Facing financial fears

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Money-minded mistakes

Winnipeg-based registered psychologist Dr. Moira Somers has taken courses offered by the Financial Recovery Institute in the United States and specializes in the psychology behind money problems. She frequently attends conferences across North America as a guest speaker. She says many people have negative thought patterns concerning financial matters that add to their shame and fear regarding the money problems they face.

Here is a look at some of the more common, unhealthy thought patterns people hold about personal finance and their mental antidotes:

 

'Finance is too complicated for me'

Yes, financial aficionados seem to speak another language, but becoming proficient in financial jargon is easier than you think. Understanding starts with learning the basics, like balancing a budget, debt repayment and starting a savings plan.

 

'I'm a financial screw-up; I'm destined to be a loser'

No one is genetically predestined to be bad with money. Money management is a learned behaviour and so is mismanagement.

 

'Someone else will take care of this for me'

Perhaps this is true in some cases, but what happens if that "someone" dies? Abdicating control of your financial life will likely lead to a lot of anxiety someday about having no control over your finances.

 

'I have more important things to do'

Of course there are more important things in life than money, but let's face it: Few of those more important things have nothing to do with money. In fact, ensuring positive outcomes for marriage, children and career, for example, are often dependent on solid financial management.

 

'Money is tainted and if I deal with it, I'll be tainted'

Money can be a corrupting force, but that's often when it's mixed with greed. Like many other things in life, dealing with money may be unpleasant, but it's necessary.

 

'I'll never get out of debt'

There's always a way to get out of debt. It involves a combination of spending less and earning, or taking more drastic measures such as bankruptcy.

 

Mothering and money management

Just in time for Mother's Day, Somers is facilitating a tele-seminar series beginning May 16 entitled Women and Finance 101: Getting Real about Money. The seminars are for women only, aimed at helping develop financial savvy while in the company of other women. To find out more, visit moneymindandmeaning.com .

Fear and greed are the twin emotions that often are said to drive markets.

Greed is sometimes euphemistically referred to as "irrational exuberance." Fear has many other names: anxiety, panic and the softer-sounding "risk aversion," to name a few.

But eventually, fear makes its twin its handmaiden. Dreams of riches, the thrill of riding the bull market and the monetized pursuit of happiness generally crumble and panic, anguish and despair rule.

Investments aside, fear also plays a large role in most people's financial affairs, whether they have a foot in the volatile stock markets or not.

It's not that fear sows only an awful wake of crumpled financial hopes and dreams. It can be a great motivator to strive to do better financially.

But for some people, this emotion plays a central role in their financial calamities -- even if they don't yet know it, says a leading expert in the field of financial recovery.

Karen McCall should know. Almost three decades ago, the San Francisco-based therapist and pioneer in the field of financial recovery had plenty of financial problems to cause her high financial anxiety.

She was deep in debt, facing eviction and, maybe worst of all, owed the U.S. Internal Revenue Service money.

Needless to say, McCall had a lot of financial fears.

She realized she had two choices: She could face her fears, bring them to heel and harness them to her advantage, or she could continue avoiding them -- a strategy that was less and less effective.

Obviously, she chose Option 1 and today she is a sought-after lecturer and educator of financial advisers and therapists from across North America who attend seminars at the Financial Recovery Institute, which she founded.

McCall helps advisers and other professionals help their clients unravel the emotional backstory surrounding their financial problems.

Fear, she says, plays a central role in many people's money troubles, but rather than face up to this emotion, most people muddle about in what she calls a "money fog."

"Some people just go a little foggy with their finances, but others go completely unconscious," says the author of Financial Recovery: Developing a Healthy Relationship with Money.

Like the folks she would eventually come to help, McCall was in a "money coma." She had largely ignored her problems with finances and instead used money as a means to push her anxieties out of mind.

She says the first step for anyone facing money problems is the acknowledgement that underneath the veil of blissful ignorance is something they find scary.

"This is a quote from Lily Tomlin: 'The best mind-altering drug is the truth,' " McCall says.

The problem is, this drug can lead to a bad trip. That's why so many of us would rather not tune into what's wrong. Instead, it's easier to drop out from financial realities and stressors such as credit card statements or retirement savings.

"People often don't want to know what the truth is," she says. "They want to put it off because it's much easier to think that you'll deal with it tomorrow."

And with money, it's increasingly easy not to deal with the truth.

Problem spenders, for instance, will split off the consequences of an impulse purchase from the act itself. They only get the pleasure of the purchase while gagging their hand-wringing, internal bookkeeper, who is griping about the impending pain.

Plastic -- credit and debit cards -- has made overspending much easier because it disconnects us from the sensation of really spending money. It's a concept casinos caught onto much earlier than bankers.

"Casinos know that if they change money into chips, that's another example of 'Hey, I'm not really spending money,' " she says. "Credit and debit cards -- plastic -- or anything that can disconnect you from spending money can really be problematic."

After the purchase rush is gone, shame sets in and so does the fear of the consequences of that poor financial choice. But rather than facing up to those fears, people who develop problematic relationships with money continue on in a fog, McCall says.

"They may even recognize their situation is getting worse, and that's when the real fear takes over."

Then these problems take on monstrous proportions.

"When you're stuck in a money coma, any financial problems can seem like a huge and formidable monster that gets scarier by the day."

The only way to slay the monster is to shine the light of day on it -- examine it until it's no longer frightening.

In some instances, this is simply a matter of sitting down and looking at how much money is coming in and how much is flowing out. For others, it involves brushing up on investment intelligence or other financial know-how required to make an unknown such as an RRSP investment seem familiar.

Others have good reason to be fearful, but McCall says even people who are deeply indebted or may not have saved anything for retirement, for example, often fear these problems more than they should.

In her book, McCall refers to the infamous shower scene from Alfred Hitchcock's Psycho in which Janet Leigh is murdered with a kitchen knife.

"After watching that gruesome scene, a lot of people felt pretty nervous about taking showers for a pretty long while, but if you watch the scene closely, you'll see that the knife is never actually shown touching the woman's body," she says. "That's because Alfred Hitchcock knew that the images that we conjure up in our imagination can be far more powerful than anything he could put on a screen."

In other words, money problems are amplified by our imagination. No doubt they are real and have very tangible consequences, but they are not fatal (unless you owe a gambling debt to the Mafia).

"Then, fortunately, once you face your financial picture, you can bring the financial bogeyman in your life down to size," McCall says, reading a passage from her book.

Yet the beast won't be vanquished in one fell swoop. It's about small steps and "gold-star moments."

"The goal is to help people with small steps so they can start building on the little successes," she says.

Becoming conscious begins with keeping score, whether that involves tracking spending or learning about your investments. These will help provide a sketch of the big picture.

This can be an intimidating prospect, like trying to eat an elephant, she says.

"How do you eat an elephant? You do it one bite at a time."

Little by little, the problem gets smaller, and instead of financial fears ruling you, you make them your handmaiden to financial success.

"If people say, 'I'm sick and tired of this situation,' that absolutely can be a motivator," McCall says. "If you become conscious, you also become curious, and whenever you're curious, you start thinking, 'Oh, how can I fix this problem?' "

giganticsmile@gmail.com

Republished from the Winnipeg Free Press print edition May 12, 2012 B12