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Behavioral Finance

The Emotional Side of Money and the Harm of Moralizing It

The psychology of debt.

Key points

  • Almost 37% of U.S. adults have more credit card debt than money in an emergency savings account.
  • Many moralize personal debt as “good” or “bad,” so they have difficulty discussing it with others.
  • There is a critical need for holistic financial therapy to deconstruct and destigmatize financial stories.

If you have recently purchased gas, groceries, or anything else, you have experienced what many people face daily–financial stress and the emotional toll it can take on our lives.

Many people who struggle with debt believe financial wellness is a thing of the past. However, attaining that goal is often possible by addressing the emotional component connected to debt. How does debt make someone feel? And do they ever understand how to utilize those feelings to move beyond debt? It’s what I call “the human side of money.”

The morality of debt

So, how do people feel when they talk about their debt? That sensitive conversation can create a range of feelings from shame to responsibility, from defeat to success.

Consider this: When was the last time someone told you about the time they met their savings goal? Even money “wins” can be seen as distasteful to talk about, which makes difficult financial situations even harder to discuss. The primary problem with discussing debt is how we have moralized the issue.

Labeling some forms of debt as “worthy” and others as “selfish” does not make space for the nuance inherent in our financial situations. Life happens, and sometimes it hurts. Consider someone who racked up credit card debt because they were caring for a loved one who had gotten sick. Or consider a person whose car broke down and needed to fix it to get to work the next day. These situations don't neatly fit into categories of "worthy" or "selfish" debt.

According to a recent Bankrate survey, almost 37% of U.S. adults have more credit card debt than money in an emergency savings account. And yet, discussing personal debt is not widely acceptable. Most Americans struggle with debt, yet talking about money is almost taboo because of its personal nature.

Is credit card debt more worthy if it was necessary? It’s still debt, and that’s the crooked path I hope to make straight each day I discuss debt with anyone. Debt is common. It was decades ago, and it’s undoubtedly familiar now. So why can’t we be honest with ourselves and alleviate some of the volatile emotions like shame that come with it?

Credit card debt is often perceived as reckless shopping or mismanaged budgeting. It can make a person feel out of control. So, what do we usually do when life feels out of control? We seek professional help or counsel. The same should be true with our financial lives. But, seeking help can be difficult because many therapists can’t fully engage in financial conversations or have adequate training in money-related topics.

Financial therapy and debt

Holistic financial therapy should be the starting point for people to deconstruct financial stories, and it is critical. A financial therapist can be instrumental in helping others work through their financial challenges and beliefs. Money plays a huge role in our day-to-day functioning, yet the belief that it is taboo can be damaging—usually to those with that opinion.

Too often, financial therapists encounter black-and-white beliefs about debt that people internalize into their self-worth. Cultural messages about what debt means usually lead to feelings of isolation because there aren’t many places to talk openly and honestly about debt and its effect on our lives.

Professional support is an excellent option for helping to deconstruct money beliefs; however, many therapists are not trained in financial dynamics and how they affect our psychological perceptions. In fact, as a group, therapists tend to have their own money-avoidant beliefs that often lead to avoiding direct financial conversations with their clients.

Financial professionals may be more comfortable discussing money. Still, most do not have adequate training in the “people” side of the work, which involves processing beliefs that impact psychological well-being.

Over the past few years, financial therapists have begun addressing this need in the overlapping fields of money and mental health, even though the number of trained financial therapy practitioners remains very low.

Mental health professionals need to step directly into these often uncomfortable but necessary conversations around the meaning of money and debt. Patients must understand how those meanings define financial decisions and impact mental health.

If you can name it, tame it

Debt is a reality in the majority of our lives. It can significantly impact how we see ourselves and engage others. Finding the courage to discuss this stigmatized topic can be difficult, but the discussion can relieve much of the shame connected to our many money stories.

You aren’t alone in your debt or financial stress. Debt is something you have, not something you are. Learn to discuss debt in healthy ways to release the burden of shame or guilt related to accruing it.

A cardinal rule in therapy is “If you can name it, you can tame it.” Labeling those money issues and speaking them out loud is vital to mental health. Financial healing is only possible if we collectively learn to discuss the hard things and find others who will too.

To find a therapist, visit the Psychology Today Therapy Directory.

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