I don’t believe that anyone is truly “bad with money”. Instead there are other things at work, which thankfully can be addressed.
When I speak with people about whether we’re a good fit for working together, some version of this phrase almost invariably comes out of their mouth:
“I’m bad with money.”
Now, the first 50 or times I heard this, I thought I knew exactly what they meant. After all, that was why they were coming to me. I help people with money. I help people change their behaviors so that they can earn more, have more, spend what they want, and live their best life unencumbered by financial anxiety.
And yet, just like the more you say a word the weirder it gets (try saying “corn” about 80 times and you’ll see what I mean), the more I heard this phrase the less it made sense to me.
What does it mean to be bad with money? And is there even such a thing?
After a while I realized that people aren’t “bad with money”, it’s always something else. And that’s a good thing, because while “bad with money” isn’t an actionable problem, these other factors are.
So what are we really talking about here?
Table of Contents
You lack financial knowledge
The world of personal finance is filled with loud, confusing, contradictory voices.
Some say you should cut up your credit cards. Others say you should put everything on them to keep your credit score high.
Some say that owning a home is the best financial decision you can make. Others say locking up so much wealth in an illiquid asset is foolish.
One way that people mean they are “bad with money” is that they lack financial knowledge.
What is the solution? Dedicated study. Find trusted authorities who are not trying to sell you anything, and follow their plan.
In general, I like to follow Occam’s Razor when it comes to financial knowledge: the simplest, least complicated solution is usually the best.
So instead of day trading, buy low-cost mutual funds a little at a time over a long period, and hold on to them.
A few years back, someone wrote down everything you need to know, financially, on an index card. You can follow that and that’s probably good enough.
You’re avoidant
I can think of at least three tasks that I’m avoiding right now by writing this post. (And no, I’m not going to tell you what they are.)
My point being is that for some people, talking or even thinking about money is on part with home dentistry. It’s not just boring, it’s low-grade hell.
I see avoidance all over the place when it comes to money. You don’t want to track what you spend. You don’t want to check your balance (as long as you have money in your account, you’re okay, right?). You don’t want to pull up any of your accounts.
Tackling avoidance is definitely one of the hardest challenges I encounter as a coach. If I can’t even lead the proverbial horse to water, there’s no way anyone’s drinking.
Does this mean you’re “bad with money”? No, it just means that it’s not as important to you to deal with it than it is to avoid your discomfort.
Interlude: Avoiding avoidance
How do I avoid avoidance? Personally, I use calendars.
Yes, calendars. If you’re avoiding something, you’re not actually not thinking about it. Instead, it’s occupying a small corner of your brain, slowly making you feel bad.
So I always suggest people put whatever money task is being avoided on to your calendar.
Tuesday evening. Sunday morning. Saturday afternoon. Hell, Friday at midnight. Just put your task on the calendar, and then forget about it. You’ve taken it out of your head and put it somewhere else.
Oh, and don’t turn off your calendar notifications, you sneaky devil you.
Here are some other tactics you can use to avoid avoidance.
You’re scared
Fear makes people stupid. I don’t mean that in a belittling way, but instead I mean that your mental acuity just isn’t there when you’re under distress. Your brain energy is working on other things.
Money fears often have the same flavor as the fears we used to have as children about monsters. They were under the bed. They were in the closet. They were in the basement. They were certainly somewhere. And you did’t’ want to look, because they were monsters!
And then your mom or dad or whoever would come in, turn on the light, look under the bed, and hold your hand while you did the same, showing you that there was nothing under the bed but some shoes and toy boxes.
But money problems are never—never!—as bad as the fear of them. I can guarantee you this.
When you confront the issue, you can then understand the issue. When you don’t, you let your brain run wild. And let me tell you, the fear part of your brain is way more creative than anything that’s likely to happen.
So does this make you bad with money? No, it just means you’re scared, and you could use someone to help you look under the bed and see that there are no monsters there.
You’re okay
Are you bad with money? No, you just don’t have financial knowledge. That can be learned.
If you don’t do that, then are you bad with money? No, because you are probably feeling avoidant. That can be addressed through mindfulness and practice.
If you don’t address your avoidance, then are you bad with money? No, it just means that you are probably scared. But that can be addressed too, mainly by reaching out to a trusted friend or family member to help.
None of these things mean that you are bad with money.
Do you think you’re special, in that you’ve got a special maladaptation that I haven’t mentioned here, that will prove me wrong? Just leave a comment below.
But for the rest of you, you’re not bad at money. You’ve just got some work to do. Don’t we all.