Why some people have a problem spending money

Posted by TEBI on April 27, 2023

Why some people have a problem spending money



Some people find it very difficult to spend money even though they may have enough. What are the psychological causes behind this, and how could it be addressed?


It is common in the world of personal finance to worry about people spending too much. A great deal of advice has been written about the need for people to live within their means and stick to their budgets. Far less attention is paid to those who have a very different problem — a difficulty spending what they have.

In its extreme form, there is a psychological diagnosis for this: chrometophobia.

The CPD Online College describes this as: “an extreme, irrational and overwhelming fear of money, specifically of spending money. Someone with this phobia may experience intense fear, anxiety or panic at the sight, smell or touch of physical money or at the thought of spending money. Chrometophobia can be so extreme that it can be extremely difficult for someone to spend money or pay their bills, even if they are in a good financial position.”


Causes of anxiety

Few people experience this fear of spending to such an overwhelming extent. Diagnoses of chrometophobia are relatively rare. However, it is not that uncommon to find people who have some aversion to spending money, even when they can afford it.

For these individuals, spending money on just about anything can be a cause of anxiety. They might even find themselves withdrawing from activities where they need to pay for things, and they are likely to deny themselves luxuries, despite having enough to enjoy them.

Broadly, there are usually three psychological causes behind these kinds of attitudes.


Values and upbringing

Some people are raised in families or cultures where frugality and saving are highly valued. These values can become deeply ingrained and difficult to change, even when a person’s financial situation improves.



Spending money can cause guilt or shame in some people who feel like they don’t deserve to spend money on themselves. They believe they should always be spending in more responsible ways.


Past experience

For some people, previous experiences of poverty or financial abuse can make them hesitant to spend money, even when they have the means to do so. These experiences can create a lasting fear of not having enough money or losing control over one’s finances.


Getting to grips

Understanding what may be behind one’s reluctance to spend is an important first step towards addressing it.

Scott Rick, an associate professor at the University of Michigan’s Ross School of Business, has focused his research on the emotional causes of the way consumers behave. And his particular interest is in the behaviour of those who spend too freely – who he calls “spendthrifts” — and those who have an aversion to spending at all — “tightwads”.

In a discussion with the American Psychological Association, he described how tightwads are often impacted by some past trauma.

‘When you listen to a lot of them talk about their feelings and their thoughts, a lot of them do have memories of real distress in the past, and it’s just hard to shake it once things get better,’ Rick said. ‘These feelings are cultivated over time, and it’s hard to like it off like a light switch. So I think for them it helps to manage the distress, holding onto money.”

Since these psychological causes are often deep-set, some form of therapy is often a positive way of addressing them. Cognitive behavioural therapy, exposure therapy and hypnotherapy are all approaches with proven results in working with phobias or anxiety.


Making a plan

Perhaps ironically, the best practical way of dealing with anxiety around spending is to develop a spending plan.

While many people see a budget as limiting and restrictive, for a person who struggles to spend money, it can actually be liberating. That is because by allocating amounts to things in a budget, they are effectively giving themselves permission to spend on those things.

Writing a plan down, and seeing that their spending is affordable and within the limits they set for themselves also eases a lot of the anxiety about whether they will have enough. They can be sure that they are not putting their finances at risk.

For some, it may be more helpful to put together a spending plan that breaks things down in terms of percentages rather than actual amounts. That is because seeing large monetary figures can in itself cause anxiety. But if a spending plan is rather expressed in terms of parts of a total, that is easier to accept.



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What is truly important to me? How do I want to spend whatever time I have left? Strangely enough, these are questions that many of us just don’t get round to asking.

Encouraging people to think and, crucially, talk about these issues was the main reason that Robin Powell and Jonathan Hollow wrote their new book How to Fund the Life You Want.

In it they explain the key points of a good financial plan. They give you a downloadable workbook that will help you to set up a basic plan. And then they help you to choose a good financial adviser to review that plan and make sure it’s on track.

The book is published by Bloomsbury and is specifically written for a UK audience.

It’s available to buy on Amazon, on Bookshop.org, and in all good bookshops. There’s an eBook and an audio book version as well.



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