What is Money Avoidance and how can this impact your Financial Health?

Those who have money avoidant beliefs often commit financial self-sabotage by refusing to accept money for their work.

In today's fast-paced world, discussions around money often evoke strong emotions. For some, financial decisions are easy to make, while for others, aspects of money remain a constant source of anxiety and avoidance. If you find yourself steering away from financial responsibilities, you may be suffering from money avoidance—a psychological barrier that can significantly impact your financial health. In this blog post, we will explore the concept of money avoidance, its consequences, and how it relates to tax debt management and financial therapy here in New Zealand.

Understanding Money Avoidance

Money avoidance refers to a suite of behaviors and emotional responses that lead individuals to dodge financial discussions, decisions, or even the handling of money itself. This could manifest in various ways, such as:

• Ignoring Bills: Putting off paying bills or avoiding them altogether.

• Neglecting Financial Planning: Not creating a budget or failing to track expenses.

• Avoiding Conversations About Money: Steering clear of discussions around income, debt, or savings with family or advisors.

  
  

The Psychological Roots of Money Avoidance

The reasons behind money avoidance can often be traced back to childhood experiences or financial trauma. According to research, people may develop negative feelings toward money due to:

• Parental Attitudes: Growing up in an environment where money was a source of conflict or insecurity.

• Cultural Influences: Societal messages that equate wealth with greed or moral failing.

• Fear of Failure: Anxiety about making poor financial decisions leading to avoidance.

  
  

These psychological factors not only perpetuate money avoidance but also hinder long-term financial planning.

Impacts on Financial Health

1. Accumulation of Debt

One of the most immediate effects of money avoidance is the accumulation of debt. When individuals ignore bills or fail to manage expenses, they can quickly find themselves in a cycle of financial obligations that become overwhelming. For example:

• Late Fees and Penalties: Avoidance can lead to increased charges, making it harder to pay back debts.

• Credit Score Damage: Ignoring debts can result in a lower credit score, affecting future borrowing opportunities.

  
  

2. Stress and Anxiety

Financial problems are a leading cause of stress and anxiety, particularly in New Zealand, where cost of living continues to rise. Those who avoid dealing with money may experience:

• Emotional Distress: Constant worry about finances can lead to anxiety and depression.

• Relationship Strain: Financial mismanagement can cause rifts between partners or family members, complicating relationships further.

  
  

3. Lost Opportunities

Avoidance can rob individuals of important financial opportunities. For instance:

• Investment Growth: A reluctance to engage with financial planning may lead to missed chances for savings growth, such as participating in KiwiSaver.

• Tax Benefits: Neglecting to understand tax obligations can result in losing out on beneficial tax deductions or credits.

  
  

Addressing Money Avoidance

Recognizing that you have a problem is the first step toward recovery. Managing money avoidance can involve various strategies, including financial therapy and practical financial management techniques.

How Financial Therapy Helps

Financial therapy combines traditional therapy with financial planning. Here are ways it can help:

• Emotional Healing: A trained therapist can help clients understand the emotional aspects of their money issues.

• Goal Setting: Creating achievable financial goals can help restore confidence in managing money.

• Behavioral Change: Identifying and changing avoidance behaviors leads to healthier interactions with money.

  
  

Steps to Overcome Money Avoidance

Here are actionable steps to combat money avoidance:

1. Acknowledge Your Feelings: Embrace your thoughts and feelings about money, rather than pushing them aside.

2. Seek Support: Engage a financial coach or therapist who understands the complexities of money avoidance.

3. Create a Budget: Start simple—track your income and expenses to gain a clearer picture of your financial situation.

4. Set Achievable Goals: Break down larger financial goals into manageable tasks to avoid feeling overwhelmed.

5. Educate Yourself: Increase your financial literacy through resources, workshops, or online courses.

   
   

Recent Trends and Updates

Recent studies indicate that the rise of financial wellness programs in workplaces is significantly reducing money avoidance behavior among employees. These programs often focus on providing resources and support aimed at improving both financial knowledge and psychological barriers.

Conclusion

Money avoidance is a pervasive issue that can severely impede financial health and overall well-being. By understanding its roots and seeking help, individuals can overcome avoidance behaviors, take charge of their financial lives, and ultimately contribute to better tax debt management—an essential aspect of sound financial health in New Zealand.

I encourage you to share your thoughts and experiences related to money avoidance in the comments below. How has it affected your financial journey?