{"id":3016,"date":"2022-10-04T14:26:46","date_gmt":"2022-10-04T18:26:46","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=3016"},"modified":"2022-10-04T14:26:49","modified_gmt":"2022-10-04T18:26:49","slug":"why-is-money-so-confusing","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/why-is-money-so-confusing\/","title":{"rendered":"Why Is Money So Confusing?"},"content":{"rendered":"\n

The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.<\/em><\/p>\n\n\n\n

Managing money<\/a> is an essential life skill, yet most U.S. adults would fail a financial literacy test. Consider the results of a survey meant to measure financial literacy, called the TIAA Institute-GFLEC Personal Finance Index. On average, U.S. adults correctly answered only 50% of its financial literacy questions in 2022.<\/p>\n\n\n\n

In other words: If you find money confusing, you\u2019re far from alone. But the reasons you\u2019re baffled may have more to do with how our brains work than how money does. Understanding some of the common barriers, along with strategies to cope, could help you finally get a handle on your finances.<\/p>\n\n\n\n

Money is a new language<\/strong><\/p>\n\n\n\n

You wouldn\u2019t expect to carry on a fluent conversation in Madrid or Mexico City if you only knew a few words of Spanish. Similarly, personal finance<\/a> is loaded with terms, jargon and concepts that take a while to learn.<\/p>\n\n\n\n

\u201cEntering the world of money is like entering a whole new culture and learning a new language,\u201d says Ed Coambs, a certified financial planner and couples therapist in Charlotte, North Carolina.<\/p>\n\n\n\n

You shouldn\u2019t feel stupid for not understanding everything instantly, and no one should make you feel that way. However, learning can be more difficult if we encounter judgmental, condescending or dogmatic people \u2014 which unfortunately describes many people who are fluent in personal finance lingo.<\/p>\n\n\n\n

\u201cMany money experts, professional or non-professional, can become varying degrees of authoritarian: \u2018Yes, I know what\u2019s best for you. This is what you should do,\u2019\u201d Coambs says.<\/p>\n\n\n\n

People with a rigid approach to personal finance may not understand the culture and life experiences that shaped you. They may insist you funnel every possible dollar into paying off debt or saving for retirement, for instance, but you may feel it\u2019s important to tithe to your church or support your elderly parents.<\/p>\n\n\n\n

Rather than dictating how you should spend your money<\/a>, helpful advisors meet people where they are, says Rachael DeLeon, interim director of the Association for Financial Counseling & Planning Education, a nonprofit foundation that administers financial counseling credentials.<\/p>\n\n\n\n

\u201cIt\u2019s figuring out: What are your values? What\u2019s important to you? And how do you make that work within your own financial situation?\u201d DeLeon says.<\/p>\n\n\n\n

Money is emotional<\/strong><\/p>\n\n\n\n

For many people, money evokes strong and often negative emotions. For example, if you struggle with managing your finances, you may be so embarrassed that you try to avoid talking or even thinking about money.<\/p>\n\n\n\n

\u201cThat\u2019s what really stops people from making money progress,\u201d Coambs says. \u201cThey feel ashamed that they don\u2019t know, and they feel like they should know.\u201d<\/p>\n\n\n\n

Painful early experiences often shape our view of money, says Coambs, author of \u201cThe Healthy Love & Money Way: How the Four Attachment Styles Impact Your Financial Well-Being.\u201d Listening to parents fight about money or suffering financial hardship can be traumatic, leaving us convinced that money is dangerous or shameful.<\/p>\n\n\n\n

Coambs suggests discussing your feelings about money with supportive and compassionate people. That could include an empathetic financial advisor, a financial therapist or trusted, knowledgeable friends.<\/p>\n\n\n\n

\u201cAction is predicated on feeling safe for many of us,\u201d Coambs says. \u201cUntil we feel safe and accepted, we\u2019re typically going to feel stuck and stalled.\u201d<\/p>\n\n\n\n

Money is collaborative<\/strong><\/p>\n\n\n\n

Fear is another common emotion people experience around money: fear of making a mistake, not having enough, or being scammed or misled.<\/p>\n\n\n\n

\u201cThere are a lot of predators in this space, and knowing who to trust is hard,\u201d DeLeon says.<\/p>\n\n\n\n

Educating yourself is crucial. You can learn about personal finance basics from trusted sources, such as the Consumer Financial Protection Bureau or the JumpStart Coalition, which focuses on financial literacy for young people, DeLeon says.<\/p>\n\n\n\n

But you also can hire people to help you. DeLeon recommends fee-only advisors<\/a>, meaning they\u2019re compensated only by the fees paid by their clients rather than by commissions or other financial arrangements that could influence their advice.<\/p>\n\n\n\n

Look for advisors who are fiduciaries, which means they are required to put your interests ahead of their own. Fiduciary advisors include CFPs and people with the credentials offered by DeLeon\u2019s organization, the AFCPE, including accredited financial counselors and financial fitness coaches.<\/p>\n\n\n\n

Currently, the AFCPE offers free virtual financial counseling sessions. You can learn more at AFCPE\u2019s site. In addition, your employer, 401(k) provider, bank or credit union may also offer free or low-cost financial advice.<\/p>\n\n\n\n

With money, it\u2019s more important to know whom to ask than to have all the answers ourselves, DeLeon says.<\/p>\n\n\n\n

\u201cNot everybody needs to be a personal finance expert,\u201d DeLeon says.<\/p>\n\n\n\n

This article was written by NerdWallet and was originally published by The Associated Press.<\/em><\/p>\n\n\n\n

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