Face the numbers: Moving beyond financial denial

It’s official: Money is stressful. APA’s March 2022 Stress in America survey¹ found that the top sources of stress for American adults were the rise in prices of everyday items due to inflation (e.g., gas prices, energy bills, grocery costs, etc.) (87%), followed by supply chain issues (81%) and global uncertainty (81%). Money stress registered at the highest level recorded since 2015.

People deal with stress in many different ways—sometimes healthy, often not. People commonly deal with anxiety by avoiding whatever it is that makes them anxious. Unfortunately, if you avoid dealing with your finances, you’ll likely create more financial problems, and more anxiety, in the long term.

Money matters are too important to ignore. Financial illiteracy is linked to money mismanagement and to debt. Debt, in turn, is associated with lower self-esteem, lower productivity, and greater stress.² Unsurprisingly, research has also linked financial strain to depression.³

If you’re struggling with financial avoidance or financial denial, you can take action to get your money matters back on track.

How do you know if you’re avoiding reality when it comes to finances? Here are some of the clues:

• You try to put money and finances out of your mind.
• You avoid talking about money with family and friends.
• You avoid opening bank statements or credit card bills.
• You don’t know what your credit score is.
• You don’t know your net worth.

If you can relate to any of these feelings and behaviors, it may be time to take a hard look at your relationship with money.

We develop our beliefs and attitudes about money early in life. Often, we aren’t even consciously aware of what our beliefs are, let alone where we learned them. If you’re dealing with financial avoidance or financial denial, it can help to think critically about the money beliefs you learned in childhood. Think about what your parents taught you about money. Talk to family members about their money beliefs. Then try to challenge your existing beliefs about money.

Many people feel embarrassed about their debt, ashamed that they let bank statements pile up unread. But that shame keeps you stuck. Try to move past the self-blame so you can take some concrete steps toward financial health.

Keep tabs. Tracking your income and your spending is critical to healthy finances. If you’re not tracking money coming in and money going out, you don’t know if you’re spending your resources on the things that really matter to you.

Develop a spending plan. For some people the word “budget” like the word “diet,” calls to mind feeling deprived. Instead of figuring out where to cut back, think about what you want to spend. If going to concerts or sporting events is really important to you, you might decide to spend more money on those outings and less on dining out or cable television. By making such decisions more intentional, you’ll get the most bang for your buck.

Make it easy on yourself. Use automated systems as much as possible. Arrange to have a portion of your paycheck automatically deposited into your savings account and your retirement account. Set up automatic reminders to alert you when a bill is due. It’s a lot harder to make a bad decision when the decision is out of your hands.

Use tools. Technology makes it easier than ever to stay on track financially. A variety of software programs and apps can help you track spending and set spending and saving targets.

It’s not easy to challenge your deeply held beliefs or to change ingrained behaviors. No matter how good your intentions, change is difficult. Psychologists are experts in helping people make lasting behavior changes. Research has shown that psychological treatment programs can reduce distress and anxiety and improve financial health among people with problematic financial behaviors.⁴

If you’d like help adopting healthier financial behaviors, use the APA’s Psychologist Locator Service to find a psychologist in your area.