Savers Warned They May ‘Never Feel Secure’ as Psychologist Highlights Little-Known Finance Disorder
Saving money is generally considered a positive step for personal finances, encouraging financial stability and preparedness for unexpected expenses. However, for individuals with Disorder Money Behaviours (DMB), the act of saving can lead to detrimental consequences, akin to more commonly recognised psychological disorders. DMB operates on a spectrum, with some individuals exhibiting reckless spending habits that result in financial challenges, while others fall into the trap of financial hoarding, a lesser-known but equally damaging behaviour.
The Journal of Financial Therapy identifies financial hoarding as a symptom of a deeper issue, characterised by a “miserly spending style” where money is perceived solely as a resource to be stockpiled for potential future crises. This extreme form of saving can have adverse effects, causing individuals to forgo essential needs, neglect self-care, and exhibit an irrational aversion to risk, despite having the means to improve their quality of life. Additionally, those with a tendency towards financial hoarding often deprive themselves of indulgences such as vacations, luxury items, or gifts.
Dr Mark Rackley, a Chartered Psychologist, shed light on this little-known disorder, attributing its roots to one’s upbringing and early experiences with money. He explained that individuals develop their attitudes towards money based on the financial behaviours of their parents, shaping their own financial habits and perceptions. Those raised in affluent households where money is spent freely may struggle to assign value to money, leading to impulsive spending behaviours. In contrast, individuals from less privileged backgrounds, who have experienced financial insecurity, may develop a deep-seated fear of scarcity, driving them to hoard money as a means of security and safety.
This fear of financial instability can manifest as a persistent need to accumulate savings, even at the expense of basic necessities like food, clothing, or furniture. Moreover, individuals with a propensity for financial hoarding often avoid social activities or experiences that involve spending money, resulting in feelings of isolation, unhappiness, and depression. Dr Rackley emphasised the importance of establishing a healthy relationship with money to transition from unhealthy financial behaviours to sustainable financial practices.
Addressing hoarding disorders, especially those related to financial behaviours, presents unique challenges. However, the field of financial therapy is gaining traction in providing tailored interventions to address the complexities of Disordered Money Behaviours. By recognising the underlying psychological factors driving financial hoarding, individuals can work towards cultivating a balanced approach to money management, fostering financial well-being and emotional security.