Your money problem might actually be a clinical disorder

It’s a new year, which means it’s time for new habits—like finally learning how to manage your money. In each installment of Get Your Money Right, we’ll tackle a different aspect of financial anxiety and offer practical solutions and steps you can take toward a brighter financial future. You got this.

Sometimes a person’s money problems can become so extreme, they turn into full-fledged disorders. But how do you know whether you’re dealing with regular financial challenges or an actual money disorder? According to Natasha Knox, a certified financial planner with a graduate certificate in financial therapy from Kansas State University, there’s a definite distinction between poor financial habits and the compulsive nature of money disorders. Talking openly about your finances remains largely taboo in our culture, so many people lack the necessary knowledge to manage their money well. For richer and poorer alike, stigma keeps us from healthy money habits, and that can lead to money-related mental health issues.

In Facilitating Financial Health: Tools for Financial Planners, Coaches, and Therapists by Brad Klontz, Ted Klontz, and Rick Kahler, money disorders are defined as “maladaptive patterns of financial beliefs and behaviors that lead to clinically significant distress, impairment in social or occupational functioning, undue financial strain, or an inability to appropriately enjoy one’s financial resources.” 

According to Megan McCoy, a therapist and faculty member in the Financial Therapy Program at Kansas State University, there are both formal diagnoses (compulsive buying disorder, gambling disorder, hoarding disorder, workaholism) that are found within other DSM diagnoses, and also informal diagnoses, including financial denial, financial enabling, financial dependence, financial infidelity, and financial enmeshment. Today, workaholism is estimated to affect 30% of the population, compulsive buying disorder impacts 6% of women and 5.5% of men, and gambling disorder impacts 0.6 to 1.1% of the American population.

We often see money disorders portrayed in pop culture—workaholism, for example, is a common theme in movies and TV shows. But these mental health issues are more serious than Hollywood might have us think. Compulsive spending, for example, is very different from occasional overspending. The compulsive spender uses shopping to escape their reality or deal with stress, which can then become a detriment to their relationships because they put spending before all else.

“The compulsive spender may get a charge or a feeling of euphoria from the act of shopping or spending itself, while the actual item that the compulsive spender buys may lie unopened in a closet somewhere, or they may buy multiples of the same item,” says Knox. So while an overspender may make purchases they regret but be able to move on, a compulsive spender would hide their behavior and feel a great deal of guilt or shame. false

Knox believes that money disorders can develop for many reasons, but often they’re brought on by past emotional experiences. For example, if your family went through bankruptcy or had to give up your house while you were growing up, this could cause you to develop specific financial behaviors, such as money avoidance, money vigilance, or money worship.

The main reason most money disorders develop, though, is a build up of underlying money “scripts,” i.e. unconscious beliefs about money. “If our money scripts are too extreme and too unconscious, then we develop money disorders,” Knox says. “I think the thing with money scripts is because we don’t even realize we are holding them, we behave around money instinctually based on these scripts rather than logically based on economic theories.” McCoy adds that some money disorders arise from a pre-existing mental illness, such as obsessive-compulsive disorder or addiction, but don’t necessarily have to be related.

If you think you might have a money disorder, it’s helpful to see a financial therapist or a therapist who focuses on financial issues—this article is no substitute for medical advice. While a financial professional, such as a financial planner, could help, McCoy believes they would only be putting a bandaid on a larger issue. Knox agrees, noting that while money disorders have a financial component, they are best treated when they are addressed from a mental health perspective. While she is a financial planner with a background in financial therapy, her main discipline is financial planning, meaning she’s not qualified to diagnose or treat money-related disorders. That’s why she thinks it’s best to see a financial planner after someone has already addressed the mental health part of the issue you’re facing.

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