Treating Autism Costs $17K More per Child Each YearHave you ever worked with patients who were so deep in debt that they couldn’t see a way out or who destroyed their marriage over financial infidelity? How about a patient who was stuck in a job he hated in fear of financial catastrophe, despite having tons of savings to support a career change? Or, what about a person who habitually undercharged for her services or refused to negotiate appropriate salaries for her skills and experience level?

Dysfunctional Money Behavior

Dysfunctional money behavior, like all maladaptive behavior, can often be traced back to core beliefs and learned emotional responses. Though the area of behavioral finance is still young, there is some useful information available about what Dr. Brad Klontz and Dr. Ted Klontz call “money disorders.”

In their book, “Mind Over Money: Overcoming the Money Disorders That Threaten Your Financial Health,” Klontz and Klontz say money avoidance is more common than we think, and can wreak havoc on people’s financial and emotional lives.

The following four types of money avoidance have been loosely adapted from Klontz and Klontz’s pioneering text on the topic of money disorders.

1.Financial Denial

Opening credit card statements is typically not viewed as an enjoyable experience for anyone, but for those who struggle with financial denial, facing financial problems can be practically impossible.

From a functional behavioral standpoint, financial denial often serves to protect oneself from feeling the intensity of things like shame, regret, inadequacy and overwhelm. But  sadly, like all avoidant behaviors, denial of problems tends to only make them worse.

People who struggle with financial denial carry the highly corrosive core belief that they are unable to withstand the difficult feelings and therefore must avoid them at all costs. Therapeutic interventions that focus on helping clients build distress tolerance skills may be a good place to start with these patients.

2. Financial Rejection

People who have financial rejection issues may make a good salary but can never seem to save. They may chronically undercharge for their freelance service or refuse to partake in salary negotiations when new employers attempt to low-ball them.

This behavior can be rooted in core beliefs about personal inadequacy or undeserving or beliefs learned from childhood about money. It may also have to do with fears about elevating beyond the economic status of origin, adopting a different way of life from less financially successful friends or family or feeling guilty about success when other loved ones continue to struggle.

Because there are a number of reasons why clients may reject money, it’s important to ask questions about what clients value most in their lives. Values tend to contain important information about what people are most afraid of, as well.

3. Underspending

Frugality is often considered a virtue, but people with plenty of money in the bank who refuse to shell out for basic needs typically have an underlying issue. Underspending tends to be rooted in fear of not having enough, being left behind or losing control. Though it does not necessarily result in loss or lack of money, it is still an avoidance behavior because it is rooted in the need to avoid feelings of uncertainty, fear or discomfort.

Hoarding cash is one way to experience a sense of control in an out-of-control world and it is often used as a way to buffer oneself from the painful experience of difficult to manage relationships, work or social situations.

Those who underspend tend to also experience anxiety and use their cash as a means to manufacture a sense of control. Luckily, there are many exercises designed for anxious people to learn to lean into and tolerate uncertainty. Acceptance and commitment therapy is just one approach that offers some excellent exercises geared toward helping clients cope with the unknown.

4. Excessive Risk Aversion

Have you ever worked with a patient who had good financial standing and a solid savings but couldn’t bring himself or herself to leave the job they truly loathed? Or who refused to go for a promotion that would offer a significant pay boost for fear of failing and getting fired?

Excessive risk aversion is also rooted in fear of uncertainty and core beliefs about inadequacy and incapability. It may be helpful to do some gentle inquiry to determine which may be driving your clients’ fear of even the slightest financial risk.

Mindfulness practices can be a great way to defuse from negative or catastrophic thought patterns that limit available behaviors, whether they are rooted in fear of failure or one’s faulty core beliefs. Once clients understand how to step back from their thoughts, they may find they are better able to recognize which are rooted in reality and which are simply unfounded fears or old wounds asking to be healed.

For more about money avoidance disorders, check out the book “Mind Over Money: Overcoming the Money Disorders That Threaten Your Financial Health” by Brad Klontz, Psy.D and Ted Klontz, Ph.D.