If you are guilty of not opening your bank statements, never checking your bank balance and even throwing away or hiding unopened statements to avoid dealing with your personal finances, you could be suffering from a financial phobia, says Joycellyn Akuffo.
One-fifth of Britons suffer from a genuine psychological and physiological condition called financial phobia, according to new report from online bank Egg. Financial phobia is a psychological syndrome, which causes individuals to avoid cognitive engagement with the management of their personal finances.
Sufferers can experience anxiety, guilt, boredom, and a lack of control when dealing with money matters- resulting in a lack of vigilance and in most cases, complete avoidance.
Some of the more extreme symptoms of the phobia are feeling physically ill, feeling dizzy, having a ?racing heart? and becoming immobilised when faced with the prospect of managing money.
Excuses, excuses
Sarah, a 34-year-old business and finance professional, is an example of a financialphobe. Her life changed for the worst financially, when she took out a ?1,000 loan to get out of a ?difficult patch?. This loan should have sorted out all the debt on her credit card debts, leaving her with one manageable loan to pay off.
But the temptation to spend money on the cleared credit cards and newly acquired store cards was too much to resist. Now the problem has spiralled out of control, leaving her even deeper in debt – ?40,000 to be precise.
In an attempt to stay on top of her payments, Sarah has found herself in a vicious circle – she takes out a loan to clear off her credit card debts, spends on the cleared credit cards, gets another loan to pay off the new credit cards and the first loan and the spends on the cleared credit cards again?
The cause of financial phobia is difficult to pinpoint, but according to Dr Burchell, the start of financial phobia appears to coincide with some form of financial upset, such as the mis-selling of a financial product – something that is out of the sufferer?s control. For example, being sold a savings plan and finding out later that the assumed life savings are much less than expected.
The art of procrastination
Other causes of the condition include procrastination, which is brought on by frustration with the time and effort needed to make money-related decisions; and lack of confidence in one?s ability to understand complex numerical information or small print, which can then lead to financial avoidance.
?I?ve struggled over the years to maintain my monthly payments and I have no arrears. So the bank and credit card companies continually increase my limits,? explains Sarah.
The constant increase on Sarah?s credit card limit is like waving a red flag at a bull. She sees an increase on her credit limit as a trigger to shop. So she just spends, spends and spends, until she reaches the limit, when she has no option but to stop.
Dr Burchell, a professor at Cambridge University, and the report?s author, says: ?Financialphobes are not irresponsible, feckless or spindrifts. They have become entwined in this psychological syndrome, which makes it difficult for them to deal efficiently with their personal finances.?
?Recently, the bank topped up my loan with ?3,000 and I spent it in a week on clothes, shoes and CDs. I have enough clothes to last me a lifetime, but I keep spending,? says Sarah.
Getting help
?I?ve tried to look for help on the internet for some kind of therapy with no success. Just the other day, I thought about going to my doctors as I sometimes feel I have an illness. Last year, I hit an all-time low and considered ending my life, but I couldn?t.?
Sarah?s thoughts about suicide are an example of the avoidant behaviour in financialphobes. During his study, Dr Burchell found that the level of anxiety experienced by financialphobes is so great that they will go to any lengths to avoid dealing with their finances. For instance, 40% of sufferers would prefer to go into work early than to reconcile their bank statement, and 31% would prefer to visit the dentist.
?Financialphobes can be intelligent people who are high achievers in most areas of their lives,? says Dr Burchell. Although they appear to be dysfunctional in their behaviour towards money, Dr Burchell?s research confirms that in general, financialphobes are well-adjusted individuals in other psychological and social aspects of their lives ? from personal relationships to careers.
Career-wise, Sarah seems to be a go-getter. ?The amazing thing about my situation is that I work in the finance industry and I?m presently doing a postgraduate degree in business management?, she said, almost embarrassed.
The highest levels of financial phobia are currently found in younger age groups, with 30% of 16 to 24-year-olds and 26% of 25 to 34year-olds, compared to 11% of the 65-plus age group.
And it?s women who are more likely to suffer from the condition than men. The report found that 23% of women have the condition, compared to 18% of men.
Sarah recently applied for another consolidation loan at her bank. ?It?s like I told the lady helping me at the bank: I?m ready to start a new life. I just need to consolidate all the debts into one lump sum so I can cancel my cards and have just one payment.?
This is the same idea that put her into this current predicament in the first place. This time, the bank refused Sarah?s application, saying that they felt she could not manage her finances effectively enough to consider her loan application. This may be the best thing that could have happened to Sarah.
Forced to sort things out properly this time, Sarah has re-evaluated her finances, after years of avoidance and is taking her first steps to get out of debt, the hard way.
?I?ve cut up my credit cards and made a vow to spend only on toiletries, food and transport for at least six months.?
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