Are you afraid of spending money – or at least, anxious about your financial situation? If so, you aren’t alone. 77% of Americans are worried about their finances. How do you overcome your fears and become part of the mighty minority? In this article, I’ll highlight my personal experience in overcoming my fear of spending money and becoming smart with my spending, saving and investing. Saving money is important, but it’s crucial to find balance.
Read on to learn about how to overcome being afraid of spending money.
Causes of a Negative Relationship with Money
There are so many reasons behind financial anxiety The reasons generally boil down to three main ways. Let’s get into them.
Causes of Financial Anxiety
1. Money Denial
Finances can be a stressful and taboo area of one’s life. Many people simply don’t want to talk about money. In Western society, talking about finances is still considered rude or inappropriate. When you don’t talk about something, it becomes more taboo. It’s a lot easier to just shove those thoughts in the corner and worry about money later on. For example, it’s easier to just throw something on a credit card without thinking, “Can I afford it?”.
2. Compulsive Spending
Compulsive spending contributes to anxiety. When you’re stressed or experience a negative emotion, you may resort to overspending. A few weeks pass and their monthly credit card statement comes in with a massive balance. How do you think this person feels? Not very good! While it feels satisfying in the moment to buy $300 worth of clothing, when it comes time to pay off the credit card and you can’t pay it off in time, you will feel anxious and worried.
3. Hoarding
On the other end of the spectrum, you can become a money hoarder. First of all, what is hoarding in general? Hoarding is an issue where someone has a problem with collecting and holding onto stuff that they don’t need. Common items that are hoarded include anything from old glass bottles to boxes and clothing that no longer fits. Financial hoarding is the refusal to give away money to any cause, whether it be purchasing stuff you need, buying gifts or donating to worthy causes. Hoarding your money comes from a place of fear.
Recognizing Your Negative Beliefs Before Overcoming Being Afraid of Spending Money
Before you tackle the fear of spending money on yourself, you need to identify the triggers. Let’s get into the potential root causes why you may be afraid of spending money and identifying emotions. Read through each common reason you may be afraid to spend money and ask yourself, “Is this me?” When you understand your reasons behind being stingy with your money, you’ll be more readily able to tackle the problem.
Like This Article? Pin It!
Psychological Factors Contributing to Being Afraid of Spending Money
Fear-Based Mindset
Loss Aversion and Risk Aversion
Everyone is different in terms of how much they’re willing to risk and lose in life. Those who have a lower risk tolerance – aka. don’t want to lose too much money, may be less willing to spend money on larger purchases, even if they bring them value in the long run.
Scarcity Mindset
If you grew up in a poorer household, you may have a scarcity mindset which can contribute to you being afraid to spend money. Those who grow up with fewer resources know that they only have a specific and limited amount of money to spend on food, shelter and other necessities. Even if that person grows up, moves out on their own and generates a decent salary where they don’t need to worry about finances, they carry those psychological habits into their current situation.
Fear of Failure
Depending on your upbringing and/or personality, you may have a fear of failure in some or all aspects of your life. This fear of failure with regard to your finances can manifest itself as a fear of spending money on:
- Purchasing high-quality items that will last longer
- Investing in yourself by taking paid courses and upgrading your qualifications
- Spending more on healthier groceries instead of the cheapest items
Past Negative Experiences with Money
Traumatic Events Contribute to Being Afraid of Spending Money
Past events have a massive influence on future behaviors. If you are afraid of spending money, take some time to think about your past. Did something happen to you such as a job loss or sudden major expense you have to unexpectedly cover? These types of events have a huge influence on how your future behaviors and decision-making processes.
Social and Cultural Influences
Societal Pressures and Cultural Norms Contributing to Being Afraid of Spending Money
Culture can have a huge influence on the ways you spend money. As I mentioned earlier, people in Western society generally shy away from talking about finances. On the other hand, many Eastern cultures are more comfortable talking about money. While living in Vietnam, locals have asked me about my salary and how much money products and services cost that I’ve purchased. These questions may be considered rude in Western cultures, but in Vietnam, it’s the norm. You are influenced by your surroundings. If the people and society around you act a certain way, you’re a lot more likely to conform to these norms as well.
Peer Influences and Social Comparison
It’s natural to compare yourself to others. If your friends and peers purchase and consume in a specific way, you’ll be a lot more likely to follow this pattern as well. I like surrounding myself with supportive friends who are happy to spend money on quality things but are also reasonable with their finances. For example, my closest friends are happy to do a dinner party at home, and then go out for a few drinks. This is an example of a balance between being frugal and overly cheap.
A cheap person who is afraid to spend money may only want to have dinner at home, cooking a very inexpensive meal and declining to go out. On the other hand, a spender is happy to go out for appetizers, dinner and drinks.
