Why Do People Deny or Avoid Money Problems?

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“Just think positive, and everything will turn out fine.”

“Preparing for the worst just opens the door for bad things to happen.”

“Oh, I’m sure it’s not that bad.”

Statements like these are examples of financial denial. Denial – ignoring the reality of a situation to avoid anxiety – is a common defense mechanism. It’s one of the strategies we use to protect ourselves from emotional distress. It can be useful in the short term to cushion a shock and allow us a little time to accept an overwhelming blow like a sudden financial disaster.

In the longer term, however, denial can cause a great deal of damage. Denial around money matters can result in serious financial harm.

Why do so many people live in denial or avoidance, especially when it comes to money? Because denial feels like a safe place to be. If we don’t open the credit card statements, we don’t have to think about how much we owe. If we don’t question an “investment advisor” who promises too-good-to-believe profits, we don’t have to acknowledge that they might be taking advantage of us. If we don’t see all the things our overspending spouse brings home, we don’t have to experience the pain of confronting the behavior.