All of us aspire to improve our financial well-being. But while doing this, it is important to evaluate the role our financial beliefs play in shaping our future. These principles define how we manage our money and are often core to understanding the complicated relationship we have with money.
Inability to handle money well could be due to a ‘money disorder’ and these disorders can eventually impact our financial lives. The symptoms of these disorders are certain types of behavioral traits.
Before we delve in to find out what these traits are, let us first understand what a money disorder is.
A money disorder is essentially the dysfunctional adaption of a financial behavior or a practice that prevents someone from either fully utilising or fully enjoying their monetary resources. Most money disorders stem from a particular trigger point which serves as a reference to our perception of money and financial struggles. Identifying these trigger points, is therefore, important to enable us to not only diagnose a money disorder but also find out ways to overcome it.
Interestingly though, most people suffering from money disorders often don’t realise that they are in that state or that they even need help. And for those who know, they typically find it hard to change their behaviour. Then there are some who try to change but are unable to make the changes long term, it just ends up being momentary. The end result is that most of these people feel ashamed of their behaviour and hide them from others, hence making it difficult for them to get help.
There are some common behaviorial traits that can indicate the symptoms and I would like to highlight few of them as pointed out aptly in the book, Mind over Money, by Brad and Ted Klontz.
Money avoidance disorder
Symptoms of money avoidance disorder are nothing but living in denial, extreme under-spending and excessive risk aversion. Financial denial is when you try your best to avoid thinking about them altogether rather than face financial reality. Under-spending is when you can have plenty of savings, but you refuse to invest and enjoy. While excessive risk aversion is when you keep your savings in an interest-bearing account and shy away from investing in growth assets like equity.
Money worshipping disorder
The symptoms of this disorder include taking excessive risk, overspending and pathological gambling. Excessive risk-taking is putting yours and your family’s financial well-being at unnecessary risk in the pursuit of large, but unlikely gains. It is like using your little savings to invest in loss making assets knowingly. Over spenders, on the other hand, are those people with a compulsive buying disorder. If you look at an over spender, they will always be habitually worried about money.
Pathological gambling is the addictive variety, on the same level as alcohol and drug addiction. Some of the study highlights that it is a way for someone to evade problems and they can do anything to get the money to meet their desires or needs.
Relational money disorder
Lastly, relational money disorder deals with financial infidelity, enabling and something called prince charming syndrome. Financial infidelity is when you deliberately keep a secret about your spending or finances from your partner while financial enabling is when you find it impossible to say “no” to your children or grandchildren seeking money. Here you unknowingly make the person more and more dependent on you. For example – if a father bails out his son with a credit card overdue more than once. Here, the father is not allowing his son to correct his mistake but instead is making him more and more dependent.
Now on to the Prince Charming syndrome. A person suffering from this disorder bets on something like winning the lottery or a compassionate universe to provide for their financial needs. Many people choose to remain financially dependent on others because it protects them from working hard to achieve their own financial learning, readiness and preparation.
These are common mannerisms that can help you to assess and understand if you actually suffer from any money disorders unconsciously. It is to be noted that money disorders can be removed and one of the most important steps to take is to be honest about your actions. Also, do keep one thing in mind that an occasional financial error cannot not be termed as a ‘money disorder’.
In conclusion, my only suggestion will be to be truthful about your behaviour and immediately consult a financial adviser. The changes suggested by an expert should be followed rigidly. It will be your first step in the long journey of accumulating wealth for yourself and your family.