A wealthy doctor with a flourishing practice attends all the festivities that take place at the end on her motorbike. She sees air and wind as her ally in these hungry times. By contrast, only the new air-conditioned vehicle would suit the struggling young couple, offering rides for guests bragging about their new car. Husband had just asked me the night before what happens if one defaults on EMIs. Financial denial has been staring at me all week and these are my stories this time around.
People don’t always solve their financial problems head on. Denial is the relief the brain provides to deal with small setbacks. But many extend this soothing balm to deep-rooted problems and would rather you wish them to get rid of them. Financial deprivation is a disease that sufferers unintentionally choose for themselves.
An old couple walking around in shiny silk, to make sure people take notice. They declared that children living abroad provide for everything. The bragging was too much, but the people remained polite. Then the steward went down in private about how he grudgingly tolerated intercity plane fares. By the end of the week, stories of the couple staying away from most of the other guests surfaced and the audience for the stories dropped. The couple remained unfazed.
The woman who was changing her baby’s fancy clothes almost every hour, kept her smug smile and didn’t talk much. It was as if she had found others who did not fit in with her role. At lunch, her husband sat next to me and told me how he makes a few thousand off all his business every month and how fast he’s expanding. Except that his father had spent the lost capital on all the businesses set up by the son and paid the son’s monthly house expenses, only for breakfast. If you meet the younger spouses, you will not guess that the family has no income.
Those who live in denial of their actual financial situation are prone to several foolish habits: they make a show; They weave stories about their fortune. They do not open emails regarding their invoices and entitlements; They talk as if the winners around them got lucky; they spend as if the receivables would take care of themselves; They do not discuss their actual financial affairs with anyone; They refuse to see their bank statements or deal with the actual facts of their financial life; Only imagination will do. The stories they tell others and repeat over and over again believe they are true and do not solve the real problem.
This 50-year-old man, who lost his job a year ago, has yet to tell his wife and family about his reality. They think he works from home behind closed doors. He hopes to find a job soon, but blames the rest of the world for his situation, while remaining reticent and reluctant to talk to the contacts and relationships he made during his many years of work. After one conversation we had a year ago, we spoke six times. He never talks about his job or his finances in our conversation. I just hope for the best.
It’s hard for the rest of us to decide who needs help and risk having a difficult financial conversation. People choose denial because they don’t want to talk about their financial problems. They do not want to experience the negative feelings of regret, shame, and guilt. They will avoid those who will remind them of their reality at all costs. These are the dangers of denial.
There are five simple things people in denial can do, if they choose to solve problems over escape reality: First, bring the facts together. Gather your assets, be realistic about your dues and work on the math. Second, have the courage to believe that you can start over. Don’t let problems escalate. Everyone can make a fresh start. Third, set a deadline for yourself and rely on your resources and network. Tell yourself that you will find a job, pay off your debts, or control your spending within a year. Remind yourself every day and move with that goal. Fourth, don’t make the same mistakes over and over. Do not borrow if you cannot repay; Do not pass the card if you cannot pay the dues; Don’t spend when you can’t afford it. Fifthly and most importantly, find an ally to help you. confess to someone. Take help. Listen to advice you don’t like or don’t hear, if you want to get out of your trouble. Allow someone who is well-willing to guide you outside.
There are five things others can do, when they find close friends or relatives in financial distress, they may need help but may live unaware of their true situation. First, check the facts before you talk to the person. Be honest about your desire to help. Promoting gossip does not help. Second, find someone nearby who can work with you. Father, wife, friend, anyone familiar with the situation will easily stick to your offer to help, if they know you are real. They will help you with facts, guide you with information, and also act as a channel for you to break down the barrier and get the offended person to listen to you.
Third, you have practical solutions on hand. Nobody likes lectures and restrictions. Worse, don’t get caught up in the blame game. Assistance in transferring expensive loans through credit counseling; Enable network expansion through referrals; identifying buyers of assets that can be liquidated; Stay focused on actionable items. Fourth, don’t talk about the person’s condition to others. Being the person they can trust and trust is what will help them come out of denial and start tackling the real problem. Fifth, don’t assume that you have to give money or find donors to save the person. Protect their self-esteem while not becoming a scapegoat yourself.
There seem to be many nice people out there who just can’t face the realities of their personal finances. Verify that you are not one and see how you can help.
(The author is head of the Investment Education and Learning Center).