Tag: relationship with money

UNLOCKING FINANCIAL EDUCATION FOR CHILDREN: INSPIRING FINANCIAL LITERACY THROUGH THE SCHOOL OF SAVINGS

Post author By Brandon Smith
Post date September 9, 2024

financial education

Financial Education for Children: Laying the Foundation for a Bright Financial Future

As mothers and fathers, we aspire to provide our offspring with a solid foundation in life – one that fosters not only their physical and mental well-being but also their financial well-being. We don’t want our kids simply to get by. We want them to be successful.

When it comes to achieving success, avoiding mediocre to poor financial outcomes is a big part of it. Yes, not being broke, not being in debt, and not losing money should be seen as steps along the path to the up-and-away, soaring eagle kind of success. Financial literacy through financial education is a part of that foundation.

Instilling saving habits in children can be engaging and educational. By setting achievable goals, creating personalized savings plans with playful aspects, and celebrating milestones, we emphasize the value of money management. Opening a bank account can also help children develop essential financial skills for the future.

Why Financial Education for Children Matters

It is increasingly necessary to provide children not just with information but with essential life skills. Key among these skills is understanding how money works – a fundamental lack of understanding that leaves children more vulnerable than ever to scams and poor financial decisions. When children are taught the basic tenets of financial safety and the age-old principles of budgeting and saving, they are far less likely to make the kinds of young money mistakes that can dog them for years to come.

On a larger life skills level, always remembering to engage their brain and think through decisions involving money can pay huge dividends.

How to Teach Financial Education to Children

Once you have corralled the kids, the first step to making financial education fun is to use real-life situations to teach basic concepts. Use that trip to the grocery store to explain budgeting. Use family conversations about money to illustrate the concepts you want them to grasp. If you need to have a conversation about your family’s financial situation, turn it into a teachable moment for your children. In the same breath, however, you can have a conversation with them that encompasses their future.

Use visual aids when necessary. Use the board in your office. Use a piece of paper. Use your fingers if you have to. But for the love of Elmo, don’t just talk to your kids about money. Play some games with them. And for pegging down complex financial concepts, play The Weekly Allowance Money Game or The Piggy Bank Game. If you’re reading to your children, select books that are even remotely related to finance or economics. Finally, encourage them to start their businesses. The bottom line is: Whatever you do, don’t avoid the topic.

Key *Financial Concept**s to Teach Children*

Teaching kids about money needs to include certain fundamental concepts about money, starting with the idea that money is valuable. They need to know – it should be drilled into them – that while certain things are nice to have, earning and saving money is more important. They need to have some concept of the kind of life you can have when you’re not worrying about money. Better yet, the kind of life you can have when you’ve got a little bit of money and aren’t worrying at all.

Financial Education for Children: The Significance of Opening a First Bank Account

As I ponder childhood milestones, an often overlooked yet pivotal step is opening a first bank account. This simple act can serve as a launchpad for teaching children the essentials of money management, shaping them into financially responsible individuals. Introducing banking at an early age can transform their understanding significantly.

Understanding the Basics of Money Management

From the moment we introduce children to the world of finances, we help them grasp critical concepts surrounding money management. Picture a scenario: a child receives their first allowance money, a palpable representation of their effort and hard work. By guiding them to deposit their money into a bank account, we transform abstract concepts of saving and spending into tangible experiences, allowing them to better understand cash flow.

Research backs up this idea. Studies have shown that when children are exposed to banking practices early in life, they tend to develop better financial habits as they grow older. I recently stumbled upon data suggesting that kids who start managing their own money before adolescence often exhibit healthier spending and saving behaviours in adulthood. It’s a small step that can yield impressive results.

Building *Financial Habit**s from a Young Age*

When exploring opening a bank account for children, you will discover that they would not only learn how to save but also become aware of the importance of budgeting. Imagine how they’ll learn to allocate their allowances for different purposes, such as spending on toys, saving for a bike, or even putting aside some money for charitable causes.

Developing responsible financial habits: Regular visits to the bank, even if just for a simple deposit, can become a fun routine that teaches children about responsibility.
Understanding interests: When a child’s savings grow beyond a certain limit, they earn interest, transforming their deposited amounts into something more. This tangible representation of growth speaks volumes.

Brenda Hiscock, a certified financial planner, shared a poignant narrative about how she opened a bank account for her son when he was eight years old. Having begun earning money through chores, she recognized that this was the perfect moment to guide him in managing his funds. Her story resonates with many of us as a reminder that financial education can start surprisingly early.

Encouraging *Financial Goal**-Setting Through Saving*

With the introduction of a bank account, the door to goal-setting swings wide open. I can vividly recall my child’s eyes lighting up at the mention of saving money for that coveted video game. By encouraging them to save wisely, we teach them that immediate gratification isn’t everything; sometimes, the joy of reaching a goal far outweighs the thrill of impulsive purchases.

Creating savings goals can start with something as small as buying a new book or as significant as purchasing a bike. Parents can make this process interactive and enjoyable by setting up visual aids like a savings chart, where children can track their progress and celebrate milestones along the way.

Making Saving Fun

Financial education doesn’t have to feel like a tedious chore; instead, it can be an exciting journey of discovery. As part of encouraging saving, allow children to set aside a tiny portion for ‘fun money.’ This means they can indulge a bit while still keeping their primary savings goals in sight. A trip to the local mall or a treat from the concession stand can satisfy their immediate desires while instilling the values of thriftiness and delayed gratification.

