How 'money shame' can impede financial wellness
When people know they have a problem but are too ashamed to talk about it, how will they make any progress?
Employers looking to help their employees improve their financial wellness might consider a factor that can run under the radar—“money shame”—and sabotage their progress.
If people are doing—or failing to do—things with their money that they’re embarrassed about, and they don’t address the problem, it can booby-trap savings efforts or attempts to get or stay current with bills.
Embarrassment can keep them from asking for help, from admitting that they have a problem, and from making any progress..
In a CNBC report, people reveal some of the more compromising money secrets they hide (and secrets are often related to shame):
- Literally secreting money around the house (and very deliberately not telling one’s spouse about its location or its very existence)
- Spending on big-ticket items and not telling one’s spouse, probably sabotaging any attempts at budgeting the couple may make
- Buying lottery tickets or gambling
- The bald fact of having to live paycheck to paycheck despite middle-class status
Another report by theladders.com highlights the fact that money shame can keep people so bound up in their past financial mistakes that they’re unable to move on and improve. They’d rather go out and spend on an expensive dinner than admit to their friends that they’re trying to pay off a credit card and have sworn off (well, tried to, anyway) going out for expensive dinners or drinks after work.
Or they’re so overwhelmed by their situation that they fail even to take the smallest steps to improve things, believing that anything that small couldn’t possibly be helpful.
Another CNBC report characterizes money “FOG”—fear, obligation and guilt—as a particular problem, it says, for women:
Fear: They fear being left with too little money—being forced to become a ‘bag lady’—because of failing to police their spending habits, or to take the leap into investing because of a distrust of the markets, or to speak up at work to demand equal pay lest they end up jobless instead.
Obligation: Obligation rears its ugly head for women in their roles as caregivers, or as they financially bail out children or other relatives or even friends in trouble, even at the expense of their own well-being.
Guilt: Last but not least is guilt, which can drive bad financial behavior in both stay-at-home moms and women who hold down a job and come home to face a round of household chores. The former can be afraid to spend money, feeling guilty for not bringing in an income, while the latter can be tempted to spend on expensive gifts to make up for absences required by work.
And finally, a Forbes article reports that the emotions surrounding money can lead to all sorts of irrational behavior. Such behavior often isn’t taken into account, or acknowledged in a significant way, by the people who construct retirement plans or project the behavior of the people who participate in them.
Obsessing over money, avoiding having anything to do with it, panicking at the least market action up or down, failing to create a budget, remaining willfully ignorant about how much is needed for living expenses, overspending, underspending or spending as a mood lifter can all contribute to financial disaster—but many people are unaware not just of their behavioral patterns with regard to money but also what triggers them.
And when people know they have a problem but are too ashamed to talk about it, how will they make any progress?
It’s an additional piece of the puzzle of how to create financial wellness, and one that could be granted greater prominence when considering solutions.
READ MORE:
Americans shortsighted about financial needs
7 behavioral finance nudges to help employees save for retirement