And financial therapy, which is growing in popularity, is exactly what it sounds like, a combination of psychology and financial advice, the problem, however, for people is that financial advisors will only focus on numbers and feel uncomfortable talking about people’s emotions and on the flip side, therapists are not trained in dealing with money but are happy to talk about people’s emotions.
Like any other disorder, a money one is where there is a persistent pattern of self-destructive behaviour and according Brad Klontz, who is a leading expert in this area, they begin at a very early age, where we get distorted beliefs about money, which Klontz refers to as "flash points" - these are painful distressing and dramatic life events associated with money that are so emotionally powerful, they leave an imprint that lasts well into adulthood.
And I absolutely get this because I meet so many people every week who have particular issues and struggles with money and when you talk a little bit more with them and dig a bit deeper, it becomes obvious why this is the case because more often than not an incident happened in their past that continues to affect them and their relationship with money.
In a survey carried out last year, it was found that people feel more shame around money issues than they do around sexual problems - lying to their spouse about their spending, feeling guilty about how much money they make, spending money to make them feel better (doesn't last long by the way), not spending money at all, are just some of the disorders people suffer from but the top five most commonly recognised money disorders are:
I think we all know someone who we think still has their communion money, but for them the reason they don't spend money is not because they enjoy saving money, the reasons run much deeper.
About six months ago for example, I met with a very successful lady in her mid 40's, who had risen through the ranks and was now a senior vice president in a multi-national IT organisation.
She had more money than she could spend but that was her problem, she wouldn't spend any money on herself or her family. She was incredibly insecure about money and was always worrying that if she ever lost her job, she would run out of money so she hoarded it.
After about an hour of chatting, she shared with me that she was the eldest from a family of seven and was raised above a pub in Kerry where her father was the proprietor. She broke down while telling me how her father had been an alcoholic and any money he made, he drank. Herself, her siblings and her mother often went without food because they had no money and she saw the impact it had on her sisters and her mother, so subconsciously I think she vowed to herself that when she was older, she would never run out of money and one way of doing this is never to spend it and never stop earning it.
The difficulty with this type of person is that they are hard to cure because they don't see anything wrong with their behaviour. They live in a constant fear of financial ruin and will always worry that they will end up destitute no matter how much money they have. They put off buying things that would make a positive difference to their life, because they don't want to spend any of their money. And the problem with what we have gone through as a nation in the past eight years is that we may have bred a whole new generation who will suffer from this disorder - that is the children whose lives have changed dramatically because their parents lost their homes or jobs due to the recession.
If you think, you, your spouse or someone you know, suffers from this type of disorder, well some help is at hand because research carried out by social scientists show that the following strategies can actually help:
1. Use plastic instead of cash - you would think that someone who hates spending money would never use credit cards but it has been proven that when they do, they will spend more than if they were to use cash so getting them to use a pre-paid credit card would be a good thing
2. Focus on long term benefits - under spenders are more likely to part with their money if they believe the purchase is a good long term investment. Joining a gym for example and getting healthier will improve their health and reduce their future medical expenses.
3. Bundle purchases - under spenders hate buying individual items but they really like buying things that come in a bundle like phone/internet/tv packages and if they decide to go on holiday, guess which one they will go on - yes you are right - the all-inclusive one.
In Ireland we all know what we should be doing - spend less and save more - so more information about how we spend our money is not going to help - we need to look deeper at the emotional issues behind the problem - When you think about dieting and exercising for example, most people know that if you exercise more and eat better your health will improve, so why don't we act on this information instead of becoming the second most obese nation in Europe - it appears to me that we cannot blame a lack of information and understanding for these problems and the same goes for money issues - getting to the root of doing things that you really don't want to be doing whether that is over or underspending, lying to your partner about debt or feeling guilty about how much you earn are emotional problems that we need to help people with.
Next week I will look at the other money disorders people suffer from, identifying their symptoms and looking at what coping mechanisms and strategies they can take to help manage them better.