These simple yet effective strategies can help instill a sense of responsibility and confidence in young savers. Through engaging discussions about money – even with some playful debates – children grow more curious and excited about finances. After all, teaching them about creating budgets, managing expenses, and saving toward personal goals positions them for success in the future.

Financial Education for Children: Choosing the Right Account for Young Savers

Navigating the sea of banking options for children, allows you to learn vital information on choosing accounts tailored for young savers. Many banks have specific offerings geared toward minors, providing features such as zero fees and no minimum balance requirements. Just imagine the relief of knowing your child can manage their money without worrying about unnecessary costs!

“Teaching children about finances can begin when they are young as three or four years old.” – Gary Rabbior

While evaluating different opportunities, I discovered Scotiabank’s Getting There Savings Account, which piqued my interest. It offers a modest yet encouraging interest rate; getting children accustomed to seeing their money grow stands as an empowering lesson in itself. Being able to witness those numbers incrementally increase gives them something to look forward to and reinforces the importance of saving.

It is also wise to remain vigilant about account fees. Many banks feature accounts that seem appealing initially but may come with hidden charges. Always read the fine print! I’ve often found that the accounts promising the most significant returns can sometimes trick us with associated fees that cancel out any gains.

Comparing Fees and Features of Different Banks

It is essential to get into the nitty-gritty details of different bank accounts. It’s not just about which bank has the most colourful advertisements or the best location. I needed to dive deep into their features, focusing on two main aspects: fees and product offerings.

Account Fees: I was astonished to see the wide range of fees different accounts charged. From monthly maintenance fees to transaction costs, not all accounts were created equal. Some accounts for young savers offered zero charges, while others had fees that could eat into precious savings. You must ensure to select an account that won’t penalize your kids for simply wanting to manage their money.
Transaction Features: Some banks allow a couple of free withdrawals or debit transactions each month, which can be a valuable feature as children learn budgeting skills. Make a list of accounts that allows for no or minimal fee transactions, which will help kids learn about budgeting without being hit by extra charges every time they make a financial move.

As I compared different institutions, I realized that the necessity of having an engaging banking experience shouldn’t be overlooked. Accounts that offer educational materials or have a money management app for parents geared toward kids can make learning about finances fun and interactive.

Benefits of Accounts with Interest Rates

Once you have a handle on the various fees, move on to another critical aspect; interest rates. A savings account shouldn’t just serve as a piggy bank; it’s an opportunity for children to learn about growing their money.

Adding a little bit of math into the mix doesn’t hurt either! You can show your children how even a small interest rate could make their money grow, turning their savings goals, like purchasing the newest video game, into manageable tasks rather than distant dreams.

Checking for Hidden Charges

The devil is always in the details, and this rings doubly true when it comes to young saver accounts. Exploring the fine print is crucial. As I examined various accounts, I was careful to check for hidden charges which can easily sneak up on you. Some accounts that appeared advantageous at first glance turned out to have fees for not meeting certain balance thresholds or for exceeding the number of allowed transactions.

I found it rather poignant when Jason Heath mentioned, “A bank account isn’t just a place to keep money; it’s a platform for teaching financial skills.” This resonated with me because it reinforced the idea that choosing the right account goes beyond just numbers; it also lays the groundwork for financial habits children will retain for a lifetime.

Researching Banks’ Young Saver Accounts Is More Than Just Rates and Fees

Engaging in thorough research is a necessity in my opinion, as different banks showcase distinct offers. Each institution has unique educational programs or tools aimed at instilling a sense of responsibility and understanding in young savers. Exploring various options gives a broader perspective on what institutions prioritize financial lessons for children. This understanding helps in selecting an account that aligns to teach children valuable lessons about managing money wisely and responsibly.

Ultimately, everyone’s financial strategies will differ. While some parents flock toward accounts with high interest rates, others may focus on those that emphasize a strong suite of educational tools. A balanced approach to teaching a child about money, combining both aspects is essential for maximizing the learning experience while also nurturing a child’s financial independence.

Financial Education For Children: Instilling Good Saving Habits Through Practical Experiences

I believe that it is one of a parent’s top priorities is to ensure that their children grow up with a solid understanding of how to manage money. Instilling good saving habits and overall money management skills in kids can be an enlightening and enjoyable experience. By setting achievable savings goals together, creating personalized savings plans, and even allowing for some fun expenses, parents are embarking on a meaningful money-smart journey through financial education toward financial literacy.

When a child approaches a parent with the desire to save up for a new video game or toy, it is the perfect opportunity to dive into the world of saving. Set a realistic and attainable savings goal together with your child. Instead of overwhelming the child with the total cost, break it down into manageable weekly amounts. This way, saving feels less like a chore and more like a game to be tackled together.

Creating a personalized savings plan is another significant step in teaching children about money. Guide your children in charting out their savings goals on a colourful poster board. Decorate it with illustrations that capture the essence of what the child is saving for. This visual representation encourages a child to think about spending habits more critically, empowering the child to make better choices. Use stickers to track progress, which makes the whole process engaging and motivating.

Saving doesn’t always have to be serious. Incorporating fun expenses within savings goals helps strike a balance. A child should set aside a small portion of their savings for something enjoyable – maybe a little treat or a small toy. This approach teaches children that while saving is important, enjoying one’s money is equally valuable. They can learn firsthand that budgeting doesn’t mean deprivation; it can mean thoughtful enjoyment.

“Begin to talk about money when your child is in second or third grade. That’s when most kids’ math skills get to the point where they’re able to understand this kind of arithmetic.” – David Anderson, PhD

Make celebrating small savings milestones a regular practice in your household. Whether it was hopping into the local ice cream shop or having a movie night where your child can pick the film, each little victory becomes a reason to celebrate. Acknowledging these achievements reinforces positive behaviour and makes saving an enjoyable habit rather than a burdensome task.

