Beat Back 5 Financial Fears
Provided by CNNMoney.com
Everyone's got concerns when it comes to money, but some have fears that can really put a big hole in their . Here's how to overcome five common ones.
1. Fear of coming clean with your partner
You know it's bad. So bad you'd really rather keep it to yourself. Why, you figure, ruin your partner's day with news of your mountingor the fact that you've been living off your savings?
Because if you don't, the truth will out at the worst possible time -- like when you go to apply for aand realize that your or lack of savings is killing your chances of getting that house your partner loves. "Then that creates a double problem. Knowing is safer," said Ruth Hayden, author of "For Richer, Not Poorer: The Money Book for Couples."
Chances are you're afraid that your partner will think less of you and want to leave you or, possibly worse, try to control every dollar you spend from now on.
But remember, Hayden said, "you're more than money - there are so many more facets to a relationship. Plus, everyone has some kind of a downside. And money baggage is easier to deal with than others."
Try this: Have the conversation no matter what. It may be uncomfortable but it will pay off down the line, Hayden said. Then make an agreement about what you both want to achieve (e.g., pay down debt, save more for retirement, buy a house) and agree on what you'll both do (and won't do) to reach that goal. Beyond that, allow each other autonomy money - money you can spend that the other person can't question.
2. Fear of not fitting in
Social pressure to conform isn't in your imagination. Sheryl Garrett, founder of the Garrett Planning Network of fee-only financial advisors, has worked with plenty of couples who try to support lifestyles they can't afford because, they say, that's how people in their professions live. "They think they're doing what they're supposed to be doing," she said.
And they're afraid not to. She knows of one neighborhood in an affluent county ofthat's filled with lots of lovely homes that have no furniture in them because the homeowners are too strapped.
"They show that they have money. But it's all smoke and mirrors," she said.
Everyone wants immediate gratification. But Garrett points out that when it comes to your financial security - which your friends at the country club will never pay for - "you need indefinite gratification."
Try this: One way to lighten your load financially and emotionally is to "step back from the immediate and ask what you really want in life," Garrett said. Maybe it's an early exit from a high-paying career that leaves you cold, or a retirement that is as comfortable as your current lifestyle.
Whatever your goals, figure out where you can ratchet back your spending or boost your income or savings. If you're in a couple where only one of you works, it might involve the other person forfeiting the stay-at-home life for a return to the workforce.
3. Fear of being penniless
No matter how much you have, you're always mindful that financial catastrophe could strike. And you're right. It could.
But to focus on that possibility and become a money hoarder is, in some ways, to forfeit your life. "That kind of fear immobilizes us," said Sheryl Garrett, founder of the Garrett Planning Network of fee-only financial advisors. "There's danger and risk in virtually everything you do. And you can't allow fear to immobilize you."
Try this: Garrett suggests trying to come to terms with more likely and more narrowly defined risks. For example, you could get an illness or disability that prevents you from working for some period, so consider whether you're adequately insured for that possibility. And likewise, you could live a long life, so map out an adequate savings plan to ensure you live comfortably without running out of money.
Of course, if you have a pervasive fear of poverty, it's likely there can be no one quick fix. So if your fear controls your every financial move - to say nothing of your relationships - consider exploring the issue with a psychologist to unearth the roots of your fear. "What's unconscious will run you, and when it becomes conscious it loses its power over you," said Dr. James Gottfurcht, president of Psychology of Money Consultants in.
4. Fear of success and wealth
It's hard to ask for a raise. But it's doubly so when you secretly doubt you deserve it. So you may, unconsciously, sabotage yourself.
Sheryl Garrett, founder of the Garrett Planning Network of fee-only financial advisors, knew of one woman who made well-below market rate for her job at a charity. Not only did she not ask for a raise that would rectify that, she refused a raise that her board offered her because she felt the money would be better used on the charity's efforts. End result: She lived like a pauper and donated her financial security to the cause.
"First and foremost, you have to take care of yourself. It's not selfish to be responsible," Garrett said. Otherwise, you undercut your ability to take care of others long-term.
Try this: One way to think about a raise you don't feel worthy of on some level is to break down the numbers.
How much is a $5,000 annual raise per hour? If you work a standard work week, it's $2.40 an hour before taxes. After taxes, it's probably closer to $1.50. Do you really think if you're a valuable employee that you're not worth an extra $2.40 an hour? No? Your boss may disagree because she'll have to pay roughly 1.5 times your annual salary to replace you. So it's worth asking.
As with a raise, the financial cushion that can come with an inheritance from your parents or other windfall may feel undeserved because you didn't do much to earn it. But you can earn it now.
Try this: Take responsibility for your good fortune. Another former client of Garrett's inherited a great deal of family wealth he didn't feel he deserved. But rather than proving himself right and mismanaging the batch, he confronted his fear by learning to be a good steward of the money and preserving it for future generations. "He got a fishing pole and learned to fish," Garrett said.
5. Fear of taking the financial reins
College, taxes, retirement, long-term care ... thinking about them can trigger a full-blown migraine when financial planning isn't your thing.
So you tell yourself you're too busy, too ignorant or too behind the eight ball as it is. And if ever you got bad service from aor advisor, you remind yourself you'll never do that again.
Then you do nothing. But you know nothing is going to bite you someday.
Try this: To overcome your fear of taking charge financially, "work up a hierarchy of baby steps that don't trigger the fear," said Dr. James Gottfurcht, president of Psychology of Money Consultants in.
The first step is to condition yourself to feel safe. So if you're not saving for retirement - or just putting all your money in a- because you're afraid of investing, just read an article about investing. If that doesn't wipe you out, you're desensitizing yourself.
Next, "reality test" a specific part of your fear. So if you're afraid to talk to abecause you don't know what to do and are easily intimidated, send up a trial balloon. Call a planner who comes recommended and make clear you're not ready to make any decisions today but you'd like to hear some of his ideas, Gottfurcht suggested.
Ask a friend, spouse or anyone who makes you feel safe to act as a financial sounding board.
After you've increased your comfort level, approach your fear in a painless, low-risk way. For example, if you're afraid of investing, earmark a small amount of money - say, $1,500 - and set up an automatic transfer of $100 a month from your bank account into a low-cost, broadly diversified (VGSTX).with a low minimum requirement such as the Vanguard STAR Fund
"Turn off and put it on autopilot," said certified financial planner Mari Adam. In a few months, chances are fair you'll have made some money. But if your balance has declined, consider two things. First, that $100 you invest every month will actually buy more shares when stock prices are down, which is a good thing for long-term investing success. And second, if your balance is lower, it only becomes an actual loss if you sell.
All these small acts taken together can start to whittle down your initial fear. So can remembering what novelistsaid: "There are very few monsters who warrant the fear we have of them."
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