10 Common Money Fears and How to Overcome Them - Money Psychology

Previously in our Money Psychology series we explored the array of emotions that affect our money decisions - including guilt, envy, fear and shame. 

We established that as inherently thinking and feeling beings, emotions will always be part of our financial journey, but having made peace with that, we know that the ability to acknowledge and handle how they influence our financial planning is of utmost importance. 

As we approach the end of 2023, we look at how fear specifically affects our relationship with money and our quest to achieve financial stability and security. 

For eight years in a row the American Psychological Association (APA) annual Stress in America survey has found that money is a leading stress trigger. This has been true even before the Covid-19 pandemic. 

Fear is the unpleasant feeling which is triggered by the perception of danger, real or imagined. 

Chrometophobia 

When it comes to finances, an intense fear of money which includes fear of spending, financial ruin, thinking about it or even touching money is called chrometophobia or chrematophobia. 

While it is not as common as other phobias, it nonetheless is persistent fear in some people with a number of symptoms that vary in severity. These include;

1. Resistance to thinking about money 

For most, this would constitute an extreme unwillingness to acknowledge and deal with unhealthy spending and saving habits. This resistance could be in the excessive hesitation to spend money including on items that are necessary. The fear here is running out of money or the inability to manage your finances which leaves one feeling powerless. This fear could lead one to stop saving money and paying their bills. 

2. Withdrawing from activities 

Just like other phobias, chrometophobia may push one to avoid activities they have previously and normally enjoyed. The manifestation could be in skipping pleasurable activities largely driven by the worry over finances. 

3. Counting money constantly

It is absolutely normal to keep checking your bank balances and other financial accounts regularly to stay updated on where your money is going.

For some, however, there is a constant checking of balances and money in the wallet several times in a day. If you keep doing this and getting stressed about what you find, experts say, you could be chrometophobic.

4. Refusing to touch money 

If you have watched the TV series, Monk, then this could be a good illustration of the refusal to touch money because of being extremely afraid of getting sick from the germs on money. In other cases, one may be emotionally triggered by just the sight of money.

5. Depression and physical ailments

Anxiety, intense feelings of hopelessness and depression could also come about because of chrometophobia. If your financial situation is leading to anxiety attacks, sweating, shaking, dry mouth, nausea and shortness of breath among others, then this could be an indicator that the phobia has held you captive. It is advisable to seek professional medical help to help address the underlying issues.

10 Common Money Fears

Having looked at the symptoms, some of the commonest money fears (that are not necessarily chrometophobia, but rather general everyday fears) that keep people awake at night include:

1. Fear of losing a job

This is a very common fear especially with the ever increasing unemployment rates.

This can hold people back in many ways including being stuck in jobs they hate because of the fear of risking losing their sustenance. Even when the security of one’s job is relatively assured, many people still stress about the possibility of being out of work. 

Several surveys show that many people are "liquid asset poor," meaning they do not have savings enough to make ends meet for three months in the event that their income is interrupted. In the United States, a 2019 Prosperity Now Scorecard shows about 40% of households fall in this bracket, in Kenya, the numbers are likely higher (see BFA Global report).

Liquid-asset poor people are unlikely to absorb a financial shock like a lost job, medical emergency or other unforeseen financial expenses.

Tip: While job security cannot be ultimately guaranteed in any sector of the economy, everyone can create a cushion against an unexpected job loss rather than worry needlessly. 

Identifying the reasons why you are afraid you might lose your job is the starting point - is it market volatility? Technology change rendering your skillset obsolete? Increasing redundancies? Disagreements at work?

Once identified you can work towards creating the cushion; starting a side business, learning new skills, actively looking for another job etc. 

Also importantly, always plan on building an emergency fund which is an essential step in financial planning. An sizeable emergency fund (which you can grow over time) will give you the confidence to be at your productive best knowing that if anything goes wrong, you can maintain your current living standards and bounce back with ease.  

2. Fear of Negotiating for a pay raise

Negotiating a salary rise can be anxiety-inducing for many people. The anxiety may stem from real or imagined tales of people being let go or threatened to be fired for asking for a pay rise. But you are probably thinking about asking for a raise because your finances need it. 

Wealth psychology expert and author of Wealth from the Inside Out, Kathleen Burns Kingsbury, advises that it is worth taking the risk since it could end up increasing your lifetime compensation significantly.

Tip: Kingsbury says that negotiation is a skill that can be learned. For starters, you have to consider the appropriateness of your timing, know the worth of your work, give a glimpse of future goals, be prepared to communicate your triumphs and efforts in stories and always be prepared to offer an alternative proposition in case your first is rejected. 

To perfect the skill, Kingsbury advises practicing with a friend or professional coach to help build confidence.

3. Fear of Never having enough money

A lot of people, and this could be a conservative estimation, live with some level of fear that they will never have enough money - even if ‘enough money’ is in many ways an abstract amount. 

This fear may be worsened if, for whatever reason, it becomes apparent that they never will get that ‘enough money’. Why this kind of fear can be crippling, is because it makes one feel that they will be seen as a failure even after putting in years of toil. 