Developing a habit of saving in young children can lead to better financial stability in adulthood. These are lessons that will serve children well for their entire life. By experiencing real-world savings, children are developing essential skills that will ease future financial decisions—skills like budgeting, planning, financial responsibility and responsible spending.

Opening a bank account for children is a pivotal step toward fostering essential financial skills. With children now back in school and the Canadian National Exhibition in the backdrop, the discussions around financial literacy became quite relevant. It’s the perfect chance to lay that foundational knowledge as kids get excited about back-to-school shopping and the prospect of managing their finances. The financial world’s complexities might seem daunting at first, but experiencing them early has proven invaluable for my child.

One of my favourite moments came when I explained to him the importance of setting realistic savings goals. All too often, kids envision that saving money means they’ll have access to whatever they wish right away. By reiterating the concept of waiting and patience—points that can be hard for any child—I’ve noticed a positive shift in how he approaches his goals. It no longer feels like something to dread; instead, it’s an adventure full of anticipation and rewards.

Financial Education For Children: Final Thoughts on Financial Literacy for Kids

Opening a bank account lays the groundwork for a child’s understanding of money management. This essential first step will help them venture into a world where they can confidently make informed financial decisions. As we enter the back-to-school season, it may be the perfect opportunity to initiate conversations about banking and teach our children valuable financial literacy skills that will serve them for a lifetime.

In all honesty, our role as parents is to equip the next generation with the tools they need for financial independence. Establishing a first bank account is just one way we can begin to fulfill this crucial mission. So let’s embark on this journey together, instilling a sense of purpose and excitement around managing money!

In closing, instilling good saving habits through practical experiences lays an essential foundation in my child’s understanding of financial management. It’s about building a positive relationship with money, exhibiting responsible behaviour, and cultivating a sense of achievement. Every step, every small savings milestone we reach, brings us closer to financial empowerment. Through this journey, I find that both my child and I are learning valuable insights that will resonate deeply into our futures.

Financial Education For Children: Conclusion

I hope you enjoyed this financial education for children Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring due to distressed real estate or other reasons? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or someone with too much personal debt.

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We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

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The information provided in this Brandon’s Blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content of this Brandon’s Blog should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc. as well as any contributors to this Brandon’s Blog, do not assume any liability for any loss or damage resulting from reliance on the information provided herein.

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YOU’RE RICHER THAN YOU THINK: CULTIVATING HEALTHY FINANCIAL HABITS TO OVERCOME MONEY DYSMORPHIA

Post author By Brandon Smith
Post date July 15, 2024

you're richer than you think

You’re Richer Than You Think: What Is Money Dysmorphia?

You’re richer than you think is a slogan used by The Bank of Nova Scotia for its ScotiaBank consumer financial products advertisements. It is normal for Canadians to be concerned about their finances and whether they will have enough to pay bills, pay for their children’s education and save for retirement. Many times we feel that we won’t have enough. That is all normal. But sometimes, the rational can become irrational.

In the present era of digital advancements, social media has emerged as a major contributor to the exacerbation of money dysmorphia, particularly affecting Generation Z and millennials. This irrational unease regarding one’s financial status can result in feelings of inadequacy and financial strain. Here, we explore expert advice on reclaiming command over your financial health.

In this Brandon’s Blog, I discuss how money dysmorphia, influenced by social media comparisons, leads to financial stress. Overcoming it requires setting clear goals, seeking professional guidance, and cultivating healthy financial habits. The reality is, for most people, you’re richer than you think.

Definition of money dysmorphia

Money dysmorphia is a term that resonates deeply in today’s society. It is a psychological condition characterized by the irrational anxiety individuals experience about their financial status. Money dysmorphia can be felt by anyone, regardless of their actual wealth or income. The effects of this phenomenon are very detrimental.

Money dysmorphia is a distorted perception of one’s financial situation. Individuals with money dysmorphia may experience intense feelings of inadequacy or dissatisfaction with their financial status. This condition can lead to compulsive spending, hoarding, or other maladaptive behaviours related to money management.

Individuals with money dysmorphia may also have difficulty accurately assessing their financial resources and may engage in risky financial decisions as a result. It is important for individuals experiencing symptoms of money dysmorphia to seek professional help. Financial therapy, behavioural therapy or financial counselling, to address and manage their symptoms effectively are all avenues to consider to get help.

Who is affected by money dysmorphia?

Money dysmorphia can affect individuals from all walks of life, regardless of their socioeconomic status. It creates a significant impact on their financial well-being, relationships, and overall quality of life. While anyone can be susceptible to money dysmorphia, certain factors such as childhood experiences, societal pressures, and personal insecurities may increase the likelihood of developing this disorder.

The FP Canada’s 2024 Financial Stress Index, reveal a concerning trend of heightened financial worries, particularly among younger demographics like Generation Z and millennials. Factors like rising inflation, escalating housing costs, and the overall economic landscape contribute to this growing sense of financial insecurity. A study by Credit Karma shows similar results.

You’re Richer Than You Think: Causes of money dysmorphia

The causes of money dysmorphia can be complex and multifaceted, but some potential contributing factors include:

Cultural and societal influences

Societal pressure to consume and keep up with material possessions can contribute to an unhealthy relationship with money.
Limited understanding of personal finance and money management can lead to feelings of uncertainty and anxiety.
Exposure to social media may foster unrealistic expectations and comparisons, potentially resulting in feelings of inadequacy and discontentment with one’s financial circumstances.
Environmental factors such as poverty, economic instability, or financial insecurity can contribute to money dysmorphia.

