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How Financial Denial is Making You Poor – Money Psychology
How Financial Denial is Making You Poor – Money Psychology
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Money Psychology

How Financial Denial is Making You Poor – Money Psychology

Njenga Hakeenah
September 16, 2021
Ignoring the signs is a good way to end up at the wrong destination

Financial upsets have come upon all of us at one point or another. Some of these upsets are graciously weathered while some are only swept under the carpet with the hope that they will disappear all on their own.

However, the ones that we hope will disappear into thin air keep most of us awake at night since they remain unresolved issues.  

If there are financial issues that remain resolved, especially when they are significant enough, our ability to fully achieve our short- and long-term financial goals can be affected considerably.

One of the negative responses to a financial problem is denial. This is where one could have a money problem and they are unable to admit it. Since financial upsets do not often happen overnight, financial denial is built over many years.

Simply put, financial denial is having a money problem and not being able to admit it. It follows the characteristics of other forms of denial :-

  • Failing to acknowledge the existence of a difficult situation
  • Avoiding to face the facts of a problem 
  • Playing down the consequences of the issue at hand

Psychologists list financial denial as a type of money disorder where one tries as much as possible to not face the money problems head on and choose not to think about it at all.

What does financial denial look like?

To help you know if you have been avoiding the reality about your financial situation, consider these clues; 

  • Underestimating your debt, i.e. failing to fully acknowledge the true amount that you owe
  • Stuffing your bills and leaving them unopened
  • You avoid checking your bank and mobile money statements
  • You try as much as you can to not talk about money with friends and family
  • Using lack of failure as evidence of success i.e. misconstruing ‘luck’ as evidence you are doing the right things 
  • Ignoring phone calls because you suspect that someone is reminding you about what you owe them
  • You do not know what your net worth is
  • You try to avoid thinking about money and finances
  • Making ‘some day’ statements frequently
  • Thinking emergencies won’t happen to you
  • Creatively making money problems look smaller than they really are
  • Using success in one area of your life to overshadow failures

What is noteworthy is that denial, in all its forms, is the brain’s defence mechanism where it rationalizes the mistakes you make to protect you.

Psychologists theorise that in some cases, short-term denial could be all you need to get your life in order to adjust to a painful or stressful issue. That said, it is important to note that financial denial does not only affect you psychologically but also directly affects your financial wellbeing especially if it is lengthy.

According to financial psychologist, Dr Brad Klontz, financial denial makes you feel better about your finances (or lack thereof) by not thinking about them. The associate professor of Practice in Financial Psychology at Creighton University Heider College of Business adds that this denial is a way to deal with stress and it manifests when you stop paying attention to your finances, not tracking them and not opening your statements.

To avoid digging yourself deeper into a financial hole, you have to get started on a journey to acknowledging your situation. 

Your money mindset, which is a set of individual beliefs regarding money and which shapes your decisions about how you earn, spend or invest your money will also have to change.

In a previous article we saw that your attitude towards money is one of the biggest determinants of your financial health. This includes how much you think you are worth, how much you think you can earn and what you can or cannot do with money. With this in mind, strive to go beyond your circumstances by:

1.  Acknowledging your situation

Financial denial comes with a lot of effort to cover up shame associated with one’s financial situation or, even more often, the perceptions of oneself on account of where they are monetarily. To deal with this, first start by truly assessing your situation through a financial self-audit to get a good picture of where you really are. Then gracefully accept that this is where you are at today and understand that your situation does not mean you are lazy or stupid. 

2. Deal decisively with denial

Since financial denial is the go-to debt stress coping mechanism, deal with it by paying attention to your finances, tracking them and going through your financial statements. Failure to do this can be destructive to your financial wellbeing. You have to create routines that help you steer clear from acts of denial such as daily journaling, budgeting, money-related to-do lists and even seeking professional help. 

3. Forgive yourself if there is blame

Financial denial is a coping mechanism and the real issue can only be dealt with when you can step back a bit and evaluate your situation which can ultimately lead to success. Evaluate the blame and your situation as much as possible to finally start on your way out of the current financial circumstance.

4. Seek help

To remedy your situation, take full account and responsibility for your situation and then seek advice from a trusted confidante or advisor so that you can improve your situation.

5. Always keep your finances in perspective

At the core of financial denial is financial illiteracy which more often than not can lead to money mismanagement and debt. Since negative money matters can lead to a lower self-esteem, reduced productivity and stress, they are too important to ignore. 

As such, it goes without saying that you have to keep building your financial literacy skills by learning through formal means, from peers of groups and, importantly, practising the learnings day to day. 

Financial strain can be serious enough to lead to depression such that it should not be ignored or avoided.

By acknowledging that there is a struggle with financial denial, it is possible to take action to get your finances in order and back on track.

In addition to seeking professional help, you can also ensure that you:

  • Come up with a spending plan

This is no more than a budget. Try to figure out where to cut back and what is truly worth spending your hard-earned money on. To ease the emotional and psychological burden of your finances, a budget will come in handy and it will be worth the time as we have seen here.

  • It is never that serious

When push comes to shove over your finances, remember to always be easy on yourself. You can adopt the use of automated systems to help you with planning how your money is spent, saved or invested. Have automatic reminders for the due date of bills etc. to ease your burden of remembering things.

  • Love tech

There are several financial tools that can help you track your finances and help you stay on top of things. Embrace technology which makes it easier to stay and keep on track of your spending and other financial targets.


Even away from just money matters, if you have a problem and fail to acknowledge it, nine times out of ten it comes back to bite you, hard! And when it’s about money, you want to make sure that you are well insured from any bites.. 

Ignoring a prevailing financial problem not only hurts your peace of mind but blinds you from opportunities to move past the current hurdle since you are effectively doing nothing about it and somehow expecting the universe to solve it for you. 

The good thing is that when you take the single step of accepting that a problem exists, you can open up your mind to considering solutions and actually relieve some of the mental pressure that comes with the knowledge that you have unresolved money issues. 

Even better, you do not have to do it all by yourself. There are financial advisers to consult, friends, family and peers who are likely to enable you figure out a path out of your current situation.

Njenga has over 8 years experience in multimedia and business journalism both as a writer, editor and producer. He has over 5 years of experience in radio broadcasting as a news reader, reporter and presenter. He is also a 2012 Earth Journalism Network-EJN Fellow.

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