Most people think the biggest problem with wealth is its absence. Take the middle-aged woman who is squatting in a foreclosed condominium because she can't afford rent, the young man who lost $25,000 on a scam investment or the couple who scour their house for nickels and dimes whenever they have to put gas in their car. These are all sad situations I've seen.
But when I talk about a dark side, I also include the fear, anger and pain that plague even society's financially fortunate souls. After all, fear, greed and anger are prevalent in all kinds of financial decisions we make, whether we're destitute or loaded.
What's your worst money mistake?
First let's take some examples, and then I'll give you some ideas from my new book, "It's Not About the Money," on how to conquer the dark side.
Semi-successful
Rick Bursky is a successful account executive with a major advertising agency in trendy Venice, Calif. But he can't quite translate his career achievements into success in other financial arenas. As he explains it: "I control the stock market. . . . Whatever I do, the market does the opposite."
How Bursky 'controls' the stock market
Bursky has had a lifetime of investment decisions that didn't pan out. And he has the same problem as many other investors: fear. We have the unfortunate habit of waiting until we feel confident and comfortable before making or increasing an investment in the stock market.
To see why this is problematic, look to the Gallup Index of Investor Optimism. This broad-based survey hit its all-time high in January 2000, just a few months before the S&P 500 Index started a two-year, 53.7% decline. Then, as the S&P began a five-year rise that would see it nearly double, the Gallup survey's recovery lagged the stock index's comeback by about six months.
Chart: Investing tips for your personality
Strict savers
Most of us would look at people who have put away significant sums of money as role models -- expressions of a personal-finance ideal. But the truth is that often their good financial behavior is grounded in fear.
Quiz: What's your money personality?
Whether consciously or not, these people almost always fear their money might run out one day and leave them poor, alone or dependent on others. That fear is by far their greatest motivator. Whether self-made millionaires or just frugal hard workers, often these people are plagued by fears and anxieties that aren't rational, given their significant assets.
As a result, many good savers have other problems with money. They can't enjoy the purchases they make, have trouble being generous and don't consider themselves to be relaxed with money -- unless they're saving. That's their dark side.
Caretakers
As a society, we look up to people who give financial support to friends, family members or charities. But these people often become angry and resentful toward those they are helping, sometimes because they feel trapped in a financial relationship they didn't bargain for.
Recently, I was sitting in my office with a quarreling couple. Two years earlier, the husband had quit his high-paying job as an architect to write a novel. His wife kept her reliable job as a school administrator, but her salary fell short when it came to covering the bills. During one meeting, he suggested that we invest their portfolio more aggressively to make up for his lost income, and his wife shot back: "We don't need to take foolish risks with our nest egg. We need you to get a normal job!"
But he had his heart set on creative success, so I counseled them to find a middle ground between her need for financial security and his need for creative expression -- with an agreed-upon deadline, after which he would in fact get a paying job.
What follows are four additional ways to handle money's dark side:
1. Feel your feelings. People feel a whole string of negative emotions about today's troubled economy, including some combination of anger, sadness, frustration, envy, rage, depression, hopelessness, confusion, worthlessness, greed, anxiety, shame, emptiness and inadequacy. The trouble starts when we avoid these feelings and instead fall into instinctual money habits.
Next time you notice even a hint of an unpleasant feeling coming up in relation to money, breathe deeply and allow yourself to feel the feelings fully in your body. Don't cling to them or push them away, but don't let them rule your major financial decisions either.
2. Stall. People get into trouble when they cling to thoughts that arise about money during their darkest hours. Don't even begin to weigh the pros and cons of a real-life financial decision -- selling a losing investment, buying a fancy new living-room set or even paying off the mortgage, for instance -- if you're caught in a cycle of fear, anger or greed. Instead, wait until you are in a better frame of mind to make practical decisions.
3. Go through your worst-case scenario. The next time you find yourself in a dark place, ask your worrying mind to exaggerate its worst-case scenario. Then imagine how you would optimally respond if that
scenario occurred. What would you do? Be specific and realistic. Not "I'd be a basket case" but instead, "I'd move into my sister's garage with a sleeping bag and an air mattress and make money working as a shipping clerk."
You're still going to want to survive, and you will call on whatever resources you have available in order to do just that. Then, with that practical response fresh, ask yourself what you think you ought to do right now.
4. Listen to these guided meditations on how to relax.
Guided meditations: How to avoid your dark side
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Published Aug. 22, 2008
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