Personal experiences and traumas

Childhood experiences of financial stress, poverty, or neglect can lead to a distorted relationship with money.
.Chronic financial stress can lead to feelings of anxiety, guilt, and shame.
Family members’ financial behaviour, attitudes, and values can influence an individual’s relationship with money.
Major life events, such as job loss, divorce, or illness, have the potential to trigger or worsen distortions in perception and reality.
Limited financial literacy can lead to feelings of uncertainty and anxiety.
Low self-esteem or self-worth can lead to an unhealthy relationship with money, as individuals may use money as a means to compensate for feelings of inadequacy.

Mental health conditions

Various mental health conditions, including anxiety, depression, and obsessive-compulsive disorder, have been identified as potential factors contributing to the development of unhealthy attitudes towards money. An individual’s values and beliefs regarding financial matters, such as the perceived importance of material possessions or the necessity of saving, can significantly influence their relationship with money.

Research indicates a possible correlation between these attitudes and abnormalities in brain regions associated with emotional processing, such as the anterior cingulate cortex. Additionally, specific personality traits like perfectionism, rigidity, or impulsivity may heighten one’s susceptibility to developing problematic financial behaviours.

Setting unrealistic or unattainable financial objectives can lead to feelings of frustration and disappointment, ultimately exacerbating the condition known as money dysmorphia.

It’s essential to note that money dysmorphia is a complex condition, and multiple factors may contribute to its development. If you’re struggling with money dysmorphia, it’s crucial to seek professional help from a mental health expert or a financial advisor to address the underlying issues and develop a healthier relationship with money.

The comparison trap on social media platforms has become a prevalent issue, especially among younger generations like Generation Z and millennials.

When scrolling through social media feeds, it’s easy to fall into the trap of comparing one’s financial status to the seemingly perfect lives portrayed online. This constant exposure to curated content can fuel feelings of inadequacy and financial stress, creating a flawed perception of reality.

Social media is pivotal in perpetuating financial insecurities, creating a platform where comparisons run rampant. The carefully curated highlight reels and seemingly flawless lives showcased on social platforms can distort perceptions of reality, leading individuals to question their financial standing. This constant exposure to unrealistic standards can fuel feelings of inadequacy and breed a culture of comparison.

It is imperative to comprehend the impact of social media on shaping financial attitudes and behaviours in addressing issues related to money dysmorphia. Acknowledging that online depictions often present a curated and exaggerated representation of reality enables individuals to liberate themselves from the comparison trap. It is essential to foster a mindset that prioritizes personal growth over seeking external approval, concentrating on individual financial objectives and ambitions rather than external standards.

You’re Richer Than You Think: Who is most affected by money dysmorphia?

Money dysmorphia, also known as financial anxiety disorder, can affect anyone who has a distorted perception of money and financial reality. However, certain groups may be more prone to experiencing money dysmorphia due to various factors.

Young adults and millennials

People in their 20s and 30s may be more susceptible to money dysmorphia. Let’s explore these and other factors more closely:

Career establishment: This age group is often in the process of establishing their careers, which can be a significant source of stress. The pressure to secure a job, climb the corporate ladder, and achieve professional success can lead to financial anxiety and a distorted view of money.
Student loan debt: Many individuals in this age group are still paying off student loans, which can be a significant financial burden. The pressure to manage debt, make timely payments, and avoid default can contribute to financial stress and anxiety.
Building a financial foundation: This age group is often expected to establish a financial foundation, including building an emergency fund, paying off debt, and starting to save for retirement. The pressure to achieve these financial milestones can lead to feelings of inadequacy and financial anxiety.
The impact of social media: Platforms such as Instagram and Facebook frequently portray the idealized lives of others, complete with their financial achievements. This can cultivate unattainable standards and feelings of inadequacy, prompting financial distress and a distorted perception of wealth.
Changing financial priorities: As people enter their 20s and 30s, their financial priorities often shift from living expenses to long-term goals, such as buying a home, starting a family, or achieving financial independence. This shift can be overwhelming and lead to financial anxiety.
Growing financial commitments: As individuals transition into their 20s and 30s, they often assume additional financial obligations, which may include providing for dependents, covering healthcare expenses, and overseeing household finances. These augmented financial responsibilities can lead to heightened levels of financial strain and anxiety.
Insufficient financial education: Individuals within this demographic may have not been equipped with sufficient financial education or guidance, resulting in feelings of uncertainty and anxiety regarding their financial status.
Social comparison pressure: The societal expectation to align with the lifestyles of peers, coworkers, and social media figures can result in sentiments of insufficiency and economic distress. Individuals may perceive a need to conform to current fashions, acquire the latest technologies, or engage in extravagant travel experiences to uphold a desired social standing.
The phenomenon known as the fear of missing out (FOMO): Pertains to apprehensions about missing out on financial prospects, career advancements, or life experiences, which can give rise to financial stress and a skewed perspective on money.
Lack of financial self-assurance: Individuals in their 20s and 30s may exhibit a lack of financial self-assurance, leading to feelings of doubt and anxiety regarding their financial circumstances.

