The 2 surprising ways perfectionism could damage your financial circumstances

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Being a “perfectionist” is a common trait individuals will often describe, used in both a positive and negative way depending on the circumstances.

You could hear people say that their house is always clean and tidy, they’re never late, and that they’re very organised because of their “perfectionism”. Conversely, some may describe their perfectionism as a difficult trait to handle, as it impedes their ability to simply get things done and move on.

Whatever your own experience of perfectionism, there’s increasing evidence to suggest that this behaviour can be detrimental to your financial circumstances.

Read on to find out two surprising ways that being a perfectionist could damage your wealth, according to recent psychological research.

1. There is a proven correlation between perfectionism and anxiety

According to a clinical study published by BMC Psychiatry, “certain dimensions of perfectionism have significant associations with pathological worry and generalised anxiety disorder (GAD)”.

Even if you don’t experience the level of worry and anxiety described above, it’s clear to see that being a perfectionist can have links with anxious feelings.

In today’s world, it’s understandable that anyone, regardless of their situation, might worry about their finances. With inflation reaching 7.9% in the year to June 2023, according to the Office for National Statistics (ONS), and the base rate being raised to 5% in June, everyday costs are rising.


Indeed, a 2023 report from the National Library of Medicine reveals that cost of living factors are likely to reduce a household’s overall disposable income long term, which over time can lead to:

  • An increase in borrowing
  • A decline in leisure and relaxation
  • Rising stress and even despair.


If your perfectionist traits meet the everyday stressors of the cost of living crisis head-on, you could find yourself making unwise financial choices in a state of panic. These might include:

  • Taking on more debt as a result of over-worrying about your financial circumstances
  • Cashing in investments at a loss to cover costs
  • Spending your emergency fund on everyday outgoings
  • Cutting down luxuries to the bare minimum, which could increase your stress levels.


Fortunately, if you understand that your perfectionism might cause you to panic when circumstances outside of your control affect your financial situation, you may be able to curb the impulse to make rash choices.

Remember: although it may feel worrying, the cost of living crisis is not forever. While the future may not all be plain sailing, focusing on long-term progress, rather than having all your ducks in a row right now, might help soothe your anxious mind.

2. Perfectionism could blind you to your progress – and prompt you to give up completely

One of the effects of perfectionism, according to researcher Thomas Curran’s report in the Guardian, is that it can “blind you to your achievements”.

If you have built up a significant amount of wealth but still have goals you are yet to achieve, your perfectionist attitude could push you towards a pessimistic view of your current situation – especially with cost of living factors at play.

Let’s say you have five years left before you retire. You’ve contributed diligently into your pension pot, saved tirelessly in case of emergencies, and invested in a diverse range of assets designed to help you live comfortably in your later years.

Yet looking at your investment portfolio today, you might see that some assets have taken a significant downturn after the events of the pandemic, Ukraine war, and economic volatility have rocked the stock market. You could feel frustrated that things haven’t gone exactly according to your plans, and decide to cash in your investments before things get any worse.

Unfortunately, giving in to your perfectionism in this case could worsen your long-term financial stability. Crystallising investments at a loss means they never have a chance to recover – whereas, if you had remained invested, your assets might have regained value over the next five years before you retire.

This is just one example of how a perfectionist financial mindset can actually be detrimental.

Sometimes, events outside of our control can alter our wealth plans. Rather than swimming against the tide and potentially squandering your resources in a short-term panic, it could be wise to go with the flow and work with what you’ve got, not what you wish you had.

Bespoke financial planning can remind you of your long-term goals (and help you get there)

Luckily, professional financial planning can help you use the positives of your perfectionism – organisation, forward planning, and diligent saving – to your advantage, while soothing the anxiety that may come with it.

We can help you:

  • Reframe the cost of living crisis as a temporary challenge within a long-term financial plan
  • Calculate whether you have enough to achieve your goals now, and work on solutions if you don’t
  • Create a robust financial plan that allows room for the impact of external factors.


There is no shame in feeling out of your depth, and professional guidance can help set you on a more confident financial path.

Get in touch

If your perfectionism acts as an enemy to your peace of mind, we’re here to help. Email us at [email protected], or call 01273 076 587.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

About the author
Picture of Oliver McDonald
Oliver McDonald
Oliver is the managing director and independent financial adviser at Engage Wealth Management.
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