4 Subtle Ways Shame and Guilt Are Keeping You Poor
Written by
Cara Danielle Brown
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Jenna Klaverweiden
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Wondering how to get out of debt or increase your savings but just can’t seem to succeed in either? “One of the biggest obstacles that holds individuals back from financial wellness has nothing to do with the numbers,” wrote Kamaron McNair for CNBC. Shame over past money mistakes is, in fact, the largest unacknowledged culprit affecting individuals’ financial well-being, McNair explained.
This is because powerful emotions, like shame and guilt, can lead to avoidance, which manifests in destructive ways.
GOBankingRates spoke with experts to uncover four subtle ways shame and guilt could be keeping you poor — and what to do about it.
Also see five ways to break poor money habits now.
Overspending
“Spending money in response to feelings of shame about past spending ultimately can lead to reduced savings or increased debt, contributing even further to feelings of shame and guilt,” said Kate Dorman, financial therapist at Sound Financial Therapy.
Basically, individuals are spending to either fill a void or numb themselves, which only compounds the problem. These self-sabotaging behaviors may look like spending in secret or spending exorbitant amounts on others.
Underspending
Feelings of unworthiness can lead to guilt and shame over spending money on oneself — especially when past mistakes have led to poor financial circumstances. When individuals don’t feel deserving of nice things (or even basic necessities), deprivation and lack of self-care can occur, which leads one to feel increasingly undeserving. That cycle can then continue on and on.
Alternatively, those who feel guilty about having “too much” may neglect smart investments, like equities, that could provide future security.
Less Long-Term Planning
“Financial shame and guilt result from past and present actions,” Dorman explained. “We do not feel Financial shame and guilt about future actions or actions that have yet to occur. Therefore, financial shame and guilt can keep us trapped in a moment in time, struggling to visualize change or plan for the future.”
In other words, it’s hard to make progress when looking in the rearview mirror and kicking yourself over what could have been. What’s more, shame and guilt are rarely motivators for sustainable behavioral change.
Difficulty Asking For Help
Likely the biggest issue, financial guilt and shame can make people incredibly embarrassed and fearful of judgment, which can prevent them from asking for help from trusted partners, parents or financial advisors.
Without the proper resources, knowledge or support, individuals can wind up digging the hole even deeper. “Shame begets shame, creating an incredibly lonely experience … Not only is there financial shame, there is also the shame around having financial shame and the shame for believing you are the only one!” Dorman said.
How Can You Overcome Shame and Guilt?
Melissa Murphy Pavone, CFP, CDFA, founder of Mindful Financial Partners, said practicing self-compassion is crucial to overcoming these feelings. Remember, it’s incredibly common to make financial missteps. You are not alone.
Being vulnerable with others in disclosing financial shame can be a great first step to getting on the right path. From there, others can assist with shifting perspective and setting specific goals. “Working with a financial planner or therapist can help individuals reframe their relationship with money from one of shame to empowerment, setting realistic, shame-free goals that align with their values and creating a mindset shift towards financial well-being,” Murphy Pavone said.
Another tactic for overcoming unwelcome feelings is the outside-in approach. Just begin with small actions and allow the momentum to empower you to take larger ones. Creating systems that make it harder to take unwanted actions and easier to take positive actions can also be helpful, Charles Chaffin, co-founder of the Financial Psychology Institute, told CNBC. This could include deleting your credit card from Amazon and other retailers, or automating transfers to your 401(k).
Chaffin also recommended checking in on your finances regularly. “People who are money avoidant tend to have terrible issues, because they don’t want to look at it,” he told CNBC. “If you’re looking at it, and you’re focused on it, you’re more likely to change your behaviors to be consistent with what your goals are.”
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