- We've said it a million times,
but it bears repeating,
money is not just numbers and math.
A dollar bill doesn't have any value in itself.
It's a symbol of human values.
What we want, who we trust, what our priorities are,
how you decide to spend it or save it
can be a window into your hopes and dreams,
but also your fears and traumas.
- The point is money is intrinsically emotional.
We can try to be as rational as possible
when making financial decisions,
but your brain is not a spreadsheet.
Besides, good financial decisions
should take your emotions into account.
What would be the point of money
if it couldn't make you happy?
- But, sometimes, our emotions
can hijack our financial decision making
in a way that is recurring and self destructive.
- When someone slips into such a pattern,
it's known as a money disorder.
There are many different types
with different causes and negative impacts.
- You might recognize one in someone you know or yourself.
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- In their book, Mind Over Money,
financial psychologists Brad and Ted Klontz
divided money disorders into three main categories,
money avoidance, money worship,
and relational money disorders.
Money avoidance refers to people who,
for one reason or another,
are made very uncomfortable by the idea of money
and go to dangerous lengths to escape the topic.
The most common type is financial denial,
often spurred by income loss, overwhelming debt,
or other financial woes.
Those suffering from financial denial
avoid all reminders of their money problems.
This can mean never checking their account balances,
ignoring credit card statements,
and, in extreme cases, neglecting bills
or not filing their taxes.
- Obviously, you can only pretend for so long.
Eventually, reality will assert itself
and the longer you've had your head in the sand,
the worse the consequences will be.
A bad credit score is the least of your worries.
You could go bankrupt, get audited, even evicted.
In trying to avoid the emotional pain
of facing your money problems,
you've just made those problems much, much worse.
- A less common
but still damaging form of money avoidance
is known as financial rejection.
If someone has low self-esteem,
gaining money can trigger feelings of guilt
and worthlessness.
They may deliberately avoid steps
that most of us would consider financially smart,
like asking for a raise or making long term investments.
They may also give their money away to family, friends,
or strangers.
- That doesn't sound so bad, noble even.
After all, many of our cultural and spiritual heroes
rejected the pursuit of money.
- Sure, if you make a conscious choice
to give all your possessions away and live a monastic life,
we're not gonna say that's not a valid life choice,
but if you're doing it out of compulsion
to avoid negative emotions about yourself,
that may be a disorder.
- And, you may put your
and your family's financial wellbeing
in serious jeopardy along the way.
- On the other end of the spectrum is money worship,
which describes people who rely on money
to alleviate emotional pain or anxiety.
For example, most of us have occasionally spent
a little more than we intended
or bought something we regretted,
but compulsive shoppers use the act of purchasing
as a temporary relief from feelings
of depression or anxiety.
- It may feel great when the credit card is being swiped,
but once the shopping spree is over
and you're back home with all the stuff
you know you'll never use,
the negative emotions set back in, even worse than before,
with a hefty credit card bill to boot.
- Compulsive gambling is one of the few money disorders
officially recognized
by the American Psychiatric Association Diagnostic
and Statistical Manual.
And, it doesn't just happen at the casino or the racetrack.
An addiction to the risk reward dopamine cycle
can be gratified by lottery tickets, stock trading,
even video game loot boxes.
For compulsive gamblers,
the thrill of winning is so intoxicating
that they're even willing to risk
their family's livelihood for it.
And the pain of losing is so great
that the only thing that can alleviate it
is to chase the high of winning again.
- Earning and saving are generally considered
to be positive financial behaviors,
but even they can be taken too far.
Workaholics get so anxious when they're not working
that they can't enjoy their hobbies, vacations,
or time spent with family.
And hoarders are so intent on building their money pile
that they may deprive themselves of important life goals
and experiences.
Again, what pushes these behaviors
into unhealthy territory
is that the activity is not pursued
for its own pleasures or benefits,
but as a ritual to keep negative emotions at bay.
- Lastly, there are relational money disorders,
disorders that involve close relationships with spouses,
family, and friends.
Financial infidelity
is the act of deceiving one's partner about money matters.
This can mean secret spending and debts,
keeping a private bank account,
or even stealing from each other.
Financial infidelity is often related to other disorders
like a spouse who has to cover up debts
resulting from compulsive gambling.
- Financial enabling and financial dependency
are two sides of one coin.
They refer to an unhealthy relationship
in which one person is totally reliant on the other
for all their financial needs and accounting,
even if they have the means to be independent.
This is most often seen in parents
who continue to support an adult child
who takes no responsibility
in their own financial situation.
- This is not to say
that people shouldn't help each other out
during tough times.
Lord knows our parents did it for us,
but if it's a long term recurring dynamic
in which the parent is sacrificing their own retirement
for a child who is not even making a plan
to become independent,
then it may be fair to call the relationship dysfunctional.
- Another relational disorder
is known as financial enmeshment,
when a parent inappropriately or unfairly
involves a young child into their financial hardship.
This can be done to elicit sympathy,
to make the child feel guilty for the costs they incur,
or even to demean one's spouse in the child's eyes.
- If you recognize any of these disorders in yourself
or someone close to you,
you may be wondering what can be done about them.
- Anything so connected to emotions has no easy fix,
but there are some places to seek help.
You can ask a spouse or other family member
to help manage the household's money
or you can use apps that schedule
and automate payments and investments.
- But that may not free you from the trauma
or anxiety that causes the disorders in the first place.
There are a lot of resources out there,
from books to podcasts,
to help you identify your emotions,
and not feel so alone.
- But talking with a professional,
like a therapist or psychologist,
is often the best way to support your financial
and emotional wellbeing.
- [All] And that's our two cents.
- Thanks to our patrons
for keeping Two Cents financially healthy.
Click the link in the description
to become a Two Cents patron.
(upbeat music)
If you wanna sit in on our session
with a financial therapist,
check out our video: "Philip and Julia Go to Therapy."