loaning money to a relative) may be kept undisclosed because we’re ashamed of exposing to our partner how easily persuaded we are, or how hard we find it to say ‘no’.
Dig deeper
Is financial transparency always recommended? What I can advocate are conversations that create a shared understanding of the boundaries of privacy. Perhaps there is a scenario in which full transparency is not the best strategy, but in which you and your partner lay out expectations. What will be kept private, and what won’t? And will £xx a month be allocated to each person for personal enjoyment, without having to report back on expenses?
We often test the waters with our partners, giving up at the first sign of resistance, but secrets can cause more havoc when they come to light.
Money On Your Mind: The Psychology Behind Your Financial Habits by Vicky Reynal (Bonnier Books) is out now.
This article originally appeared in Red magazine.
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