Individuals with low self-esteem or a history of a history of trauma

Individuals with low self-esteem or a history of trauma may be more susceptible to money dysmorphia due to the following reasons:

Negative self-talk: People with low self-esteem may have a negative inner dialogue that can manifest in their financial decisions. They may believe they are not worthy of financial success or that they don’t deserve to have money. This negative self-talk can lead to financial anxiety, fear, and a distorted view of money.
Fear of rejection: Individuals with a history of trauma may have a deep-seated fear of rejection, which can manifest in their financial decisions. They may be overly cautious with their finances, hoarding money or avoiding financial risks, due to a fear of being rejected or abandoned.
Low self-esteem: Individuals who have experienced trauma may encounter challenges related to shame, guilt, and self-blame, resulting in diminished self-worth. This may influence their financial behaviour, as they may perceive themselves as undeserving of wealth or lacking in worthiness to attain financial prosperity.
Hyper-vigilance: Individuals with a history of trauma may be in a state of hyper-vigilance, always on the lookout for potential threats or dangers. This can manifest in their financial decisions, as they may be overly cautious or risk-averse, leading to a distorted view of money.
Challenges with establishing boundaries: Individuals who have experienced trauma may encounter difficulties in setting and upholding appropriate boundaries, potentially impacting their financial well-being. They may find it challenging to assertively decline financial demands or regulate their expenses, resulting in heightened financial strain and distress.
Emotional regulation: Individuals with low self-esteem or a history of trauma may struggle with emotional regulation, leading to intense emotional responses to financial stress or anxiety. This can lead to impulsive financial decisions or a distorted view of money.
Fear of loss: Trauma survivors may have a deep-seated fear of loss, which can manifest in their financial decisions. They may be overly attached to their money or possessions, leading to a distorted view of money and financial anxiety.
Difficulty with self-care: Individuals with low self-esteem or a history of trauma may struggle with self-care, including taking care of their physical and emotional needs. This can lead to financial decisions that prioritize others’ needs over their own, leading to financial stress and anxiety.
Lack of financial education: Trauma survivors may have a lack of financial education or guidance, leading to financial anxiety and a distorted view of money.
Individuals with a history of trauma or low self-esteem: Such people may encounter challenges with trust, which can extend to trusting themselves, others, or financial institutions. This difficulty may result in financial choices influenced by fear or mistrust, rather than logical decision-making.

Those with a history of financial difficulties

People with a history of financial difficulties may be more prone to money dysmorphia due to the following reasons:

Fear of financial instability: Individuals who have experienced financial difficulties in the past may be more anxious about their financial situation and more likely to develop a distorted view of money.
Trauma and stress: Financial difficulties can be a traumatic experience, leading to stress, anxiety, and feelings of shame or guilt. This trauma can lead to a distorted view of money and a fear of financial instability.
Lack of financial confidence: Individuals who have faced financial challenges, possibly due to past poor decisions, may experience a lack of confidence in their financial management capabilities. This can result in a skewed perception of money and a heightened fear of making further financial errors.
Fear of debt: Individuals who have struggled with debt may be more anxious about debt and more likely to develop a distorted view of money.
Fear of financial loss: People who have experienced financial loss, such as a job loss or a financial setback, may be more anxious about financial loss and more likely to develop a distorted view of money.
Difficulty with financial planning: Individuals who have struggled with financial difficulties may have difficulty planning for the future, leading to a distorted view of money and a fear of financial instability.
Fear of financial judgment: People who have struggled with financial difficulties may fear being judged by others for their financial situation, leading to a distorted view of money and a fear of financial instability.
Difficulty with financial decision-making: Individuals who have struggled with financial difficulties due to having made poor decisions in the past may have difficulty making financial decisions, leading to a distorted view of money and a fear of financial instability.
Fear of financial vulnerability: People who have struggled with financial difficulties may fear being vulnerable to financial exploitation or taking financial risks, leading to a distorted view of money and a fear of financial instability.
Difficulty with financial forgiveness: Individuals who have struggled with financial difficulties may have difficulty forgiving themselves for past financial mistakes, leading to a distorted view of money and a fear of financial instability.

It is crucial to acknowledge that money dysmorphia can serve as a symptom of deeper financial trauma or challenges. Engaging with professional support, such as therapy or financial counselling, offers an effective approach to addressing these underlying issues and cultivating a more positive relationship with finances.

You’re Richer Than You Think: How money dysmorphia affects financial habits

Overspending and impulse buying

Excessive spending and impulsive purchasing are prevalent outcomes of financial dysmorphia. The subsequent delineation illustrates how financial dysmorphia may precipitate increased expenditure and impulsive buying behaviour:

Overspending:

Compensatory spending: Individuals with money dysmorphia may overspend as a way to compensate for perceived financial shortcomings or to alleviate feelings of financial anxiety.
Emotional spending: A phenomenon that involves individuals turning to shopping as a coping mechanism for managing negative emotions like stress, anxiety, or boredom.
Keeping up appearances: Money dysmorphia can lead to a desire to keep up appearances, which can result in overspending on luxuries or status symbols.
Fear of financial loss: Individuals with money dysmorphia may overspend as a way to avoid feelings of financial loss or to maintain a sense of financial security.
Lack of financial boundaries: Money dysmorphia can lead to a lack of financial boundaries, making it difficult for individuals to say no to financial requests or to prioritize their own financial needs.

Impulse buying:

Emotional triggers: Money dysmorphia can lead to emotional triggers, such as stress, anxiety, or boredom, which can cause individuals to make impulsive financial decisions.
Lack of self-control: Individuals with money dysmorphia may struggle with self-control, leading to impulsive buying decisions.
Fear of missing out (FOMO): Money dysmorphia can lead to FOMO, causing individuals to make impulsive buying decisions to avoid feeling left out or to keep up with others.
Inadequate financial planning: The presence of money dysmorphia may result in a deficiency in financial planning, creating challenges for individuals in effectively prioritizing their financial objectives or making well-informed financial choices.

