The Money Myths Keeping You From Your Financial Goals
Reduce your financial anxiety with this expert advice.by Rachel Crowell
Save, spend, invest or donate? Even in the best of times, it's easy to feel as if there are too many places that we "should" use our money and not enough dollars to go around. For many folks, the COVID-19 crisis has only exacerbated financial stress and anxiety.
Economically, things are likely to get worse before they get better. Unemployment is currently above 10 percent, supplemental unemployment benefits have ended and millions of people are at risk of eviction.
Money itself might seem like a cure-all for our financial fears. But cash often doesn't eradicate these worries, because they're inextricably tied to our thoughts, beliefs and attitudes about our finances.
I spoke with three financial experts about the most common myths that contribute to our worries about money and ways we can reduce stress and anxiety even during tough times.
Myth: If you're experiencing a financial crisis, it's best to solve the problem quickly
If you've been furloughed without pay or lost your job, your mind might jump to unpleasant possibilities: "I'm going to run out of money and have to move back in with my parents" or "I need to cash in my retirement fund now even though I just opened it."
However, resist the urge to immediately pull the "nuclear option." You may not need to, and the fallout might not be worth it.
"The most important thing is to give yourself time," said Emily Guy Birken, a money coach and author of End Financial Stress NOW.
"When we have moments like we do now, everything feels urgent … (but) I want to invite people to slow down, take a few days and let the urgency blow off."
Guy Birken compares making major money decisions under panic and stress to getting a tattoo on a whim: the decision might be quick, but the consequences are long-lasting.
Myth: People only have anxiety about money if they don't have enough of it
Anyone can be affected by financial anxiety, says Lindsay Bryan-Podvin, financial therapist and author of The Financial Anxiety Solution. Cultural taboos around discussing money only contribute to our worries or even shame about it.
Do your interactions with money — such as getting a raise, paying bills or looking at your bank account balance — make you feel anxious, avoidant, gross or weary? If so, Bryan-Podvin recommends meeting with a financial therapist or other mental health professional who has experience in helping people work though issues surrounding money.
A therapist could also help if your issues with money are interfering with your ability to function, such as distracting you from work, causing problems in your relationships or keeping you up at night.
Myth: Overspending is a problem, but over-saving isn't
The experts agree that both can be a problem if they interfere with your emotional well-being or prevent you from caring for your basic needs and meeting your financial goals.
For overspending, Guy Birken recommends making a goal of putting time between finding things you're interested in buying and actually purchasing them. This could help you to make the transition from "I want it now" feelings to rationally considering whether you need to make the purchase.
For over-saving, she says you should ask yourself: "What is it that I'm putting off and what would I gain or lose by avoiding making necessary purchases?"
Myth: Money fights are an inevitable part of being a couple
We're often advised to avoid talking about money under stress, but these days, who isn't stressed? Still, there are ways to discuss money with your partner without having the conversation turn into a battle.
- Schedule a time
If you and your partner are home together a lot right now, this might seem like an unnecessary step. However, preparation is key, even if just means agreeing to talk about finances together after dinner, Bryan-Podvin said.
- Locate your escape hatch
Decide in advance what factors will signal that it's time to take a break from your conversation. You might decide to stop for a while if you're tired, hungry or have been talking about the same thing for hours and don't think you're getting anywhere, recommends Megan McCoy, director of Kansas State University's personal financial planning master's certificate program.
It also might be time to stop if one of you is yelling, blaming or shaming the other, Bryan-Podvin said.
- Set a common, measurable and attainable goal
It needs to be more specific than "save more money" or "pay off debt." For example, you might make it a goal to cut your expenses by $200 per month, McCoy said.
- Discuss and honor your shared values and individual needs
Do you and your partner most value community? Health? Family? Freedom? Once you pin these down, Bryan-Podvin says it's time to ask yourselves: "Are we spending in a way that feels good for us as a couple?"
"Give your partner the benefit of the doubt," McCoy said. "Everyone sees money really differently." The way we approach money is often tied to our feelings about security, pleasure and self-worth, she added.
For instance, sadness about COVID-19 might drive one person to spend money to cheer themselves up, while their partner wants to save more money because they are scared that they might get laid off or furloughed, McCoy notes.
"Compromise often means people give up something," she said. But it doesn't have to be that way if you look for solutions that meet everybody's needs.
Myth: It isn't OK to be upset about money problems when we're in the middle of a global crisis
It's OK. Maybe you became an adult on the heels of the 2008 financial crisis and feel like you're losing the economic footing you just gained, or you graduated this year and are concerned about your future.
"You have every right to be angry," Guy Birken said. "The only sense of hope that I can give is that this situation is temporary."
While this crisis is frightening, Guy Birken believes it's an opportunity to recognize structural changes that are needed to support people and reduce the impacts of economic swings in the future.