Improving your financial life can sometimes seem like a trap – the same money problem you have to solve creates so much anxiety that you end up turning away from it altogether.
Seeking a better understanding of money issues such as managing debt, building emergency savings, and diversifying risk could increase overall happiness. A study released earlier this year by Finra and the Global Financial Literacy Excellence Center found that even before the pandemic, low financial literacy was a major contributor to financial stress and anxiety. The report analyzed survey responses from 19,000 Americans.
“Fear is literally crippling,” said Sonya Lutter, financial therapist and director of institutional research and education at Herbers & Co., a management consulting firm. Poor management or bad decisions can arise if seemingly insurmountable money issues, such as determining your total debt and how you’re going to pay it off, are ignored.
Another study, published earlier this month, overseen by Dr Lutter, found that the highest-paid Americans who sought out a financial advisor were nearly three times happier than those who managed their own finances – and those who went solo became statistically more unhappy as they made more money, which might show how difficult it can be to manage large sums of money on your own.
Here are some steps to face your financial fears:
Learn what you’re afraid of
The most intimidating part of dealing with your financial fears might be figuring out exactly what you’re afraid of and why.
When working with clients for the first time, financial planners often ask them to recall their very first experiences with money, which can provide clues to their approaches to money as adults.
The way a person handles their finances can vary widely based on their earliest memories of money. For example, someone who won an allowance may have a very different experience of money compared to someone whose earliest memory is of a single parent struggling to make ends meet, Mark said. Reyes, Certified Financial Planner and Director of Financial Advice at Albert, a management application.
Dr Lutter directs newbies to a tool she helped develop, the Klontz Money Script Inventory, which aims to bring out a user’s beliefs about money.
“Is fear running out of money? Is it a fear of embarrassment? she asked. “It really comes down to some of those observations we made when we were kids, whether our parents taught us that or not.”
Experts advise keeping a journal or telling friends and family about memories to better understand fear, which may offer more guidance on how to move forward.
Find targeted information
As with health information, all it takes is a Google search to get details on just about any money topic.
“Decide you’re going to read the books, watch the videos, take an online course,” said Brittney Castro, certified financial planner at Mint, another money management app. “Money is there for the rest of your life, so the sooner you learn to invest time, energy, and sometimes money in learning, the easier it will be. “
Chelsea Ransom-Cooper, Managing Partner and Financial Planner at Zenith Wealth Partners, recommends a pair of recent books to help allay financial fears: “Get Good with Money: 10 Simple Steps to Becoming Financially Whole”, by Tiffany Aliche, an approach by the personal finance educator known as “The Budgetnista” and “The Psychology of Money: Timeless Lessons in Wealth, Greed and Happiness” by Morgan Housel. It presents financial takeaways through short stories.
People should also browse blogs and frequently asked questions on the pages of official agencies such as the Big Three Credit Bureaus and the Consumer Financial Protection Bureau, said Angela Holliday, president of Frost Brokerage Services and Frost Investment Services. For people who might be intimidated by the process of cleaning up their credit, she suggested, these are good places to start for some basic advice.
Ms. Castro said consumers can access in-depth financial information for free by following top YouTube influencers. While social media platforms are teeming with financial influencers providing basic tips and tricks, Ms Ransom-Cooper warns that influencers’ backgrounds can be unclear. Some may be sponsored by financial companies offering certain products or services.
“It’s just hard to filter through what’s real, what’s not and who actually has the education to express that,” she said.
Consider a financial planner or an affordable alternative
Hiring a planner or financial advisor can provide an objective view of your spending, help you understand why you’re avoiding things like paying off credit cards or student debt, and provide some degree of responsibility.
Many people turn to family, friends, and peer networks for referrals or free databases from financial planning associations, such as the National Association of Personal Financial Advisors (or Napfa) or the XY Planning Network.
SHARE YOUR THOUGHTS
What are your tips for dealing with your financial fears? Join the conversation below.
Planners are often out of reach for those who need them most, said Dr Lutter. Many large cities have free financial advice centers, she said, and certified planners, who tend to work with high-income clients, often participate in free days, during which planners provide advice. free individual advice to consumers. If you are interested in attending sessions, such as those organized by the Foundation for Financial Planning, you can consult the event calendars of the sponsoring organizations.
If you have a therapist, consider addressing your financial anxieties at your next session, Ms. Ransom-Cooper said. If you have friends in similar situations, share your concerns and compare your notes.
“Hiring a financial planner is a bit expensive and very uncertain,” said Dr. Lutter. “So I don’t want to discourage people. There are tons of options out there.
Write to JJ McCorvey at [email protected]
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