Family Background and Upbringing
Childhood Experiences Causing You to Be Afraid of Spending Money
Alongside the culture in which you live in, past events and the friends you surround yourself with, family plays a huge role in your relationship with money. If you grew up in a family where your family overspent, you’ll probably have a tendency to go on spending binges in your adult years. On the other hand, if your parents had a scarcity mentality, you’ll be a lot more likely to have issues spending money as an adult.
Media and Advertising Messages
Overcoming Consumer Culture
Consumer culture also plays a huge role in the ways you spend money. While our culture places a huge emphasis on consuming and spending which contributes to overspending, some may take the opposite approach and rebel against this mentality.
Perceived Lack of Control or Security – Another Major Reason Why You’re Afraid of Spending Money
Job Instability and Economic Uncertainty
A lack of control is a huge reason why you may be afraid to spend money. There have been multiple recessions, pandemics and other major world events that have caused financial market and job market fluctuations. If you’ve been underemployed, had hours reduced or have been laid off from your job, you may feel a lot less comfortable with spending money. This response is completely natural and understandable.
Debt Burdens
Carrying debt can majorly impact how you feel about spending money. When I was in debt, I felt scared to spend more money than necessary. I had to come up with a plan to repay my debt and understand that there are some things worth spending money on. Debt can cripple your decision-making process, so it’s important to come up with a plan on how to tackle it and develop a solid saving and budgeting strategy.
Strategies for Overcoming the Fear of Spending Money
Now that I’ve covered the main reasons why you may be afraid to spend money, how can you overcome your fears? There are many ways to do so! Follow the steps below that I’ve personally taken to go from an overly frugal person to a person who is frugal, yet now has a healthy relationship with money.
Connecting Money to Your Life
Understanding the Differences Between Needs and Wants
Finding a healthy balance with your finances means understanding if every single purchase you want is a ‘need’ or ‘want.’ Log into your credit card account and pull out your statement from last month. Grab 2 highlighters – one color for ‘needs’ and one for ‘wants.’ Highlight every single purchase you made and find out if it was a ‘need’ or ‘want.’ Next, add up the total amount of purchases and determine the percentage of purchases that were needs and the percentage that were wants. For example, if you made 50 purchases last month and 40 were needs and 10 were wants, you would have spent 80% on needs and 20% on wants.
When you understand how many purchases you made in each category, you’ll understand if you are afraid to spend money on non-essentials, and if so, how to create and develop financial goals so you can find balance.
Reviewing and Modifying Financial Goals
Next, take a look at your current financial situation. How much of your income are you saving and investing? Are you paying off your bills and reaching your goals? If you’re saving more than enough money for an education fund, retirement funds, debt repayments and other obligations you have but aren’t spending any money on stuff you need, do you need to readjust your budget? Believe it or not, it is possible for one to save too much money. Some signs you’re saving too much and not spending enough money include refusing to replace old items and being way over target when calculating your retirement savings compared to approximately how much you need.
Speak with a financial planner, get a handle on your spending versus saving plan and commit to freeing up some cash for spending purposes.
Creating a Money Plan
When you reverse your habits around being afraid to spend money, divide your plan into two areas:
- Items and services you need
- Wants – non-essential services and products that aren’t necessary to your survival but will enhance your life
Next, take a look at what you currently own and what services you need to get done in the near future but have neglected due to a fear of spending money.
Some examples of items you may need to buy or replace include:
- A new fridge or other appliances
- Painting walls or doing other minor upgrades in your home to enhance the esthetics and increase its value
- New clothing to replace your current items that are worn, damaged or have holes
Some examples of services you may need to invest in may be:
- An oil change for your car
- Getting a haircut that’s long overdue
- Going to the dentist more regularly
When I started practicing frugality over being cheap, I was overwhelmed. To remedy this, I made a list of all the products and services I needed, then chose two I wanted to invest in right now. Write down your ideas in a journal. Wait 24-48 hours, then make a decision on which areas you’ll invest in right now.
After you’ve chosen a couple of essential items and services that you need to replace, choose one or two treats you’ve denied yourself due to your fear of spending money. The two areas I treat myself in now are special skincare masks and takeout once a week, but you can choose whatever you want. Be sure that your spending aligns with your budget. While you’re focused on getting over your fear of spending money, it’s important to spend within reason.
Practicing Mindful Spending
After you’ve modified your financial goals, time to plan out your spending! Being mindful about how much you spend and how much you spend on stuff is crucial.
Seeking Professional Help for Being Afraid of Spending Money
Seeking a Therapist
If you feel in distress regarding your finances, it’s crucial to seek professional help. Contact a therapist in your area for help with your mental situation. Before you seek out a pricey therapist, check with your employer to see if you’re covered under your benefits plan.
Conclusion: Afraid of Spending Money
There you have it – my top tips on how to overcome being afraid of spending money. Understand your reasons behind why you’re afraid to spend money, create a plan and readjust your saving and spending patterns. Before you know it, you’ll be a smart, frugal person who enjoys smart spending and saving!
Like This Article? Pin It!
Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
