How to manage harmful money secrets

Most of us have secrets when it comes to money. Some of these are relatively harmless, such as buying a pair of shoes instead of the textbook you wanted for your studies.

Some secrets, however, can damage our relationships or financial wellbeing - such as having to sell your car to pay off your gambling debts.

This article explores what motivates us to keep money secrets, and how we can change our behaviour if it’s putting us in moral or legal jeopardy.

Tip: Debt, whether or not it’s secretive, can affect your financial and emotional health. Find out how debt consolidation can reduce this burden.

Money and emotions

Money is a powerful motivator and evokes strong emotions - some of which can be complicated, notes Paul Nixon, head of behavioural finance at Momentum Investments.

When we shop or gamble, for example, our brains release dopamine, rewarding us with a sense of anticipation.

However, we can feel shame or guilt once our money is spent, along with buyer’s remorse. “This is why, in some instances, we hide our behaviour, or promise not to repeat it,” Nixon says.

Why do we behave in ways that require secrecy?

Many of our adult behaviours are informed by childhood patterns that we don’t always recognise or understand, says Nixon.

If, for example, you were embarrassed because you were dropped off at school in an old car, in front of children who had more material wealth, you may have become obsessed with “keeping up with the Joneses”.

As a consequence, he notes, “You may borrow money to spend just to impress others”. This behaviour can’t be changed simply by teaching the spender that saving will improve their financial status.

Psychologist Quinton Williams agrees, and says that for many of us, the way we behave with money reflects our insecurities, a desire for status, or our views on what is financially acceptable.

“Our feelings of inferiority or the way we relate to conspicuous capitalism may drive our behaviour,” he notes.

As social beings, we want to belong and be respected, but we sometimes go about this in ways that compromise our values or financial standing.

“Money gives us status in society, and secrets can help to protect our reputation,” Williams says.

Nixon says some reasons we may feel ashamed include not having enough money, being ignorant about money and finance in general, buying on impulse to make ourselves feel better, or being unable to control compulsive behaviours such as gambling or taking drugs.

When our behaviour affects others, we may feel guilty – for example, when we hide our income, expenses, or debts, or lie about our finances. This may occur if we’re spending family money or putting status above financial security.

Rethinking money behaviour

The first step to addressing damaging behaviour is acknowledging that it may potentially hurt you or your loved ones.   

Nixon recommends working with a therapist or financial coach who has the skills to help you understand your motivations and identify the cause of your financial behaviour.

“Psychologists use a technique called Imago therapy, which is based on understanding adult behavioural patterns rooted in childhood,” he says.

“Changing behaviour requires intent, work and the services of a professional who understands these techniques.”

Working through negative associations can help you to manage the emotions that frequently underpin secretive actions.

Regaining control of your finances

Williams notes that the ultimate goal is to “develop a financial plan that will allow you to regain control over your finances, along with a sense of perspective.”

He points out that a greater understanding of the systemic causes of debt has removed the stigma of what was previously considered a moral failing in society.

“The Covid-19 pandemic and failed economic policies have hurt people financially. They shouldn’t judge themselves – or others – harshly if they’ve fallen into debt,” he says.

“Financial problems can be solved, provided you’re prepared to confront the facts and admit you need assistance. This will help to reduce any shame that you may feel.” 

Tip: Debt counselling provides a potential solution if you’re over-indebted. Find out if you qualify.