Hoarding and fear of spending

Hoarding and fear of spending are common consequences of money dysmorphia. Here are some ways in which money dysmorphia can lead to hoarding and fear of spending:

Hoarding:

Fear of financial loss: Individuals with money dysmorphia may hoard money or resources as a way to avoid feelings of financial loss or to maintain a sense of financial security.
Fear of scarcity: Hoarding can be a response to a perceived scarcity of resources, leading individuals to accumulate and hoard as a way to ensure their financial survival.
Emotional attachment: Money dysmorphia can lead to an emotional attachment to money or resources, making it difficult for individuals to part with them.
Fear of financial vulnerability: Hoarding can be a way to avoid feelings of financial vulnerability, as individuals may feel that by accumulating and hoarding, they are protecting themselves from financial uncertainty.
Lack of financial planning: Hoarding can be a result of a lack of financial planning, as individuals may not have a clear understanding of their financial needs or goals.

Fear of spending:

Fear of financial loss: Individuals with money dysmorphia may fear spending as a way to avoid feelings of financial loss or to maintain a sense of financial security.
Fear of financial vulnerability: Fear of spending can be a way to avoid feelings of financial vulnerability, as individuals may feel that by not spending, they are protecting themselves from financial uncertainty.
Fear of debt: Fear of spending can be a result of a fear of debt, as individuals may feel that by not spending, they are avoiding debt and financial obligations.
Fear of financial judgment: Fear of spending can be a result of a fear of financial judgment, as individuals may feel that by not spending, they are avoiding criticism or judgment from others.
Lack of financial confidence: Fear of spending can be a result of a lack of financial confidence, as individuals may feel that they are not financially prepared or capable of making financial decisions.

Constant comparison and dissatisfaction

Money dysmorphia can lead to constant comparison and dissatisfaction in several ways:

Unrealistic expectations: Money dysmorphia can create unrealistic expectations about what one should have or be able to afford. This can lead to constant comparison with others who seem to have more or better things.
Focus on material possessions: Money dysmorphia can lead to a focus on material possessions as a measure of financial stability or happiness. This can lead to constant comparison with others who have more or better possessions.
Fear of missing out (FOMO): Money dysmorphia can create a sense of FOMO, where one feels like they are missing out on experiences or opportunities because they don’t have enough money.
Perfectionism: Money dysmorphia can lead to perfectionism, where one feels like they need to have the perfect job, the perfect partner, the perfect home, etc. This can lead to constant comparison with others who seem to have it all together.
Lack of self-acceptance: Money dysmorphia can lead to a lack of self-acceptance, where one feels like they are not good enough or worthy of happiness because of their financial situation.
Comparison to others’ highlight reels: Social media can create a false sense of reality, where one compares their life to the highlight reels of others. This can lead to constant dissatisfaction and comparison. Fear of being judged: Money dysmorphia can create a fear of being judged by others for one’s financial situation. This can lead to constant comparison and dissatisfaction.
Unrealistic standards: Money dysmorphia can create unrealistic standards for oneself and others. This can lead to constant comparison and dissatisfaction.
Lack of gratitude: Money dysmorphia can lead to a lack of gratitude for what one already has. This can lead to constant comparison and dissatisfaction.
Constant striving: Money dysmorphia can create a constant sense of striving for more, which can lead to constant comparison and dissatisfaction.

You’re Richer Than You Think: Strategies to Overcome Money Dysmorphia

Navigating the intricacies of money dysmorphia and its implications on financial wellness underscores the importance of establishing clear financial objectives. Setting tangible goals and monitoring their progress serves as a foundational element in regaining a sense of agency in managing one’s finances. This proactive strategy not only cultivates empowerment but also nurtures a positive rapport with money, facilitating a more informed understanding of one’s financial standing.

Here are some practical strategies that you can use to maintain a healthy relationship with money and your financial needs:

Build financial literacy

Financial literacy plays a vital role in addressing money-related challenges and fostering financial empowerment. Elevating one’s understanding of personal finance, seeking guidance from financial experts, and engaging in constructive dialogues about financial matters are fundamental steps in establishing a strong financial footing. By arming oneself with the requisite knowledge and skills, individuals can make well-informed decisions and confidently navigate the financial landscape.

Financial literacy and planning are indispensable components of effective money management and ensuring a secure financial future. In the contemporary, fast-paced environment where social media can influence our perceptions of wealth and success, it is imperative to educate ourselves on personal finance and cultivate sound financial practices for sustained prosperity.

Self-education on personal finance serves as a potent tool in addressing money-related anxieties, including money dysmorphia, which refers to the irrational distress individuals experience about their financial standing, often exacerbated by comparisons with others.

Seek professional help

In the face of societal pressures and financial uncertainties, it is essential to seek guidance from reliable sources. Engaging in candid discussions regarding financial worries with trusted individuals such as family, friends, or financial experts can provide valuable advice and direction. Building a supportive network can empower individuals to confront financial obstacles with resilience and determination.

Consulting with financial planners and advisors can offer specialized insights and expertise for navigating the intricacies of personal finance. These professionals can offer a realistic assessment of one’s financial standing, identify areas for enhancement, and devise a roadmap toward financial security. By leveraging their proficiency and experience, informed decisions can be made to bolster long-term financial well-being.

Create a monthly budget

A critical aspect of addressing financial challenges such as money dysmorphia involves establishing clear financial objectives that align with our fundamental values. This process commences with a thorough assessment of our monthly income and expenses, followed by the development of a financial strategy that ensures our expenditures do not exceed our earnings.

