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The Mindset of Financial Security Thumbnail

The Mindset of Financial Security

By Sarah Carlson, CFP®, CLU®, ChFC®

My client, Holly (a psychologist, wife, and mother), calls me right after a market pullback, and discusses financial security. After we've had months of gray skies, she admits she needs a sun fix. I have been working with Holly for over 15 years, and when this happens, I usually know what's going on.

I suspect she suffers from SAD (Seasonal Affective Disorder): a feeling of depression related to the change of seasons and diminishing sunlight. For Holly, SAD is in full swing when she urgently requests an appointment with me. She will not settle for anyone else on the team.

It doesn't matter how big Holly's investment accounts are or how well the economy is going. Holly fears she will lose a big part of the value of her investment to a market correction, as she did in 2008.

What's interesting is that Holly has more assets than she needs and has never withdrawn money from her accounts since she started investing with me. In her mind, she views money as a scarce asset, and it affects her mindset of financial security. It's most likely part of her depression and the way fear manifests for her: she focuses on her money. I refer to this type of fear as "bag lady syndrome."

Holly is not alone. Many of my women clients—regardless of how much money they have stashed away in their bank accounts and regardless of how successful they are in their careers—live with the fear that if something goes wrong, they could end up as a bag lady.

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What is Bag Lady Syndrome? 

"Bag lady syndrome was first coined in the 1970s, a term given to describe some middle-aged women who fear that they'll wind up homeless and carrying around their possessions in a bag." It is a real concern for many women, not just middle-aged women, but women of all ages.

Why do so many women experience this particular anxiety? Perhaps it goes back to evolutionary times. We are hardwired to stay with the tribe, and our cellular memory finds comfort in a strong provider. When we don't have one, it triggers insecurity that we won't have enough.

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Why is Bag Lady Syndrome Common? 

Human beings are naturally inclined to avoid pain and to seek pleasure. Running out of options and becoming a bag lady would definitely be painful for most women I know. Some of these fears could stem from childhood imprinting, a baseline fear that influences these women to believe they won't have financial options, they won't have support, and they will suddenly be without options. 

Perhaps they were poor growing up or had a family member who lost all their resources. Perhaps through watching images and stories of homelessness in the media, or in their own community, they are triggered by the constant reminder of how fragile life is.

Fear is an emotion that keeps us stuck. It keeps us from moving forward toward achieving our dreams.

Scarcity is a common fear that lives in the primitive part of our brain.

If we have a strong emotional response to a situation, we have the ability to reason it away using our frontal cortex. Unfortunately, at times when overwhelmed with emotion one cannot access the detached reasoning of the frontal cortex. In this instance, the frontal cortex has been hijacked by the amygdala.

The amygdala, the primitive part of the brain, is responsible for flooding the body with hormones, giving us the fight or flight response. When these hormones are secreted, it usually takes the body 18 minutes to reboot and re-calibrate to allow them to metabolize and for the frontal cortex to allow us to access the ability to calmly reason. So, when Holly calls me, she is most likely responding to a fear, possibly a memory from her childhood imprinting.

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Overcoming Bag Lady Syndrome

The last time Holly and I had the "bag lady conversation," I tried something different. I think it may have worked, for she is still a client, and it has now been over two years since we had that "bag lady conversation". 

Holly asked me, "What if my account loses half of my money?"

I told her that is definitely a possibility even though I did not think it would be likely. I went on, "So what ... what if you lost all of it?" 

She had a panicked look on her face. "All of it?" she asked.

"Yes, all of it. You have never needed these funds for anything to support your lifestyle; you live way below your means; and nothing would change. So what if you lose it all? You will be fine. You would most likely be in the same situation, and you will continue to be able to do the things you enjoy." 

Holly's fearful look dissipated. She smiled and said, "Yes. I suppose you're right."


As a Spokane financial advisor, I have seen this scenario so many times over the years. As investment accounts rise in value, many women are concerned they will lose it all with one market correction. Many times these are women who have more resources than they use, and their bank accounts represent emotional and financial security. 

If their bank account balance decreases, it reflects their lost status and ultimately lowers their self-worth. The only way to help women feel secure with their money is to help them feel secure with themselves. 

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.