14 Common Financial Mistakes Caused by Shame and Guilt (And How You Can Stop Making Them)

Escape the cycle of financial self-sabotage fueled by shame.

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Updated June 6, 2024
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Dealing with your finances can bring up complex emotions and these feelings can cloud your judgment and lead you to make poor money choices.

Remember, your worth is not tied to your bank account. If you work to overcome your shame and guilt and control how they impact your financial health, you can vastly reduce your money stress and improve your financial future.

Let’s look at how shame and guilt are causing you to make bad money moves.

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Overspending to impress other people

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One common way shame can affect your finances is by compelling you to overspend to impress others. 

You might feel ashamed of your class status and use material things to mask your insecurities. This can result in you spending more than you can afford. But your real friends care about you, not about what you own. 

So the next time you feel the urge to keep up with the Kardashians, remember that fact and crush your debt before it can start.

Impulse buying

Krakenimages.com/Adobe woman holding credit card

Guilt or shame can trigger you to make impulse purchases to cope with bad feelings. Sometimes, buying things you don't need can make you feel better, but the relief is temporary. The ramifications may not be.

There are many ways to curb this habit, from taking your credit card info off Amazon to leaving sticky notes as reminders on your computer. Anything that gets you to remember your goals and stick to the list can help.

Accumulating too much debt

Krakenimages.com/Adobe man holding credit card

Overspending can cause you to rack up debt, which can snowball as you continue to shop. Unfortunately, this only exacerbates the problem as interest accrues, and your debt becomes harder to manage.

You can turn things around by consolidating your debt and setting up a reasonable payback plan, all while reigning in your spending. Plenty of folks do the same thing, so it’s nothing to be ashamed of.

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Avoiding debt at all costs

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While having too much debt is one issue, refusing to take out any loans at all due to financial trauma can limit your fiscal growth (unless you’re super wealthy).

You'll miss out on getting needed loans like mortgages and car financing to build home equity and your credit score.

Strategies like sticking to low-interest loans or paying reward credit cards off every month can help you see why some debt is good.

Avoiding financial discussions

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If you’re ashamed of your money choices, you may avoid discussing them with loved ones. This can damage your finances and relationships, especially if their fiscal health is tied to yours and you’re keeping them in the dark.

This is an excellent time to come clean to your loved ones with the help of a financial therapist. That way, you can start the work of rebuilding both trust and bank balances.

Ignoring financial problems

Many people struggle with financial problems but feel too ashamed to confront them head-on. You may instead sweep them under the rug, hoping they will magically disappear. Unfortunately, this is seldom the case.

Like coming clean to a loved one, a financial therapist can help you come clean with yourself about your money problems. You can then begin to regain control of your fiscal health.

Ignoring budgets

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Money shame can make it hard to stick to a budget or come up with one in the first place. You might feel guilty about restricting your spending or setting financial boundaries, which can lead to overspending and financial instability.

The benefits of budgeting can’t be overstated, and they may be easier to adhere to than you think. Consider downloading a budgeting app that makes it simple and shows you the rewards, keeping you motivated.

Difficulty saving money

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Money shame can easily make you feel like saving money is impossible. You may feel like you’ll lose it if you don’t spend it now or that it’s something you can put off until later. Or you might just feel unworthy of saving up for anything at all.

An emergency fund is essential, so start small and let the savings build by itself. Once you see that it’s accumulating, saving might not seem so scary.

Lending money you shouldn't

Syda Productions/Adobe young woman holding money

Guilt can goad you into lending money to loved ones without considering the financial impact on your own situation. 

While helping friends or family is admirable, it's essential to maintain healthy financial boundaries, especially if you have needs that aren't being met.

Instead, you can point folks asking you for help to resources that are better equipped to help them. This will protect you from becoming a statistic; nearly half of personal loans are not repaid in full.

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Hoarding money

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If you have financial trauma, it can cause you to hoard money to the detriment of you and your loved ones. 

You may neglect home repairs, refuse to get your car the service it needs, and other maintenance that can lead to costly repairs down the road.

This may be a good issue to discuss with a trusted family member, friend, or financial therapist who can help you understand how hoarding isn’t helping.

Failing to invest

Krakenimages.com/Adobe businessman holding bunch of 20 dollars

Investing can be intimidating, but avoiding it can mean missing out on wealth-building potential. But if you have money shame that makes you feel unworthy of wealth or avoid financial planning altogether, you may miss out on this huge opportunity.

Like saving, you can start small and download an investing app that makes it easy to make low-risk moves. Even better, talk to a financial planner who can help you get started.

Not planning for retirement

gstockstudio/Adobe confident financial advisor discussing options

Shame often rears its head when it comes to retirement planning. You might feel guilty about not saving enough for your golden years, which can lead to procrastination and inadequate preparation for the future.

The best way to get started is to set up a 401(k) plan with your employer, ideally with company matching. It’s never too late to start.

Avoiding career advancement

Kateryna/Adobe woman looking laptop screen with disappointment.

Guilt over succeeding professionally and making more money than others might lead you to avoid career advancement opportunities. You may feel ashamed of your achievements and downplay your talents, limiting your earning potential.

This is an excellent opportunity to stop self-sabotaging and see the concrete reasons you deserve success. A raise is seldom given without merit, after all.

Overworking in the pursuit of success

Diane Munro/peopleimages.com/Adobe laptop and headache in stress

On the flip side, you may be obsessed with success, which can cause you to overwork, overachieve, and overcommit yourself at the office. 

You might even rush to get things done, leading to work mistakes. Or you may obsessively switch jobs to make more money.

While making money is important, so is satisfaction on the job. Compromising and completing tasks mindfully can help you refocus on what’s important and help eliminate financial stress.

Bottom line

A. Frank/peopleimages.com/Adobe couple with a financial advisor

Shame and guilt can hurt your finances, especially if you’re dealing with money trauma from a hard time in your past. Sometimes, it can feel impossible to stop living paycheck to paycheck.

However, making mistakes with money is a part of life, and there’s no shame in seeking assistance to improve your financial situation.

By doing so, you can break free from the grip of guilt and take control of your fiscal future.

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Author Details

Cat Lafuente

Cat Lafuente is a Florida-based writer and editor with extensive experience in digital and print content spaces. Her own personal finance journey — particularly consolidating debt and paying it off, in turn boosting her credit score and becoming a homeowner — inspired her to join the FinanceBuzz team; she hopes she can help others do the same.