By articulating our financial aspirations in harmony with our core principles, we can construct a comprehensive framework that informs our financial decisions and behaviours. Whether our objectives involve saving for a significant trip, purchasing a property, or investing in further education, linking our financial goals with our values instills a sense of purpose and direction.

Effective budgeting relies on the diligent tracking of income and expenses. By monitoring the sources of our monthly income, as well as our expenditures and their destinations, we can gain valuable insights into our spending patterns and identify opportunities to reduce expenses or enhance savings. Formulating and adhering to a budget fosters accountability and empowers us to progress toward our financial objectives, whether they are short-term initiatives like saving for a vacation or longer-term goals.

You’re Richer Than You Think: Conclusion

Money dysmorphia, influenced by social media comparisons, leads to financial stress. Overcoming it requires setting clear goals, seeking professional guidance, and cultivating healthy financial habits.

I hope you enjoyed this you’re richer than you think Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or someone with too much personal debt.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The information provided in this Brandon’s Blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content of this Brandon’s Blog should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc. as well as any contributors to this Brandon’s Blog, do not assume any liability for any loss or damage resulting from reliance on the information provided herein.

Brandon Blog Post

FINANCIAL WELLNESS: IMPROVE YOUR RELATIONSHIP WITH MONEY

Post author By Brandon Smith
Post date March 29, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to this Brandon Blog’s audio version, please scroll to the very bottom of this page and click play on the podcast.

What Is Financial Wellness?

Financial wellness is the state of being free from financial stress or worry. By managing your financial health you can avoid the feelings of anxiety and despair that come from worrying about money. When you are financially well you have the ability to focus your energy on the things that really matter to you.

The phrase is everywhere these days. It’s a buzzword that’s getting a lot of attention. But what does it actually mean? When you boil it down, financial wellness is simply about being responsible with money. It’s about paying attention to how you spend, saving for the future, and making sure you can take care of yourself and your family.

Why is financial wellness important?

Financial wellness is important because it’s the first step to planning and achieving your goals. If you don’t know where your money goes, how can you ever be sure that there is enough for the things you want and need? Your ability to pay bills and avoid debt can determine whether or not you have a good credit score, and whether or not you can apply for a mortgage or a loan for a house or a car. This creates unnecessary financial stress.

In this Brandon Blog, I discuss the aspects of financial wellness and what it means for your overall enjoyment of life.

This blog is an expansion of a recent blog titled: “Take Care of Yourself, Take Care of Your Money” I wrote for our national association that we are a member of, the Canadian Association of Insolvency and Restructuring Professionals.

Financial wellness & stigma

It’s difficult to remember a time when the word “debt” didn’t have a negative connotation. Whether you’re talking about consumer debt, medical debt, or debt related to other services, the ominous word is never far from its less than attractive cousins “recession” and “bankruptcy“.

Yet even in the midst of a pandemic, in September 2020, credit reporting firm Equifax Canada stated increasing mortgage balances pressed average financial debt per Canadian consumer up to $73,532. This is up 2.2% from the prior year and despite the financial impact of the COVID-19 pandemic.

Financial health can be part of an overall health wellness program which will certainly aid in decreasing any kind of stigma. The Financial Consumer Agency of Canada stated that “mental, physical and financial wellness are three pillars of good health”. They say this with great certainty as almost fifty percent of Canadians have financial tension in their lives. Virtually as many, according to a 2018 survey carried out by the Canadian Payroll Association, would certainly have economic pressure and financial shock if a paycheque came late.

Financial wellness & productivity

The number one reason people will credit with helping them make and save money and make proper financial decisions is their parents. So why not make the home for your entire family the number one place to learn about money and manage it? Look for personal finance articles, books and courses that can teach you everything from general money management to specific techniques for saving money on groceries to investing. This is also known as improving your financial literacy.

Also, look for advice on your overall well-being so you can have a healthy relationship with money and your family that will last all of you a lifetime. Overall good health, taking the stressors out of your life as much as possible and financial well-being will lead to increased productivity and overall enjoyment of life.

The principles of physical health are well promoted through health institutions. It consists of a well-balanced diet regimen, exercise, and healthy life selections. The importance of psychological well-being in the form of self-care and mindfulness is obtaining awareness through networks beyond medical care specialists. Its value has been highlighted a lot more throughout the pandemic.

In my experience as a Licensed Insolvency Trustee (“Trustee”), the principles of financial well-being and financial wellness still challenge Canadians. I never see it included as a component of overall health in discussions over awareness of physical and mental health wellness. Perhaps because in our consumption-driven world, saving cash through excellent money management abilities isn’t as “awesome” a subject to brag about or to become a social media influencer in!

Nonetheless, establishing monetary objectives and achieving them is extremely rewarding. Self-control today will certainly pay dividends in the future. So just how do we get there to a nirvana state of financial well-being? The same way as we do with a physical health and wellness goal – with self-control and good habits, forming new behaviours.

I recommend that as a first step, draw up a checklist of financial planning objectives and a timeline. Take stock of your financial obligations, rates of interest you are paying, monthly payment amounts and days of the month that payments are due. Understand your assets, liabilities, income and all of your expenses.

Goals: Financial wellness programs need realistic goals

The biggest mistake people make when trying to establish financial wellness is setting financial goals they have no realistic chance of achieving. This is not an achievable goal if it is too high, or too grand. If necessary, break a larger objective into smaller-sized objectives that can be attained in a reasonable period of time to stay clear of discouragement. If you set out to lose 100 pounds, you might be scared off because of how much time that would certainly take. Going for a few pounds a week or month would certainly help keep you motivated.

