Understanding the Origins of Financial Stress

Jay Gershman |

Do you ever wonder why two seemingly similar people react to the market meltdowns so differently?  I believe it is far too simple to say the recent rapid correction was the reason for the stress that many individuals have shown the past few weeks.  Of course, it would be equally unreasonable to assume that it was the culmination of the past three years that caused the emotions that arose. To use either of those reasons would not explain why two married individuals would react completely differently during times of financial stress.

To explain the differences in stress levels, I am looking to things far deeper and further back in our pasts. Some researchers will point to gender since many studies have shown that women, in general,  are more risk averse.  While I have found this assumption to be true in my twenty year practice, I have long realized that each of us has a unique story to tell about our early life as it relates to money.

In many cases, this story is unknown even to the spouse of many years. These stories include divorces that have lead to food stamps, failed businesses that have lead to bankruptcy or unemployment that wipeout savings. For older clients who are children of depression era parents, the stories of hardship and fear are even more vivid. While describing these memories, clients can often re-experience the raw feelings of insecurity, fear and shame. After unearthing these emotions, clients often realize the root of their reactions to present day financial stress.

Understanding an individual’s early life with respect to money can often help a financial advisor explain why a client with massive net worth, experience stress over relatively small temporary market losses while other less well to do clients are amazingly calm. In other cases, advisors are able to understand why children of the Depression Era are unable to spend on themselves despite advanced age or ample savings. It is not uncommon for older clients to always want to be in the accumulation phase of life even twenty years after retirement. Conversely,

individuals who have experienced loss at an early age including losing both parents, are sometimes prone to reckless spending and an outward lack of stress based on their inherent belief that “life is short” so why save for tomorrow?

As a financial life planner it is important to identify possible impediments to success in our planning.  In many cases the causes are easily identifiable and with work can be overcome.  If you suspect that you or someone close to you is experiencing stress related to financial matters, an exercise in inner listening may be helpful.  In order to do this, a quiet room without interruptions is all that is needed.  Once you feel calm and can block out the cluttered thoughts of everyday life, ask yourself one simple question;  when was the first memory you have of being insecure or fearful about money?  Once you hone in on one experience, let the emotions flow and try to remember exactly how you felt.

After you have fully explored you feelings, ask yourself if that experience affected any other decisions about money you’ve made during your life since. If you realize the answer is yes, it may be time to address this issue with a professional who can help you find ways to allow the past to stay in the past and the best possible future to be experienced.

Life is short.