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Money disorders

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You may not have heard of Adolf Merckle. The German billionaire committed suicide in 2009 by throwing himself under a speeding train. Prior to the Global Financial Crisis (GFC), he was the 94th richest person in the world. Post-GFC, Merckle lost over a billion dollars and - although far from broke - could not cope emotionally with the losses which he found too great to bear.

We all have a relationship with money and for some that relationship is dysfunctional. If you let money rule your life, it can literally wreck your life. Even though we all intuitively know that money can’t buy happiness, we often act as if it can. While no one wants to live in extreme poverty, extreme wealth on the other hand does not - in and of itself - make you content.

To be clear, having more money does not make us miserable but neither does it make us happier beyond a certain income level. As I have pointed out in several blog posts over recent years, Australians are rich by world standards. Yet, as a nation, many of us grizzle and grumble about our lot in life. It seems the more we have, the more we want.

Every day, marketers sow seeds of discontent in our lives by bombarding us with promotions about products and gadgets that are newer and better. Many of us crave the latest “must haves” and this puts us on a hedonic treadmill, causing us to live beyond our means. In the worst cases, this can lead to spiralling household debt driven by excessive shopping and spending.

Money disorders have been defined as “maladaptive patterns of financial beliefs and behaviours that lead to clinically significant distress, impairment in social or occupational functioning, due to financial strain or an inability to appropriately enjoy one's financial resources”. Here are four common money disorders.

  1. Compulsive spending is an addiction that afflicts both men and women. For compulsive shoppers, buying something creates a feeling like the euphoria induced by alcohol. Shopaholics are particularly attracted to online shopping as they can buy without being seen. But this pleasurable pastime can lead to financial disaster.
  2. Money hoarding applies to those for whom frugality has become an obsession. These penny-pinchers are reluctant to spend money, even on the essentials of life like food and clothing. They would rather shiver in a cold house than pay for the cost of turning on a heater. Money hoarders are over-savers who find it emotionally painful to part with their cash. Despite their wealth, they live in the throes of poverty, robbing themselves of life’s basic pleasures.
  3. Pathological gambling is another money-related addictive behaviour. This disorder drives people to play games of chance - betting on horses, wagering at cards and purchasing lottery tickets - to the point where it ceases to be a social or recreational activity. In Australia, 70 per cent of problem gambling is associated with poker machines and gamblers have a higher suicide rate than non-bettors.
  4. While money hoarders secretly squirrel away money, those who are guilty of financial infidelity hide their spending from their partner. They tell lies about their finances, like not revealing that they have a credit card or that they have made purchases outside of an agreed household budget. Such people are said to be financially “cheating” on their spouse with their cloak-and-dagger transactions undermining trust in the relationship.

Even without financial infidelity, money woes are among the leading triggers of divorce. Climbing out from under a pile of bills can put a strain on any relationship and can see couples at each other’s throats. Money is the main source of stress for younger couples and families who see red when the household budget is in the red. And when tempers flare, people can say things which they later regret.

Money may make the world go around but it can also send us around the bend. Financially self-destructive behaviours are real and more common than we realise. If money is controlling your life, perhaps you would benefit from some professional advice. At the end of the day, you should control money – it should not control you.

Regards,
Paul J. Thomas, CEO

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CEO Paul Thomas