If all you do is have the idea of being debt-free or have $100,000 in your bank account, that goal is probably unattainable. There is no roadmap of steps to take to get there and there is no timeline attached to such a goal. However, aiming to pay all your monthly bills on time, conserving 5% of every paycheque to have some emergency funds on hand or paying off your highest interest rate financial debts at the rate of $50 a week is reasonable and measurable.

***Financial wellness*: Nutrition**

Barring any serious medical concerns, conventional weight loss wisdom focuses on calories. If you burn more calories than you ingest, you will certainly slim down. Budgeting takes the same approach. As long as your monthly spending is less than your monthly income, you will achieve your financial well-being monthly goals. In tracking your monthly spending you need to look at all the ways you spend in any month: cash, cheque, debit card and credit cards.

Don’t make the mistake that many people do in forgetting that the only amount you have to spend is your net monthly income, net of the income tax you need to pay to the Canada Revenue Agency. You need to look at your last year’s income tax return to see the total amount of income tax you paid, not just the amount deducted at source. If you received a refund, then you should not have to save extra to pay that income tax bill in April. If you had to pay more than what was deducted at source, you better plan to save that amount of money during the year so you will have it the following April.

Analyze every expenditure and determine just how well it aligns with your financial health goals for a better financial life. What is more important? The expenditure or the sensation of financial wellness that will be accomplished if you had that much more cash to put in the direction of paying down debt, building up an emergency savings fund or starting or adding to a retirement savings plan.

***Financial wellness*: Exercising**

Running on a treadmill is excellent for your physical health and wellness. Yet unless that treadmill is powering your home, when it comes to your financial well-being you will require a different type of exercise. That is an exercise in discipline. Understanding just how a “need” is different from a “want”.

After covering the requirements of life, you need to focus on what spending will certainly get you closer to attaining your goals, and which do the opposite. I am not recommending that you lead a reclusive life yet search for financial savings and effectiveness to get you closer to the financial well-being you are striving for. Is there a less costly cafe? Can I get that same fashion look for much less? Don’t deny yourself, but at the same time do not overreach.

My grandfather’s depression-era wisdom is still appropriate today: if you pinch pennies hard, you will get nickels.

Financial wellness in the workplace

Most people have financial stress in their lives, whether they realize it or not. For some, the stress may be simply a question of meeting their bills. For others, it may be more complex such as how to:

reduce the stress of dealing with creditors;
set up a savings account to handle an unexpected financial blow; or
achieve financial security.

Regardless of the type of financial stress people face, a financial wellness program can help them find solutions and create a plan to reduce their stress over money. Employees that have their stress reduced will be more productive. So it is in the employer’s best interests to institute a financial wellness program in the workplace.

It all starts with a financial wellness assessment

The idea of a financial wellness assessment might seem a bit like financial group therapy. A professional looks at your situation, from your income to your debts, and asks questions about your financial goals. It can be stressful to open up about your financial situation, but it’s an important step toward taking control of your money. It’s also an opportunity to learn about products and services that may help you achieve your financial goals.

The result of the financial wellness survey will be written up in a financial wellness report. A financial wellness report is a tool that helps you identify the state of your finances, your level of financial distress and the main source of stress. It is a tool that you can use, which provides you with objective information about your financial situation and what steps you can take to improve it.

Measure the success of your financial wellness program

If you’re a company concerned about the financial wellness of your employees, don’t just rely on gut feeling to measure your program’s effectiveness. Instead, use a quantitative approach to measuring the success of your financial wellness program, as this will help you better understand where your employees are at financially and what works and what doesn’t in your program.

If you’re seeking a successful financial wellness program, you need to assess yours. You may feel as if your program is successful, but have you measured it to be sure? Any employee financial wellness program aims to improve each employee’s financial position and to reduce the amount of financial stress in their lives. The best way to measure your financial wellness program’s success would be to measure how your employees have advanced in achieving their financial goals established in the financial wellness assessment.

After an appropriate length of time, depending on each unique set of goals, another financial wellness assessment should be conducted and the results of the newer one compared to the prior one. What an employee has achieved and how they feel about it is an extremely important measure. New goals can be set, old goals can continue to be worked on or recalibrated. All this is intending to keep your employees on track to achieve their financial goals, improve the level of financial wellness peers experience and reduce the stress in their lives.

Financial wellness guide information for employees

This listing is not meant to be exhaustive. Some of the things that your employees might need to learn about in financial wellness workshops to improve their every day finances might be how to:

Track your finances
best manage assets, liabilities, income and expenses
Improve your relationship with money
Create, track and adjust your personal budget
Money management skills
Have control over day to day spending
Set up and maintain positive money habits to reduce your money worries
Understand the key elements behind your spending habits and how to fix what needs fixing
Know how much life insurance you may need and how to choose the best for you from the different types of insurance
Maintain a good credit score
Fix your credit
Deal with Canada Revenue Agency and income taxes
Create goals for when you have extra money
Deal with unexpected expenses
Create the financial resources to meet your household’s needs

What are the financial consequences of debt?

I hope you enjoyed this financial wellness Brandon Blog post. Sometimes financial literacy and financial education have to take a back seat to fix an immediate financial problem. Education can come both as part of the solution as well as continuing after debt problems have been solved. Student debt, bad debt, Canada Revenue Agency income tax debt, other personal debt and corporate debt, credit card debt and an unmanageable debt load are all examples of financial problems we have solved for other individuals and entrepreneurs and their companies.

If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today

Call us now for a no-cost consultation. We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.