Beth Snow never thought of herself as being bad with money \u2014 until the day she realised that she had racked up \u00a318,000 in credit card debt. <\/p>\n
\u201cI had heard that getting a credit card was a good way to build your credit score. So I started spending small amounts and paying it off straight away. Then it snowballed,\u201d she said.<\/p>\n
Even though she is an accountant, Snow, 28, from Cheltenham, soon had five credit cards with different balances and interest rates. Things were getting complicated. \u201cI never looked at the statements. I didn\u2019t see it as a problem. With hindsight, I was completely delusional,\u201d she said. <\/p>\n
If, like her, you have ever refused to look at your bank statement or bills or you avoid talking about money, you might be a financial ostrich. In the wild, ostriches stick their heads into their nests in the ground. Financial ostriches avoid money issues, usually because it feels overwhelming, stressful or uncomfortable.<\/p>\n
\u201cThey are not taking control or responsibility for their financial future. They might be trying to ignore that side of their life because of feelings of shame or inadequacy,\u201d said Simonne Gnessen, a former financial adviser who now runs Wise Monkey Financial Coaching. \u201cOften, when we don\u2019t know what to do, we will do anything to not deal with it.\u201d <\/p>\n
But the effects of ignoring your finances can be devastating. In the worst cases, you could rack up thousands of pounds of debt, obliterate your credit score and even destroy relationships. <\/p>\n
Are you an ostrich?<\/b><\/p>\n
The cost of living crisis is still rumbling on. Consumer prices have risen almost 40 per cent since 2015, driven by the skyrocketing cost of essentials such as housing, water and fuel (up 48 per cent) and food and drink (up 40 per cent).<\/p>\n
This has left many anxious about their finances. Almost a third of those questioned by YouGov in May said they thought that their financial situation would get worse over the next 12 months.<\/p>\n
Normal financial worries start to become a problem when someone refuses to deal with their money problems. <\/p>\n
\u201cOften being an ostrich comes from a place of fear. People are afraid of what they will discover if they look at their finances,\u201d said Graham Wells, a chartered financial planner and money coach from East Lothian. \u201cHow we think about money often comes back to childhood. It can be influenced by school, work, family and traumatic events such as a divorce or redundancy.\u201d <\/p>\n
Some ostriches may feel overwhelmed about tracking down old pension pots because it seems complicated or, at the other end of the spectrum, refuse to save into a pension because they can\u2019t imagine getting old.<\/p>\n
Other ostriches avoid spending an inheritance, feeling guilty for not having earned the money, while their counterparts spend recklessly as an adult because money was tight when they were young. One of Wells\u2019s clients was chastised as a child for mentioning money in public, so then believed it was something that should not be spoken about. <\/p>\n
Gnessen has helped a self-employed client with large debts because they did not send out invoices for their work. \u201cSome people feel that asking for money is being greedy. Others might have imposter syndrome or feel inadequate, so don\u2019t want to send the invoice,\u201d she said. <\/p>\n
Whatever the reason, being financially avoidant often starts with small actions which then build until you financial health can no longer be ignored.<\/p>\n
How to get your head out of the sand<\/p>\n
The key to changing any financial behaviour is to become aware of your habits. Wells tasked one client with making a list of all their monthly outgoings. \u201cAfter breaking it down into different categories, they realised they were spending \u00a31,700 a month on takeaways. They had no idea,\u201d said Wells. \u201cIt sounds obvious but it often isn\u2019t. A lot of people never look at their bank statements, so it can be quite a revelation.\u201d <\/p>\n
Listing your income and outgoings is a sensible place to begin but even this can feel overwhelming. \u201cStart small and build a tiny habit,\u201d said Gnessen. \u201cIf you use a banking app, just open it once a day, even if you don\u2019t look at it deeply. This will help you become more familiar with it.\u201d<\/p>\n
\u2022 Are you financially better off single?<\/b><\/a><\/p>\n Those who are not confident with a spreadsheet can use apps that connect to their bank account to analyse their spending or automatically transfer money to saving accounts. Combing bank statements can help to identify subscriptions, bills or memberships that you don\u2019t use.<\/p>\n Debt is more common than many think. Some 84 per cent of adults (about 45.7 million people) held at least one credit card or loan product in 2024 or had done so in the previous 12 months, according to the Financial Lives Survey of almost 18,000 people by the Financial Conduct Authority, the City watchdog. Some 5 per cent (2.2 million) were in persistent credit card debt, meaning they paid more in interest, fees and charges than they had actually borrowed. Some 21 per cent of respondents had gone overdrawn in their current account in the past 12 months, and 8 per cent were either constantly overdrawn, or usually overdrawn by the time they were paid each month.<\/p>\n But don\u2019t attempt to clear all your debts at once. This is an unrealistic target for many, Gnessen said. Instead, add an extra \u00a310 to the amount you are repaying (making sure it is more than the required minimum), and build from there.<\/p>\n Set aside time for money matters. Life admin has to fit around work and family commitments, so can easily slip down the priority list. \u201cOne client gives themselves specific time and space to think about money. They set aside five minutes every day and that works for them. They have been doing it for years,\u201d said Wells.<\/p>\n Some people find spending rules helpful for budgeting, said Gnessen, but they don\u2019t work for everyone. For example, the 50\/30\/20 strategy is a popular technique where 50 per cent of your income goes on necessities such as the mortgage or rent and groceries, 30 per cent on \u201cwants\u201d including meals out, new clothes and hobbies, and 20 per cent into savings. <\/p>\n Overwhelmed by pensions? As a first step, simply see how much you have saved and where it is. After that, you can start thinking about combining old pots or contributing more. To address your savings, check where your accounts are and the interest rates you\u2019re earning, then see if there are better deals elsewhere. <\/p>\n Gnessen said: \u201cIt is always good to take action. It\u2019s never too late or too small and things are invariably never as bad as we anticipate.\u201d <\/p>\n