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Tuesday, March 5, 2024

The Dark Side of Personal Finance: Why Shaming People is Not the Solution

Personal financial advice is meant to help people manage their money better. However, much of the advice out there takes on a harshly judgmental tone that can do more harm than good.

The Rise of the Judgment Economy

The personal finance world has given rise to what can be called a “Judgment Economy.” Certain finance gurus build their brands and platforms by aggressively judging and mocking the money choices of others.

Some example quotes:

“Are you done fooling around and don’t want to die on the Walmart floor?”

“Stop doing things to poor people!”

This kind of language promotes an “us vs. them” mentality. It positions the advice-giver as superior while portraying struggling people as idiots deserving of condemnation.

Shaming People is Not Helpful

Mocking and shaming people for their financial situations is counterproductive. It makes people feel inadequate and defensive, often causing them to withdraw rather than seek help.

The research on shame clearly shows it rarely motivates positive change. It tends to trigger isolation and avoidance behaviors instead.

Judgment Ignores Reality

Harsh personal finance advice usually ignores the complex realities behind people’s financial struggles. It reduces everything to simplistic notions of “self-control” and “hard work.”

In truth, money management involves many factors. Everything from family background, to education level, to health issues and more impacts how well someone handles their finances.

Dismissing context shows a lack of understanding. And understanding must come before any meaningful change can occur.

Survivorship Bias Skews Perception

Much judgmental finance advice stems from survivorship bias. This is when a tiny number of people succeed and their stories are used to represent the whole.

For example, Facebook’s extraordinary success leads some to believe any startup can easily reach similar heights. In reality, Facebook is an extremely rare “unicorn” company. Its atypical triumph does not reflect most startups’ experiences.

Cherry picking exceptional cases creates an unrealistic picture.

Similarly, the personal finance gurus dispensing harsh advice are essentially lottery winners pretending every financially struggling person could be where they are – if only they had more grit.

It’s Not About Tough Love – It’s About Clicks

Why is poor-shaming so prevalent in finance content? Simple: because it generates clicks.

Platforms like YouTube reward shocking and outrageous material with increased distribution and visibility. Finance personalities have learned to tap into this by spotlighting people’s “bad” money choices and reacting with exaggerated disdain.

This formula for manufacturing judgment may build an audience. But it also dehumanizes and takes advantage of those already struggling.

The Allure of Feeling Superior

For audience members, judgmental finance content offers a sense of superiority. When seeing others shamed, people may comfort themselves by thinking:

“Well I would never make such dumb choices with my money.”

This position of feeling above the criticized people can feel good. But really, it simply exposes the lack of empathy and understanding at play.

Shame Entrenches Habits – It Does Not Change Them

Many finance gurus justify their judgmental stance by calling it “tough love” that can provoke positive change. But this notion clashes with the psychological research.

Shame has the opposite impact from empowering accountability. Rather than motivating improved money management, shame often further entrenches undesirable habits.

A person’s confidence and self-efficacy plunge in the face of condemnation. This makes enacting positive changes even more challenging.

Practical Finance Advice Builds Self-Esteem

The most constructive financial advice does not shame people. It acknowledges context, rejects judgment, and Frames money management as a learnable skill set.

This approach builds self-esteem and self-efficacy. It empowers people to forgive past money mistakes, celebrate small wins, and work toward lasting behavioral improvements.

Frequently Asked Questions – FAQs

Is tough love an effective approach in personal finance?

No, research shows that shaming rarely motivates positive change; it often entrenches undesirable habits.

Why do finance gurus adopt a judgmental tone?

Click-driven content on platforms like YouTube rewards sensationalism, leading to an increase in popularity.

How does survivorship bias affect personal finance advice?

Survivorship bias distorts the perception of success, creating unrealistic expectations.

Can empathy and understanding improve financial habits?

Yes, constructive advice that acknowledges context and rejects judgment builds self-esteem and empowerment.

Is feeling superior to financially struggling individuals productive?

No, it exposes a lack of empathy and understanding and does not contribute to constructive financial discussions.

How can one transform their relationship with money for the better?

By embracing an empowering mindset, forgiving past mistakes, and focusing on incremental wins in financial habits.

You Deserve Empowerment, Not Shame

Struggling with finances can feel terribly isolating. The last thing anyone needs is popular finance figures piling on more shame.

Just remember: difficulty managing money does not make you deserving of condemnation. We all make regrettable money choices sometimes. Development self-compassion is key.

You absolutely can build healthier financial habits over time. Let go of shame, get educated, and focus on incremental wins. With an empowering mindset guiding your journey, you can transform your relationship with money for the better.

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