Fear of Money
Fear of money? Are you kidding? Not at all. Read on if you think I’m crazy.
How well do you understand money? How well do you understand how money flows in and out of your life? Can you directly link your financial health to how you feel? Who taught you to balance your checkbook? Do you know how to pick a good mutual fund? Do you understand financial risk? Are your assets diversified? Is debt ever a good thing?
I’m asking these questions because I am constantly astounded about how little people understand money. Many people live paycheck to paycheck. Many people complain about money. Many people are on the brink of bankruptcy. Many people are looking to win the lottery.
The truth is that most people simply don’t understand how money works. They don’t understand what money is. Money is critical to people, yet they don’t know much about it.
Why?
You don’t really learn about money in school. If you are lucky, you learn about it at home or from your friends. However, if you don’t have a good teacher, you can be in big trouble. Even if you learn on your own, you’ll never really know if you are seeing the entire picture.
You might turn over your money to a financial advisor. But, do you understand what the financial advisor is really doing? Do you know how to pick a good advisor? Are financial advisors working in your best interest? How do you know?
Money seems so simple, but maybe it isn’t. Maybe that cash in your pocket means something different than what you think it does.
Here’s the radical point: Most people are afraid of money. They have fear about how to get it and how to keep it. They have fear about how to handle it when they do have it. They even have fear about how to spend it. They have fear of losing it. Sadly, most people don’t seem to feel good about money.
If you have a minute, talk about how you learned about money. Did your parents throw you a clue? Also, talk a little bit about how you feel financially. That is, do you have a simple way to match your financial situation to how you feel? Do you know from month to month if things are getting better or worse? Do you fear money? Do you know why you fear money?
April 25th, 2005 at 3:16 pm
I never received any money training. When I turned 21, I got $15k which I burned through in 3 months with not much to show for it. I still have bad money habits. I know I am better off now than I was 5 years ago, but that is entirely because I have a child now. I _have to_ attempt fiscal responsibility.
Sadly, I feel very good when I have money and feel borderline depressed when I don’t. I would definitely encourage everyone to see a financial advisor. I wouldn’t hand over my account to one, but we went to one and it was helpful.
April 25th, 2005 at 6:10 pm
I’m still pretty simple minded when it comes to money but I haven’t had to live paycheck-to-paycheck for the last half-dozen or so years. Still it’s hard to get out of that mentality. I’m self-taught when it comes to managing my money. I had to learn when I was younger and living p2p. I had to balance my checkbook at least weekly because I always had to run my balance low and had bounced a few checks. I wish I knew more about investing and the stock market. I’ve got a 401k (cafeteria?) going at work but I wish I understood it more. Also, I never could save money when I was younger but with diligence I’ve gotten better at it. Now that I have a bit of a nest egg built up I hate to tap it for anything. I’ve gone from living p2p to being a hoarder.
“Money, sex and air. None of them matter until you have none.”
John B
April 25th, 2005 at 8:56 pm
* When you live p2p there is fear all of the time.
* When you can start saving, you fear you aren’t making good choices.
* When you have a pile, you fear losing it.
John B, you are saying what I have heard many times. First, not many people have a solid education in personal finance. Second, there is fear about money before you have it, when you make it, and after you have it. The fear is always there, grinding you down.
April 26th, 2005 at 2:56 am
Great post. I think (though sub-consciously) that I was afraid of money until a few months ago. Then, I decided that the best way to conquer your fear was to face it. I went and bought a sports car. Kidding. ;-)
I got into learning about money; read articles, subscribed to newsletters, and suddenly, I got a decent idea of what to do. I’m a much better money manager now than I was a year ago I would say. The reason for the change is that I switched from a full-time job to a freelancing situation, so that’s made me much more aware. When you know that the paycheck at the end of the month isn’t coming, that’ll fix you in a hurry.
I was reading a book recently where the author talked about how she was so afraid of her tax forms and her statements but she decided that it couldn’t be all that hard to figure out and learned how to do it and now she’s better informed. I think that it’s a matter of making a choice of whether you want to figure out how to manage your money or whether you want someone else to manage it for you. For me, I’d rather do it on my own and make my own mistakes than give away something that I’ve worked hard for to someone else.
I think the fact that we are never taught about money in school or college is one big reason why we’re scared of money. I am sure that’s a big reason for abusing your credit card too. I’m still unsure about investing but I think that I know a little more than the average person, so for the moment, I am happy with that.
I found a couple of blogs about money management but I am not sure if I should post them here, so I won’t.
Percy
April 27th, 2005 at 2:59 pm
Rule #1 for money management:
Spend less than you take in.
