The culture of personal finance is one of personal responsibility. Any mistake with your money is your fault. Any success is the result of intelligence, discipline and hard work.
The narrative is meant to empower people to take control of their financial future, but in many ways it does the opposite. Instead of feeling inspired and confident to better manage their money, people feel ashamed and desperate about their financial circumstances.
The tool wielded by the personal responsibility crowd to keep people in check is shame. If you are in debt, it is because you were careless. If you do not have savings, it is because you are irresponsible. If your financial situation is deficient in any way, it is entirely due to your failure.
This is fundamentally false. In reality, the choices we make with our money are primarily determined by what options are available to us in the first place. You’ll end up with student loan debt if college wasn’t an option without borrowing money. You will not be able to save for retirement during the months you were laid off from your job. But the truth doesn’t stop the shame train.
Listen to this episode of Stress Test on how TikTok is resonating and what money tips to keep in mind
Those who dole out the judgment probably do so to feel better about their own decisions. Some people cannot be completely sure that they have made the right decision unless they are completely sure that someone else made the wrong decision. Shaming another person for their extravagant purchases, large debts, or lousy savings is a roundabout way of patting yourself on the back for doing things differently.
But shouldn’t it feel good enough to make good financial decisions without putting someone else down?
Financial institutions are also guilty of shaming people for their poor money decisions, with the added irony of leading them to make them in the first place. The algorithms behind credit products have ensured that you will be loaned enough money to get caught. Your debt load will never be enough to sink you, while at the same time it will always be enough to make it extremely difficult to pay off. Your credit score becomes your adult report card: exactly how well are you doing in the game of life?
It’s easy to get the impression that you’re doing everything wrong with your money, and that angst is exacerbated by the crowd insisting it’s all your fault. Even if it is, wallowing in shame doesn’t change your circumstances.
Science says it can actually make it worse. Shame intensifies financial hardship by causing people to avoid taking care of their finances or to engage in behaviors that make their situation worse, such as overspending or not saving.
Any minute you spend agonizing over the financial mistakes of your past is a minute you could have spent planning and building a better financial future. Worrying about your past not only makes you miserable, it distracts you from the wealth that lies ahead.
Most people are overwhelmed by the prospect of trying to correct their financial mistakes, but the wonderful thing about making the effort to manage your money better is that the results usually come very quickly. We tend to think that we won’t experience any relief until our finances are perfect, but it happens much faster than that.
Paying off a credit card still confers a quick win, even if there are four more left. Saving $1,000 for their child’s post-secondary education still provides them with a benefit, even if it won’t pay the entire bill. Your finances may never be perfect, but the good news is that they don’t have to be.
Financial security is built gradually, and you gain a little with every step you take. The problem with shame is that it discourages people from taking the first step. Shame communicates that the game is over even before you start. But you have many possibilities to do things well, and you always have the opportunity to improve things.
Bridget Casey, MBA (Finance), is the founder of Money After Graduation, a financial e-learning company. You can follow her on Instagram and Twitter at @bridgiecasey.