Tip: If you find yourself seriously doubting your ability to reach your financial goals, say because something is not going right right now, this is mostly a mindset issue - a scarcity mindset to be specific. It can blind you from big picture thinking and you may allow yourself to live at the mercy of others. Read more on how to develop an abundance mindset here. 

An abundance mindset is associated with the belief and conviction that you have control over what happens in your life - and you do take corresponding action to put that conviction to work. Importantly, the fear of not having enough stems from the scarcity mindset of believing that there is not enough for everyone - that there can only be losers and winners. 

4. Feeling financially lost

There is a global financial literacy problem with people unable to accurately answer basic personal finance questions on savings and investment returns. In private, a realization that you are not as adept in financial matters can be a source of consternation - and worse could counterintuitively lead to justification for inaction. 

Tip: To know where you are, identify what your biggest financial problems are and see where every dime you make goes. When you know what your main money blind spots are, it is time to get help. The help could be from a trusted friend, relative or a qualified financial advisor. Whoever you choose, they could help you set realistic goals and restart your financial education.

5. Fear of being a burden

For most conscientious people, there is a constant worry of being a financial burden to their friends, spouses and family. Money and relationships is a complex topic and every family or friendship will have its unique way of handling money matters. Most people would rather not be in a position where they are upsetting their loved ones over money. 

So, many will break their backs as much as they can to earn their own money and be independent rather than risk ruining existing relationships. However, many circumstances call for help and the fear of being looked down upon by friends and family as a leech may be unfounded or of no bearing to one’s current needs. 

Tip: First appreciate the fact that the journey to financial independence will unlikely be a smooth-sail for almost everyone. A little help along the way is needed once in a while. As such, it is important to be prepared to have difficult conversations with your loved ones about money when the need arises. Figure out how much you need and how much you can afford before reaching out. 

6.  Fear of losing all your money

If you work hard to earn your money, you naturally want to work even harder to keep it and even better, grow that money. But the available avenues of increasing the money are fraught with risks and uncertainties that could lead to great loss. 

In fact, people with the fear of losing all their money have most likely seen or heard of some people who lost all their fortunes due to wrong decisions or plain bad luck.

Those who are particularly afraid of this can suffer from severely diminished money decision making ability.

Tip: Indeed, all investment decisions should be made with an abundance of caution. If you are particularly scared of losing money, then instead of completely keeping off investing, you should consider starting really small and investing in areas with very low risk - or where your principal is guaranteed (insured) and then work your way up. 

Better still, you can enlist the services of professional investment advisors who can help you build confidence and suggest options that are low risk and right for you. 

7.  Fear of never getting out of debt

The fear that one can never get out of debt can be debilitating. This is often when one compares their earnings to what they owe. You can easily get into an endless cycle of debt where you take a debt to pay an existing one, or have defaulted on some debt and the interest keeps growing that your earnings cannot realistically wipe the owed amount.  

Tip: If you are in debt and are already afraid of getting into a cycle of bad debts, you should start by actually ascertaining if your fear is real. Find out how much is outstanding and how long it will take to repay then compare that with your estimated earnings. 

If indeed, there's a chance of default, approach your lender and negotiate a debt restructuring deal that could include interest waivers, a grace period, reduction in interest rate or a longer repayment period. 

Else, if you are not in debt yet and still are afraid of ever being stuck in a debt cycle, then educating yourself about good debt practices and preferably getting advice from a qualified financial advisor may put you at ease.

8.  Supporting relatives

Some people spend a significant portion of their income supporting family members at the expense of their own individual financial goals. This could be as a result of the fear of appearing not to care for their kin. The fear leads to overcompensation that contributes to poor financial planning on their part. 

Tip: The first step to address this fear is talking to your relatives about their finances. While this is a challenging conversation, it has to happen for the wellbeing of all those that are involved.

If it is parents you need to talk to, Cameron Huddleston’s book, Mom and Dad, We Need To Talk, might be your starting point.

Communicating Finances in the Family: Talking and Taking Action by Roberta A. Davilla Robbins and A. Frank Thompson is another handy tool when handling money issues with family.

9.  Talking about money

Money largely remains a private matter and many people would rather not talk about their personal finance with others. There are those who think that talking about money is a taboo. 

The fear can either be one guarding against being perceived as a show-off, or on the other hand, against looking poor before others.

Tip: Start talking about money with people you have confidence and trust in. Advice from people who are more experienced than you or from a financial planner can help you demystify talking about money.

10. Fear of spending your savings

The idea of spending money you have saved could make you freeze, especially if you have been setting that money aside for a long while. 

If you are getting stressed out after spending money on a certain purchase, or are constantly second-guessing yourself before making a purchase decision, you may need to take a step back and reconsider your financial planning.u

Tip:  Dig to understand why you have this fear. Get a trusted friend or a financial professional to help review your plans. Also, consider practising abundance money mindset exercises which will make you find it easier to accept your financial situation and take action.

WRAPPING UP

Fear in all its forms can be incapacitating. It is a strong emotion and it can hurt your frame of mind if it controls you and your actions.

By acknowledging the kind of fears that affect your decision making, you are already taking one step towards conquering them. The next step is taking action on these fears, possibly enlisting the help of trusted friends, family and perhaps a financial advisor.