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5 Psychological Tricks to Overcome Your Fear of Money

Written by
Samantha Rose
Samantha Rose is a personal finance writer covering financial literacy for OppU. Her work focuses on providing hands-on resources for high school and college-age students in addition to their parents and educators.
Read time: 7 min
Updated on March 18, 2021
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Got a case of chrometophobia? You’re not alone.

Money brings out a lot of emotions. Happiness. Jealousy. Confusion.

And fear.

For many people, the boogeymen of youth get replaced with new worries. Rent, bills, bank statements — all of these are tied to money. It’s no wonder that personal finance is a topic most would rather avoid.

To achieve financial goals, it’s important to approach the issue with confidence. Here’s how to overcome your fear of money and take control.

No. 1: Acknowledge your fear

To overcome your fear, first you must acknowledge it — which often means admitting it exists.

Have you heard about the scarcity mindset? The scarcity mindset is the belief that we lack something, such as money, time, or food. We fear there will never be enough and so this belief leads to thoughts and actions subconsciously driven from a place of lack. The goal is to replace this limiting belief with an empowering one.

But to do that, you need to become aware of your fear. By acknowledging the problem you can begin the rewarding work of healing. Instead of resisting change, embrace growth.

No. 2: Identify the cause of your fear

Identify the root of your fear. By understanding why you feel this way, you can take action to change or eliminate the stressors.

Determine why you’re afraid. Does your fear of money stem from societal pressure, familial expectations, or personal assumptions? For instance, your fear might be tied to the behavior your parents modeled. Or you may fear living up to expectations of what success should look like. Whatever the cause, it’s crucial to get to the bottom of it.

Once you identify the cause, forgive, release, and move on. Only you can change your previously held beliefs or negative behavior. Your financial story is yours to write.

No. 3: Talk about your fear

We don’t talk about money enough.

The societal taboo associated with conversations about money continues to this day. It’s considered rude and braggy to talk about how much you earn or how much you spend. As a result, many people wash their hands of financial matters completely.

Do the opposite. Start talking about money — your fears, your goals, your difficulties — with a trusted partner, friend, relative, coworker, or professional. Sharing can help you reduce the negative feelings you hold toward money. You might be surprised to learn that many people share the same or similar financial concerns.

No. 4: Take action to overcome your fear

Are you ready to take action? The best way to move forward on your financial path is to overcome your fear with professional guidance.

Consider finding a financial coach, mentor, or therapist. Working with an expert can have a positive impact on your growth. An expert will home in on your financial fears, identify areas of weakness, and create a plan for healing. With their guidance, you can work through your money fears to come out on the other side stronger and healthier.

No. 5: Show yourself kindness

When exploring your relationship to money, remember to be kind to yourself.

We tend to judge ourselves more harshly than we do others. But negative self-talk can increase a fearful response to money. Don’t place unnecessary pressure on your financial journey. Everyone makes mistakes — we’re only human. Instead, show yourself compassion. It’s important to take care of yourself financially, but also emotionally and physically.

You’ve made it this far and your financial journey isn’t over. That’s worth celebrating.

Common money fears

1. Doing irreversible damage, Ellie Thompson, Money Therapy Consulting

The Fear

The financial aspect my clients find most scary/off-putting is the fear of doing something irreversibly wrong with their money.

The language of money is unique and if they can't speak the language they feel frozen in financial decisions made for them by family and friends, employers, or a financial advisor. Therefore, no action happens with their finances.

The Solution

If you don't have a great grasp or understanding of money, it can seem terrifying.

I tell my clients that there are very few financial decisions that cannot be undone but that they need to know what those decisions are.

To remedy their fears, we structure a plan for education around money before we discuss their current financial situation. This includes understanding what money is, how it is used, and what their options are. Education eases the majority of their money fears.

2. Being overwhelmed, Brad Ruttenberg,

The Fear

Many people find themselves in analysis paralysis. They don't know where to START.

Personal finance is overwhelming with all the stuff we're supposed to be doing with our money. Add to it the incredible amount of experts all voicing their opinions every time you search Google.

The Solution

You don't need to tackle it all at the same time. Keep in your mind, “Before you can build for tomorrow, you need to be prepared today.”

Take care of the things that will protect you from today's risks before worrying about saving and investing for your future goals.

Keeping a budget, making sure you have the right amounts of insurance, and building your emergency fund come before 401(k) contributions and college savings.

