The culture of personal finance is a culture of personal responsibility. Anything wrong with your money is your fault. Any success is the result of intelligence, discipline and hard work.
The point of the narrative is to empower people to take control of their own financial future, but in many ways it does the opposite. Instead of feeling inspired and confident in managing their money better, people feel embarrassed and hopeless about their financial circumstances.
The tool that the personal responsibility crowd uses to keep people in line is shame. If you are in debt, it is because you have been careless. If you do not have savings, it is because you are not responsible. If your financial situation is lacking in any way, it is because you have failed completely.
This is fundamentally incorrect. In fact, the choices we make with our money are mostly determined by the choices available to us in the first place. You will end up in student loan debt if university is not an option without borrowing money. You will not be able to save for retirement during the months that you have been laid off from your job. But the truth does not stop the train of shame.
It is possible that those who make judgments do so to feel better about their decisions. Some people can’t be completely sure that they made the right decision unless they are completely confident that someone else made the wrong decision. Exposing someone else to their extravagant purchases, high debts, or dismal savings is a roundabout way of being patted on the back to do things differently.
But shouldn’t making good financial decisions be good enough without underestimating someone else?
Financial institutions are also guilty of scolding people for their poor financial decisions, with the added irony of pushing them to make them in the first place. The algorithms behind credit products have ensured that you will be lent enough money to get trapped. Your debt load will never be enough to take you down, while at the same time it will always be enough to make it extremely difficult to pay it off. Your credit score becomes an adult report card: Exactly how well are you doing in the game of life?
It’s easy to get the impression that you’re doing everything wrong with your money, and that distress is exacerbated by the crowd insisting that it’s entirely your fault. Even if that were the case, indulging in shame doesn’t change your circumstances.
Science says it can make it worse. Shame exacerbates financial hardship by causing individuals to avoid dealing with their finances, or to engage in behaviors that worsen their situation, such as spending excessively or neglecting saving.
Any minute you spend grieving about the financial mistakes in your past is a minute you could have spent planning and building a better financial future. Worrying about your past not only makes you feel miserable, it also distracts you from the wealth that awaits you.
Most people feel overwhelmed by the prospect of trying to undo their financial mistakes, but the great thing about making the effort to manage your money better is that you usually see results very quickly. We tend to think that we won’t see any satisfaction until our finances are perfect, but that happens much more quickly than that.
Paying off one credit card still makes a quick buck even if there are four more. Saving $1,000 for your post-secondary child’s education still provides an advantage even if he doesn’t pay the bill in full. Your money probably won’t be perfect at all, but the good news is that it doesn’t have to be.
Financial security is built incrementally, and you benefit a little bit with each step you take. The problem with shame is that it discourages people from taking that first step. Shame tells us that the game is over before it even begins. But you have many opportunities to make things right, and you always have a chance to make things better.
Bridget Casey, MBA (Finance), is the founder of Money After Graduation, an e-learning financial company. You can follow her on Instagram and Twitter at Tweet embed