The intricacies of managing personal finances can evoke anxiety and stress for many, particularly for the younger generation. This fear can escalate beyond everyday concerns, transforming into a genuine apprehension towards money. This apprehension, often referred to as chrometophobia, can manifest in various ways, from excessive worry and anxiety to physical ailments.
Even if your financial anxiety doesn't reach clinical levels, it can still hinder your progress in managing your finances and achieving your financial goals. The origins of this fear can be traced back to childhood experiences and the messages we receive about money.
Financial therapist Khwan Hathai, a certified financial planner with Epiphany Financial Therapy, explains, "Children often absorb and mirror their parents' financial attitudes. Parental anxiety or negativity about money can directly impact their children's financial perceptions."
Moreover, a lack of financial education can contribute significantly to this fear. According to Hathai, "Many young individuals feel ill-equipped to handle their finances due to a glaring absence of formal financial literacy education in their upbringing."
The consequences of this fear can be far-reaching, affecting various aspects of someone's financial life. Hathai notes, "Some young people may resort to avoidance, steering clear of financial responsibilities or ignoring bank statements. Others might find themselves in the throes of overspending, using it as a form of escapism or a way to seek validation."
To help young people address and overcome their fear of money, we spoke with three financial professionals. Here's what they had to say.
Understanding the Root Causes
The first step in addressing your fear of money is understanding its origins. Hathai advises, "To begin addressing these fears, the first and most crucial step is acknowledgment and reflection."
This process involves recognizing your fear of money and introspectively examining your emotions and thoughts about money. Hathai notes that common underlying causes include a lack of financial education, parental influence, societal pressures, and past experiences with money.
Educating Yourself
For many young people, their fear of money stems from a lack of knowledge and understanding of personal finance. Fortunately, there are numerous resources available to help you improve your financial literacy.
According to Kimberly Hamilton, an accredited financial counselor and founder of Beworth Finance, "Thanks to technology, more resources are available than ever before to learn about money and take steps towards a strong financial future."
Some resources that may help include MyMoney.gov, Consumer Financial Protection Bureau (CFPB) Consumer Resources, Federal Deposit Insurance Corp. (FDIC) Money Smart, and U.S. Office of the Comptroller of the Currency (OCC) Financial Literacy Resource Directory. Additionally, websites, podcasts, and social media pages by financial professionals can provide valuable insights and guidance.
Identifying Your Goals
Setting specific and achievable financial goals can help you take the first steps on your financial journey. According to Hamilton, "These may be things like building credit, paying down debt, or building up an emergency fund, but each should have an associated dollar amount and date."
Once you've identified your financial goals, break them down into smaller, manageable tasks. For example, instead of focusing on paying off debt in its entirety, break the goal down into smaller steps like creating a budget, prioritizing debt repayment, and setting up automatic payments.
Starting Small
Tackling your fear of money and mastering your personal finances is a gradual process. Starting small can help you build financial habits and gain confidence in managing your money.
One way to start small is by building savings, even if it's just a small amount each week. Another example is investing, which no longer requires a significant financial commitment or the help of a financial advisor.
Regular Check-ins
Consistently reviewing and adjusting your financial plans can help you stay on track and foster a healthier relationship with money. Regular check-ins are also an opportunity to consider new financial goals and celebrate your progress.
When to Seek Professional Help
If your fear of money is significantly impacting your life and preventing you from addressing your financial obligations, it may be worth seeking the help of a professional, such as a financial therapist or advisor.
According to Shaywanna Harris-Pierre, an associate professor and licensed professional counselor at Shades of You Counseling and Consulting, "Financial therapists work with people on the intersection of their emotions and their finances. A financial therapist can help facilitate an understanding of your money behaviors and the underlying emotions driving those behaviors to help you develop a different relationship with money and be successful in engaging in new money behaviors."
A financial planner or advisor can also provide guidance and support in establishing a money management plan and reducing your financial anxieties.
In conclusion, a fear of money can hinder your financial progress and limit your potential. However, by understanding the origins of your fear, educating yourself, setting financial goals, starting small, and seeking professional help when needed, you can overcome your fear and take control of your financial future.