3. Filing taxes, Jai Kumar,

The Fears

  1. Keeping track of business expenses.
  2. Filing taxes in time.
  3. Understanding the forms and schedules they must file under.
  4. With whom to file taxes, online service vs. a trusted accountant.

The Solutions

You can collect your bank statements and automate the tracking process using any budgeting and accounting software. Ask your bank for it—almost all banks integrate with or provide an expense tracking solution.

The earlier you file, the better. For one, you can get as much help as needed and it actually becomes less frightening over time.

There is extensive information out there [about tax forms and schedules].

[With whom to file taxes] depends on the complexity, but even online sites provide a dedicated accountant to help with any tax situation.

4. Investing in the stock market, Timothy Wiedman, PHR® Emeritus

The Fear

The stock market is too complex and dangerous for most small investors to succeed.

The Solution

Generally, folks under the age of 45 should have most of their investments in the stock market—but should do so intelligently.

I'd recommend using low-cost stock index mutual funds or ETFs (exchange-traded funds) that mirror the market as a whole. Thus, it could make good sense to put 90 percent of total investment funds in the stock market..., and then allocating the remaining 10 percent of investment funds to a low-cost bond index fund. Investing in low-cost index funds does not require any particular investing savvy, but still provides much better returns than would be possible in almost any fixed-income investment portfolio. Further, low-cost, widely-diversified index funds don't require constant attention from their investors—and won't cause any lost sleep for most folks.

Finally, over the long haul, stocks have a lengthy history of rising returns. Sure, an occasional bear market will provide a bump or two along the way; but according to Kiplinger's Personal Finance, since 1949, the U.S. economy has been in bull market territory 82 percent of the time—so the periods of bear market busts have been relatively short indeed!

Other mutual fund families such as Fidelity, Charles Schwab, T. Rowe Price, and several others also offer similar index funds; so comparison shopping would be prudent. But investors should always keep an eye on a fund's expense ratio as well as its annual performance numbers. All other things being equal, in the long run, low-cost funds perform better than funds that have higher expenses.

5. Using retirement funds, Travis Gatzemeier,

The Fear

A majority of clients find that as they get within a few years of retirement, the planning aspect becomes much more important.

The accumulation phase is the easy part, as long as someone has a disciplined savings plan.

Once someone enters their distribution phase in retirement, many clients have a hard time understanding how they can use their wealth accumulation to live the rest of their life while maintaining a similar lifestyle. On top of that, I find that clients don’t know when to start planning for the distribution stage, and some feel like they are starting too late.

The Solution

Retirement should be worry free.

Part of retiring is understanding what you have accumulated and the various methods of asset allocation that can be provided with the appropriate balance of growth and income.

Many people wait too long to start planning their distribution stage. It’s only frightening to clients when they feel they have started to plan too late. The sooner clients can get a clear view of a financial plan for their distribution stage, the less they will worry about it as retirement day comes.

Article contributors

Travis Gatzemeier is a wealth manager at Guardian Financial Management. Travis’ experience ranges from financial derivatives to personal finance. Now, Travis focuses on helping clients save for their short-term goals, while also planning for a secure retirement. He believes that everyone can benefit from a personalized financial plan, regardless if they’re a young professional or retiree. You can find him on Twitter at @T_Gatzemeier.

Jai Kumar

Jai Kumar is the marketing manager at Rapid Filing Services. Rapid Filing Services provides users the ability to prepare and file prior- and current-year tax returns to the IRS with free customer support. They aim to always make taxes simple to understand, easy to file, and secure to have a peace of mind. You can find him on Facebook at @PriorTax.

Brad Ruttenberg

Brad Ruttenberg joined his twin brother Matt in creating The Money Twins. It's his mission to show young families what it takes to "reset" their finances, stop wasting time living paycheck to paycheck and start using their money to build their dream life. You can find him on Facebook at @TheMoneyTwins.

Ellie Thompson is the founder of two Washington, D.C., -based startups: Money Therapy and Venyou. Before her startup experience, she was an employee of J.P. Morgan and HelloWallet mastering all things money. You can find her on Facebook at @MoneyTherapyCo.

Timothy Wiedman

Timothy Wiedman spent 13 years in operations management working for two different Fortune 1000 companies. Dr. Wiedman then spent the next 28 years teaching college courses in business, management, and human resources. He holds two graduate business degrees, earned a professional certification in financial planning at Old Dominion University, and taught two different college courses covering personal finance and retirement planning. You can find him on LinkedIn at @timothy-wiedman-01513411.

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