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Many can't face their personal finance reality, here are 5 ways to help them tackle financial denial - Economic Times

Attending a wedding during these times is interesting. Wear a mask, sit at a distance at the back, and make one on one conversations. And then watch people and link behaviours to what one has heard, known and learned. Interesting, indeed.

A wealthy doctor with a thriving practice attends all the ceremonies riding in last on her scooter. She sees the air and wind as her ally in these covid times. In contrast, only the new air conditioned car will do for the struggling young couple, offering rides to guests as they brag about their new vehicle. The husband had just asked me the previous night about what happens if one defaults on EMIs. Financial denial kept staring at my face all through the week and those are my stories this time.

People don’t always solve their financial problems head on. Denial is the comfort the brain offers to deal with small setbacks. But many extend that soothing balm to deep rooted problems and prefer to wish them away. Financial denial is a disease the afflicted unwittingly choose for themselves.

An elderly couple strutted around in gleaming silks, making sure that people noticed. They let it be known that the children who live abroad are providing for everything. The brag was too much, but people remained courteous. And then the host cribbed privately about how he had to grudgingly bear their intercity plane fares. By the end of the week, stories of the couple skimming off most other guests had surfaced and the audience for the stories dropped. The couple remained unfazed though.

The woman who was changing her child’s fancy frocks almost every hour, kept her smile smug and spoke too little. It was as if she found others not matching up to her league. At lunch, her husband sat next to me and told me about how he makes a few lakhs from all his businesses every month and how he is expanding rapidly. Except that his father had rued the lost capital in all the businesses the son set up and about paying for the son’s monthly household expenses, just at breakfast. If you met the younger couple you wouldn’t guess that the family had no income.

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Those who live in denial of their actual financial position are prone to several foolish habits: they put on a show; they weave stories about their wealth; they do not open mails about their bills and dues; they speak as if the winners around them just got lucky; they spend as if the dues will take care of themselves; they do not discuss their actual finances with anyone; and they refuse to look at their bank statements or deal with actual facts of their financial lives; fiction alone will do. The stories they tell others and repeat too many times are believed by them as truth and they don’t solve the real problem.

That 50-year old man who lost his job a year ago, has still not informed his wife and family about his reality. They believe he is working from home behind closed doors. He is hoping to find a job soon, but blames the rest of the world for his situation, while remaining reticent and reluctant to talk to contacts and connections he made during his long working years. After one conversation we had a year ago, we have spoken half a dozen times. He does not bring up his job or his finances ever in our conversation. I am just hoping for the best.

It is tough for the rest of us to identify who needs help and to take the risk of having a tough financial conversation. People choose denial because they do not want to talk about their financial problems. They do not want to experience the negative emotions of regret, shame and guilt. They will avoid those who would remind them of their reality at all costs. Such are the dangers of denial.

There are five simple things people in denial can do, if they choose problem solving over escapism: First, get the facts together. Gather your assets, get real about your dues and work out the math. Second, take courage from the conviction that you can start over. Don’t let the problems fester. Everyone can make a new start. Third, set yourself a deadline and draw upon your resources and your network. Tell yourself you will find a job, pay your debt or control your spends in a year. Remind yourself each day and move with that target. Fourth, do not make the same mistakes over and over again. Don’t borrow if you can’t repay; don’t swipe the card if you can’t pay the dues; don’t spend when you can’t afford it. Fifth and most important, find an ally to help you out. Confess to someone. Take help. Listen to advice that you don’t like or can’t hear, if you want to get out of your problem. Allow a well wisher to guide you out.

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 real situation. First, cross check your facts before speaking to the person. Be genuine about your desire to help. Gossip mongering does not help. Second, find someone close who can work with you. The father, wife, friend, anyone with the knowledge of the situation who will readily hold on to your offer for help, if they know you are genuine. They will help you with facts, and guide you with information, and also act as your conduit to break the barrier and get the affected person to listen.

Third, have workable solutions on hand. No one likes lectures and strictures; worse, don’t indulge in the blame game. Help convert the expensive loans through credit counselling; enable broadening the network through referrals; identify buyers for assets that can be liquidated; keep focus on actionables. Fourth, do not speak about the person’s situation to others. Being the one that they can confide in and trust is what will help them come out of denial and begin to address the real issue. Fifth, do not assume that you have to chip in money, or find donors to bail out the person. Protect their self esteem while not becoming a scapegoat yourself.

There seem to be many otherwise nice people who cannot face the realities of their own personal finances. Check you aren’t one and see how you can help.

(The writer is Chairperson, Centre for Investment Education and Learning.)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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