If you can’t follow Rule #1, there’s nothing but problems ahead. Spending control is essential.
Once you have mastered Rule #1, then you have some money to manage.
April 27th, 2005 at 4:13 pm
Money management is oral culture. You learn it from your family, if you happen to come from a wealthy family. If not (like 99% of people in the world), you will end with fear of money.
For most people, money is the result of hard work: you work to earn money, and that money is equivalent to consumer goods that you can acquire as a reward for your work. A few will be lucky learn at college that this is not true, but most people with money have it or know how to make it as a tradition from their parents.
Truth is that money isn’t goods; you can make items and find that those items are sold at a very low price in the market. No, money is *power*. The power to persuade people into making your will. Wealthy people think of money as the result of a succesful persuasion, and wealth as a resource to produce more money. For them, every exchange is a market opportunity, and every dollar must be invested into the most profitable business. This is the culture of money, and only a selected few are in the secret.
May 4th, 2005 at 4:47 pm
I agree that it is much too mystical for most people. I thought my daughters were going to be taught about money in school, but I don’t think they have been yet. I admit I’m afraid of it because it can disappear all too quickly, especially as government spending grows and grows with no real limits on what it can take from you.
November 23rd, 2005 at 10:26 pm
In my personal experience, there seems to be a common fear of money among start-up entreprenuers. A fear of invoicing, following up on collections, asking for money. In your opinion where does this behaviour stem from (childhood and learned habits?) and what steps can be taken to overcome this fear?
July 6th, 2006 at 7:00 pm
i am an aspiring actress: I aspire to make more consistent money.
When i’m between acting gigs, I bartend or waitress. When i’m counting money, my heart races and my hands nearly shake. I almost panic. I’m afraid people think i’m stealing it or something.
I seem to repel money becasue I can’t seem to hold onto my parttime gigs.
When I’m broke, i’m the most miserable soul i know; I become desperate but actually more creative about how to pay the freakin’ bills. But i also become a burden to my friends becasue they get my “poor me” speeches and usually end up housing me while I sublet my apartment for a few nights at a time to help with the rent. (I live in Midtown Manhattan so its’ quite easy to sublet for 3x what one would normally pay)
When I have money everything is copaceticc. I don’t stress, I’m happy and I sleep better. I’m less ambitious and wish, pray and do voodoo rituals to keep the money situation at status quo.
The problem is…I never have consistent money coming in. When I do have a part-time job, it seems I end up in the lousiest lowest paying parttime bar/restaurants there are in the city.
July 9th, 2006 at 9:52 am
This fear you speak of, does anyone also have a fear of checking their bank account or even counting the money in their purse or wallet. On paper does there look as though there is more then plenty of money to live a great life but in reality you are refinancing your home twice a year or trying desperately to find out how to repair you credit. Ever thought about getting a job at a credit bureau just so you can wipe out all your dept and change your credit rating? Why, and more so what is the answer to getting help. Classes on money awareness, hypnosis for a spending habit or classes on enabling people that you constantly help with money?
July 11th, 2006 at 7:07 am
I finally conquered balancing my checkbook after my first marriage–my exhusband made a habit of ridiculing me when I couldn’t make it come out right every month! I ratcheted down on my receipts and got a serious calculator, and now, I balance to the penny every month. I recently downsized to a smaller apartment with my boyfriend, and have a reasonably well-paying job that I enjoy. The only thing is, I still don’t have a savings account, I don’t have an IRA and although I have taken the time to draw up a monthly budget, I still spend every dime I earn paycheck to paycheck. I feel edgey and afraid–I actually woke up at 5:00 this morning, unable to sleep, trying to figure out where I could squeeze out just a few dollars more….
I found this website after doing a simple search for “fear of money”. My lower back is hurting me this morning, and according to an author named Louise Hay, this represents “fear of money; lack of financial support”. I never thought I could actually be afraid of money–most of my life, I’ve been afraid of not having ANY! And now that I have no reason to be without money, I’m still spending every penny because I’m afraid to hold on to it.
And, I’m afraid to admit, I am one of those waiting to win the lottery, (and afraid of what will happen to me when I do!)
I want to get to the root of this fear, and get on with my life, the way I want it to be.
March 7th, 2007 at 4:40 pm
To Veronica: OMG yes! The thought of checking to see what is in the bank actually makes me sick and even pushes me to tears at times! I don’t know what it is, or even when it started, but I am totally scared of the bank. I know I’d be much happier of I could overcome this fear.
July 3rd, 2007 at 10:37 am
Its sad to say but I also am one of those people that their checkbook never balances each month, always off a few dollars and I sit and try and find my error.
March 5th, 2008 at 4:19 pm
I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.