In this article, we will examine signs of an unhealthy relationship with money and offer strategies to address them.
Money plays a significant role in our lives, and how we manage it can greatly impact our financial well-being and overall happiness. However, for some individuals, their relationship with money becomes toxic, leading to spending problems, financial stress, and a lack of control over their finances.
Warning Signs
Living beyond means
Living beyond your means is a common trap that people fall into. This involves spending more money than you earn, relying heavily on credit cards, and accumulating debt.
As successful as Australia’s economy does, the wealth also leads to possibly wanton spending. A Finder study tagged 3.2 million Aussies as possibly spending money they don’t really have, especially Gen Zs who want to spend more to keep up with the Joneses.
Practice living within your means, cutting unnecessary expenses, and finding ways to increase your income, if possible.
Create a thorough financial plan that details your earnings, expenditures, and aspirations for savings. This will empower you to take charge of your financial situation.
Frequent overspending
One of the most apparent signs of an unhealthy relationship with money is frequent overspending. If you consistently find yourself spending beyond your means or using credit cards excessively without the ability to pay off the balances, it’s a clear indication of financial mismanagement.
Regularly monitor your expenses to identify areas where you can cut back or save. Use apps or budgeting software to help you keep track.
Ignoring financial responsibilities
Neglecting financial responsibilities includes avoiding bill payments, ignoring credit card statements, or neglecting to save for the future. Ignoring these obligations can lead to late fees, penalties, and a mounting sense of financial stress.
Establish a routine to regularly review your finances, pay bills on time, and prioritise saving for emergencies and long-term goals.
Impulsive buying
Do you often find yourself making unplanned purchases without considering the consequences or whether the item is a true necessity? Impulsive buying is a destructive habit that can quickly derail your financial well-being. This also applies to retail therapy.
Before making a purchase, take a step back, assess the necessity and affordability of the item. Practise mindful spending by asking yourself if a purchase aligns with your values and financial goals. Avoid impulsive buying and make deliberate choices.
Develop the ability to delay gratification by saving for things you want instead of resorting to instant gratification through debt or impulse purchases.
Stressed and anxious
Constant financial stress and anxiety are common symptoms of an unhealthy relationship with money. If the mere thought of money causes stress or if you constantly worry about your financial situation, it’s essential to address these emotions.
Seek support from a financial advisor or counsellor who can help you develop healthy coping mechanisms and create a plan to tackle your financial challenges.
Lack of savings and emergency fund
Failing to save money and lacking an emergency fund is a red flag for financial complications. Without savings, unexpected expenses or emergencies can lead to further financial strain and potential debt.
Set up achievable savings goals and establish an emergency fund to provide a safety net during challenging times.
Automate your savings if possible.Set up automatic transfers to your savings and investment accounts to ensure you consistently save money each month.
Denial and avoidance
Denial and avoidance are common defence mechanisms when it comes to money issues. If you find yourself ignoring financial problems or burying your head in the sand rather than confronting them, it’s a sign that your relationship with money is toxic.
Face your financial reality head-on and develop a plan to tackle your financial challenges systematically.
Financial illiteracy
A lack of financial education can contribute to a toxic relationship with money. If you find yourself unsure about basic financial concepts, such as budgeting, investing, or debt management, it’s important to educate yourself.
Take advantage of the wealth of resources available, such as books, podcasts, workshops, or online courses, to enhance your financial literacy and empower yourself to make informed financial decisions.
Lack of long-term financial planning
A lack of long-term financial planning is indicative of a toxic relationship with money. If you find yourself living paycheck to paycheck without a clear plan for the future, it’s time to reassess your financial goals.
Set achievable objectives, such as saving for retirement, paying off debt, or purchasing a home, and develop a comprehensive financial plan to guide your actions and track your progress.
Schedule regular financial check-ins to review your progress, adjust your budget, and reassess your financial goals.
Addressing Money Issues
Self-awareness
Reflect on your beliefs, emotions, and behaviours related to money. Understand where your money-related issues originate. Were they influenced by your upbringing, societal pressures, or personal experiences?
Debt management
Give precedence to settling high-interest debts, like outstanding credit card balances. Consider a debt repayment plan and budget accordingly.
Financial education
Invest time to educate yourself about personal finance, investment strategies, and effective money management. Books, online courses, and workshops can provide valuable knowledge.
Change your mindset
Transition from thinking in terms of scarcity to embracing an abundance mentality. Believe that there are opportunities to grow your wealth and that you can achieve financial security.
Avoid emotional spending
Be aware of spending to cope with emotional stress. Find healthier ways to address your emotions, such as exercise, meditation, or talking to a therapist.
Surround yourself with positive influences
Spend time with people who have healthy money habits and can provide support and guidance in your financial journey.
Practice gratitude
Be grateful for what you have and focus on what you’ve achieved instead of what you lack. Gratitude can help reduce the stress associated with money.
Avoid comparisons
Avoid comparing your financial situation to others. Everyone’s circumstances are unique, and comparison can lead to unnecessary stress.
Recognising and addressing an unhealthy relationship with money is the first step towards financial empowerment and a healthier financial future. Cultivating healthy financial habits and seeking support when needed can help you build a positive relationship with money and achieve your financial goals.
DISCLAIMER: This article is for informational purposes only and is not meant to replace official financial advice. Please consult a finance advisor for more tailored solutions.
