accumulated debt

By Dr. Charles Richards

Why is it that just when everything seems to be going well financially and you feel like you’re getting ahead, something seems to crop up that alters your plans? In my practice as a psychotherapist, I’ve seen this pattern play out in clients and others many times. If this has become a pattern for you, you may be unknowingly engaging in behaviors that are hurting your relationship with money. To uncover how you can stop sabotaging yourself financially, let’s look at ten common ways people psychologically undermine their relationship with money and what to do about them.

Tying Your Self-Esteem to the Amount of Money You Have

This is one of the most common ways that people hurt their psychological relationship with money. Many people believe that if they could somehow acquire more wealth — for example, get a raise or afford a bigger house — they’d finally feel good about themselves. I’ve seen this struggle in some of my clients, including affluent ones. Yet with each new purchase or rise in worldly esteem, their inner sense of worth, or lack of it, stays the same. Although it may seem paradoxical, believing that your value as a person is tied to your bank account can hold you back from achieving prosperity. While money helps many things, it has little long-term effect on one’s self-worth, and a sturdy sense of self-esteem is a cornerstone of what I consider a healthy psychology of wealth. Fortunately, the steps required to strengthen your financial health are the same ones that will increase your self-esteem — i.e., accomplishing even small tasks that are difficult, creative, or nurturing.

Allowing Yourself to Become Unconscious of How Much You’re Spending

Letting yourself lose sight of what you are spending may be the single most damaging thing you can do to your relationship with money. It’s also one of the easiest behaviors to slip into. Retailers and advertisers are experts at pushing our psychological “buy now” buttons. They use psychological tricks to lull us into spending more than we intended. This separates you not only from your money, but from a sense of mastery over your own resources and financial goals. Here’s a simple but powerful psychological trick you can use as a consumer: raise your awareness by writing things down. Write down your financial goals for the next year, quarter, week, and 24 hours. Then keep a journal of how much you are spending each day for a week or two. Do your spending habits match your goals?

Borrowing Money in Ways That Discourage Awareness of How Much Debt You’ve Accumulated

How many times a day do you pull out your credit card to make a purchase without even thinking about it? And when the bill comes, do you always remember what you bought? Credit cards are convenient, but they can make it easy to pile up debt. This is not only because you can use a credit card to borrow money instantaneously, but you can also make minimum payments almost indefinitely.

If you feel anxious and out of control of your money when you see your credit card bill, something is amiss. The anxiety itself can set up a self-defeating, up-and-down cycle of borrowing and spending (a.k.a., “retail therapy”) that only puts you deeper into debt, while making you feel more out of control and anxious. For daily purchases, it’s better to use debit cards or cash. This makes you more conscious of what you’re spending, since you can only buy what you can pay for. Credit is a powerful and positive tool when used well. To borrow without anxiety, seek out credit options that require you to deliberate about what you’re borrowing and buying, and that have disciplined repayment plans.

Negative Thinking Exacerbated by Expectations of the Worst

“I sure would like a better-paying job. But so many people are looking for jobs now. The competition is way too tough, and I’m no good at interviewing. There’s no way someone would want to hire me.” Sound familiar? If you really pay attention, you might be shocked at how many negative thoughts you have in a day. This negative inner chatter can undermine your self-confidence and cause you to miss financial opportunities that are right under your nose. When you find yourself thinking a negative thought, replace it with a positive one.

Reluctance to Give to Others

If you’re feeling financially pinched, generosity to others may feel like a low priority. You may hesitate to engage in even small acts of generosity because you’re afraid you won’t have enough for yourself. Yet this feeling, however factually based it may seem, can be a self-fulfilling prophecy and constricts your own monetary flow. Money can be regarded as a form of energy — energy that flows through our society, economy, and individual lives. A thriving psychology of wealth requires trusting that, no matter what happens, you will have enough. As a form of energy, money is never truly lost. To get the financial flow going in your own life, try being generous with others — with your time and attention, if your bank account is currently in a “modest” phase. Doing so can renew your energy, inspiration, and motivation to move forward.

Allowing Yourself to be Discouraged by the News Media

Have you noticed how much of the commentary and entertainment in the media these days is extreme? We have extreme sports, extreme politics, extreme makeovers, etc. If it isn’t mind-blowing, it isn’t newsworthy. And the good news doesn’t get much attention. Much of this “news” reinforces the idea that the economy has gone to the dogs and, with it, opportunities to create abundance in our personal lives. If you find yourself obsessively tuning into the bad news and fretting about it, take a break and read a book or watch a movie with an uplifting story or empowering financial message. Doing so can be a remarkably effective way to change your attitude about what’s possible.

Expecting Money to Buy Happiness

Perhaps you’ve heard it before: Money can’t buy happiness! As common sensical as this is, it can be easy to believe otherwise, especially if you’ve been struggling financially. Believing that money has special powers for generating happiness can cause you to postpone discovering and pursuing what will really manifest your vision of a fulfilling life. Thoughts like, “Everything would be OK if I were just rich,” or “I can’t start my dream business (or travel, or exercise properly…) until I have much more money” are self-defeating and usually simply untrue. While being financially comfortable certainly beats being broke, as Szifra Birke (who is both a wealth counselor and psychologist) wisely states, “Money tends not to solve personal problems; money solves money problems.” Put your attention and energy into what you can do, rather than what you can’t.

Hanging Out with Pessimists

Recent studies show that the people in our social networks have an outsized influence on our outlook, health, and even on our weight. Family, friends, and associates who gripe about their finances and fret about their prospects can negatively affect our own attitudes about money. Fear and pessimism can be contagious — but so can hope and enthusiasm. Cultivate relationships with people — co-workers, mentors, friends, and family members — who speak positively about money and are generally optimistic. The positive attitude that rubs off will help you see financial opportunities where you might have missed them before and give you more energy to pursue those opportunities.

Denial

While it’s beneficial to dodge the Debbie Downers in your world, putting your head in the sand and avoiding a realistic assessment of your finances can be downright dangerous. Interestingly, this kind of avoidance often produces more anxiety about money than knowing exactly what’s in those unopened bank and credit card statements. Anxiety isn’t a healthy state from which to make financial decisions. Facing your fear will most likely alleviate it. If you need support, ask a friend or family member to help you bite the bullet and take a clear-eyed look at your balance sheet. Armed with a realistic picture of your finances, you can start to make an action plan for either repairing or building on an already healthy state of financial well-being. Take small steps if you need to.

Fear of Taking Risks

Common sense says that saving and setting aside money for emergencies is prudent. The sense of security that savings can bring is worth its weight in gold. But fear and avoidance of all financial risk — including investments and even some debt — can severely limit your ability to move forward in life. The responsible use of credit — and the trust in yourself that it requires — is essential to the commerce of life, and investing in yourself is necessary for growth. This can mean anything from taking out an affordable installment loan to buy a more reliable car, to taking classes that will enhance your appeal to employers, to stretching a bit to purchase a classy suit for job interviews. You are always a worthy investment.

Charles Richards, Ph.D., is the author of the New York Times bestselling book, The Psychology of Wealth: Understand Your Relationship with Money and Achieve Prosperity, and a licensed psychotherapist in private practice in San Diego, California. You can learn more at PsychologyofWealth.org