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When You Should Listen to Financial Guilt and When You Should Ignore It

Money guilt can creep into your life when you least expect it. Here, we'll examine what financial guilt is, when you should and shouldn’t listen to it, and how to overcome it. 

September 9, 2021

Have you ever felt funny about spending money? Are you uncomfortable because you have more money than your friends? Do you get a pit in your stomach when your in-laws show off their fancy new car? 

Money guilt can creep into your life when you least expect it. Let’s examine what financial guilt is, when you should and shouldn’t listen to it and how to overcome it. 

What is financial guilt? 

Financial guilt is a form of guilt that relates to financial wellness. In some cases, financial guilt can arise from making a large, unnecessary purchase. Other times, financial guilt may stem from earning more money than close friends or family members. Financial guilt can also revolve around not being able to spend as much as you’d like, i.e. when the holiday season rolls around and you’re forced to stick to a tight gift budget.  

Why do we feel guilty for spending money? That depends. It’s possible to pick up financial guilt in a few different ways: 

  • Childhood upbringing can play a major role in how we feel about money and can lead to feelings of guilt under certain circumstances. For example, if your parents struggled financially when you were growing up, buying a luxury car may make you feel bad, even if it’s within your budget. In some cases, your parents may have passed down their specific money beliefs, which can lead you to feel guilty over “normal” purchases or “good” sources of debt (more on that in a bit). 

  • Social media can also lead to financial guilt, especially when it comes to the fear of missing out (FOMO). When, day after day, you scroll past your friends spending money on fun vacations, dinners out and designer clothes, it can be tough not to feel guilty over your inability to keep up. That guilt only gets worse when you overspend to match their spending. 

  • Watching the news or witnessing crises related to job loss and economic decline can also bring about pangs of money guilt. 

Point being: money guilt can come at you from a lot of different angles.


When to ignore financial guilt 

Sometimes, financial guilt over spending money or other feelings of money guilt can raise your awareness of financial goals you want to conquer. There are other times, however, when financial guilt simply isn’t going to do you any good. When feelings of financial guilt pop up, it’s important to listen to them and evaluate why you’re feeling that way. It’s equally important to step away from feelings of guilt when they aren’t necessary. 

Let’s look at a few instances when you should ignore financial guilt: 

When you have “good” debt

Debt gets a bad rap for a good reason. That’s because debt can be damaging to your financial health. That being said, not all debt is bad. In fact, there are forms of “good” debt that can increase your net worth and boost your financial security. 

You don’t need to feel guilty about good debt, because it’s a tool that can help you make progress in your personal and financial life. “Bad” debt, on the other hand, typically involves borrowing money to buy rapidly depreciating assets. Credit card debt is one of the more common examples of bad debt. 

Let’s examine a few forms of good debt and how they can help you, so you can let go of any feelings of money guilt that may surround them: 

  • Pursuing higher education. While a college education isn’t required to make a decent living, it can help make it easier to obtain a competitive job. Student loan debt can be stressful to take on, but it can also help you make financial progress. When you walk away with a college degree, you may have debt, but you’ve also made a major investment in your future. 

  • Starting a business. Taking out a business loan can be a bit intimidating, but there’s no reason to feel guilty about investing in your own business, especially if you’re being responsible. It can be tough to start a successful business, so be mindful of not borrowing more than you can afford to lose if things go south. 

  • Buying property. Purchasing a live-in home or real estate investment property can be a great way to grow your wealth. Many people need to borrow money for these kinds of purchases, so there’s no need to feel any financial guilt here. 

When you have survivor’s guilt

The concept of financial survival guilt is a new one, but is very relatable in light of recent pandemic-related job loss. Feeling guilty about thriving economically when coworkers, neighbors and loved ones are struggling comes from a place of caring and compassion. However, it’s a form of guilt you shouldn’t let weigh you down, because it won’t help anyone involved.

When to listen to financial guilt

While we generally like to keep things positive, there are times when financial guilt can help point out that you’re making a money decision you’re not fully comfortable with. 

When you have bad money habits

If feelings of money guilt keep popping up, take some time to reflect on why these feelings consistently arise. Keep a spending journal or create a budget to track how you’re spending your money each month. 

While you’re at it, you can take a look at how much you’ve been contributing to your retirement fund, savings accounts, and debt payments. Which financial habits are you proud of and which do you want to change? Harness your guilt into a productive path towards better spending. 

When you’re engaging in emotional spending

Emotional spending occurs when you buy something you don’t need to ease your emotions. This type of spending can happen when you’re sad, stressed, happy or excited, but often results in overspending, which is less than ideal.

When it’s FOMO

FOMO can lead to spending money in an effort to “keep up” with friends or people you follow on Instagram (remember the Kardashians?). These purchases may feel satisfying at the moment, but once the guilt kicks in, it’s pretty easy to identify why you’re feeling the way you do. Try to avoid making financial choices as a means to keep up.

How to manage money guilt 

While we pointed out a few common sources of money guilt — some good and some bad — when it comes to kicking financial guilt to the curb, it’s easier said than done. 

Here are a few ways you can work towards managing financial guilt: 

1. Identify guilt triggers

If you don’t know what’s causing your money guilt, it can be challenging to figure out the steps you need to take to overcome it. Try looking at fact versus feeling here:

  • Is it a fact that you can’t afford new shoes? Or do you feel guilty about spending money on the shoes even though you budgeted for their purchase? When you come across a “fact” source of guilt, it’s easier to make changes that stop the feelings of guilt from coming back.

  • If it’s “emotion” that’s calling the shots, spend some time figuring out why you’re feeling guilty and what’s triggering those feelings. 

2. Get the whole financial picture

A lot of the time, money guilt can pop up when you’re unsure of whether or not you’re making a misstep. Take a look at your whole financial picture — how much you’re earning, spending, putting towards being debt-free and saving for the future. Once you have the full financial view, you can make a strong financial plan you can stick to and avoid those feelings of financial guilt. 

3. Take control

Ignoring money guilt can make the feelings of guilt intensify over time. Taking control once feelings of guilt arise can help you alleviate them. While it may be too late to undo the decision or events that led to the guilt, you can still focus on what to do next. 

Whether you create a budget, work towards paying down bad debt quickly or decide to see a therapist about how to get over spending money, you’ll feel better having a plan in place with action steps you can follow. 

If getting your credit card debt under control is a step you need to take, consider Tally. Tally† is a credit card payoff app that can help you reach your financial goals and kick financial guilt to the curb. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.