Money makes the world go round. And it can leave some people spinning. The thing is, whether we focus on it or not, it plays a significant role in our day-to-day activities. Ultimately, our ability to manage our finances can have a profound impact on our quality of life.

Ask yourself: Are you avoiding managing your money? Do you find yourself putting off making financial decisions? Are you spending beyond your means? If you answered yes to any of these, here are some insights that may just make a world of difference.

Missed Opportunities

When you consider seemingly complex factors like investing, saving, and even the ‘joy’ that is tax, it is understandable why some people would rather bury their head and savings in the ground. For many, the thought of saving or budgeting is hardly exciting. It’s just as appealing as eating less carbs to stick to your weight goals. However, avoiding the topic of money management is a risk itself. It can lead to missed opportunities to save, invest or even pay off debt. In the long run, this can lead to financial instability and insecurity.

Mind Over Financial Matters

But why do we not want to assess our financial situation? Often, it’s due to the psychology of decision-making. We may fear making the wrong choice or feel overwhelmed by the options. It’s important to recognise these feelings and take steps to address them. One reason is the fear of the unknown. We may not be sure how to manage our money effectively, so we ignore the topic altogether. This fear can be compounded by anxiety or stress related to financial issues like debt or a lack of savings. Interestingly, the psychology of avoidance can also be linked to our emotions. We may deflect from confronting our finances because it makes us feel uncomfortable or anxious. By not minding our money, we can temporarily alleviate these negative emotions. Just temporarily though.

The Highs and Lows of Avoidance

Dodging the consequences of overspending is another all-too-common behaviour. Many people find themselves overspending and then turning a blind eye to the reality of the situation, either by not checking their bank account or by pretending that the problem doesn’t exist. Afterall, when you’re getting compliments on those snazzy new shoes, you feel an instant high. In fact, you feel a little bit richer. Unfortunately, spending money in this way is just an illusion of wealth.

Speeding into the overspending lane is often the person who drives by in their shiny, red Ferrari. ‘How amazing would it be to be so super wealthy?’ many of us think.  The reality often puts the brakes on that thought – when you consider whether the person actually owns the car. In too many cases it’s essentially a bank loan on wheels – an extravagant splurge that jeopardises the person’s finances and future in different areas. A red Ferrari looks stylish on anyone, but debt is so last season. It’s avoidance masked by the adrenalin high of overspending. One way to address overspending is to be honest with ourselves about our habits. This means tracking our expenses and identifying areas where we overspend. For example, do you spend too much on dining out or shopping? By recognising these patterns, we can start taking action to address them.

Another strategy is to set limits for ourselves. This might mean creating a budget for discretionary spending or using cash instead of credit cards. By setting limits, we can prevent overspending before it happens and stay on track with our financial goals. Yes, once again it may not seem as fun as new shoes or wheels but in the long term it’s worth it. It’s a matter of deciding what you want – retiring early, owning that dream home or paying for your children’s studies – and keeping this incredible picture in mind.

Ultimately, avoidance of a clear plan can have a negative impact on our finances in the long term:

• To overcome this fear, it’s essential to educate yourself about the various options available and seek the advice of experts.
• You could go online (much like you’re doing right now), read books on personal finance or seek out the advice of a financial advisor.
• By doing your research and seeking expert advice, you can reduce the risk of making a costly mistake.

There are challenging reasons why people do not want to focus on money management. Whether it is fear of making the wrong decision, lack of confidence, or procrastination, these challenges can have significant consequences on our financial well-being. Want some help on your journey? Why not get a free coaching session to turn money from fear into a friend.