Conquer six financial fears
Deep down, are you frightened of money? Here’s what you need to know to address your anxiety
FOR many Australians the major hurdle to building real wealth is not the performance of investment markets … it’s what’s happening in their head – how they control their f inancial fears.
All of us are governed by basic human emotions … vanity, lust, greed, fear, joy, sadness. When it comes to matters of money, fear is often the overwhelming emotion which can destroy our ability to manage our finances properly.
Understanding those fears, and knowing how to overcome them, can be both a liberating experience and a critical turning point in building wealth. Here are six biggest financial fears that we see holding people back and how to conquer them. MONEY IS TOO COMPLICATED
The fear of not understanding and being made to feel a fool is so common when it comes to dealing with financial matters. It is basically an automatic surrender to have anything to do with any money decision.
They want someone else to do it and, as a result, they take no responsibility for what eventually happens. They don’t read the fine print of investments, they aren’t willing to educate themselves or learn from experiences or others.
Change your thinking. Believe us, money isn’t complicated. It’s common sense. Challenge yourself to learn about the different parts of your financial life. Do it slowly. WHAT IF I MAKE A MISTAKE? We all make mistakes. That’s life. The best we can do is limit the damage and rectify it as quick as we can. But for many people, this fear of making a mistake paralyses them from making any decisions at all.
Keeping your money in a bank savings account earning incredibly low interest, or under the mattress, means you will go backwards financially as your cash is ravaged by inflation.
There are tools and strategies to minimise risk while maximising returns.
Good advice and a diverse portfolio of investments will help overcome this fear. I’LL GET FIRED AND NEVER HAVE ENOUGH During high unemployment or underemployment this is a very common fear. A regular wage becomes a financial lifeline on which we all depend and fear losing. It can mean we are stuck in jobs we hate or are too scared to ask for a pay rise.
To overcome this fear, it’s important to have a back-up plan. Assess the future prospects of your employer. If the outlook isn’t so bright, start looking at what else you could do. Target potential new employers and start developing new skills to transition to a new career.
Just having a well thought out back-up plan will control your fears. I’M GOING TO END UP POOR This is one of the most insidious and complex of our financial fears. It’s rooted in vanity, in independence, in uncertainty.
In our society wealth is a measure of success. If you don’t have it, what will friends think? Who will you depend on?
Fear of losing financial independence can be so absorbing that it can distract you from solving the problem.
The solution boils down to knowing how much you’re making versus how much you’re spending. Put a budget in place to figure out if you’re living within your means.
Many people tend to turn a blind eye to the real things that can financially derail them.
They might fixate on a low superannuation balance while ignoring the fact that they spend $500 on eating out each month. I’M BEING CRUSHED BY DEBT AND WILL NEVER ESCAPE A combination of outstanding credit card balances with a whopping 30-year mortgage can be too much for some people. To get started, call your bank to negotiate a lower interest rate on the home loan. Even a small discount can cut years off your home loan and save thousands in interest. Then figure out the amount you’d need to pay – and what works with your budget – to eliminate that debt in five years or less.
Another important step is to make sure you aren’t racking up more debt. Leave your worstoffender credit cards at home (the ones with the highest interest rates). WHAT WILL MY FRIENDS AND FAMILY THINK OF ME Too many people gain a sense of personal value from the money that they earn (or don’t earn).
They may fear that people will think less of them if they don’t have enough money or even will think they’re snobby if they have too much money.
Learn to separate your self worth from the money that you have. Define what you consider to be a sign of success other than a big investment balance. Determine what you think is important to have in your life – regardless of how much it costs.