Chapman, author of the Trauma of Money, explains that the brain has difficulty distinguishing between an actual lack of resources and the belief that resources are scarce. (Photo by Roberto Machado Noa/LightRocket via Getty Images) · Roberto Machado Noa via Getty Images
Chantel Chapman grew up dreaming of owning her own home.
“Ever since I was a young child, it was such an important goal for me and it’s because I grew up with housing insecurity. I grew up experiencing poverty,” said Chapman, CEO of the Trauma of Money Institute and author of the forthcoming book, The Trauma of Money.
But despite years of working towards that goal, Chapman didn’t achieve the milestone until she was 42.
“It was something I deeply desired but it also felt so far away from me,” she said, referring to challenging qualifying barriers due to self-employment and affordability issues, particularly in the Greater Vancouver Area.
Chapman’s experience reflects a broader trend across the country. According to the latest MNP Consumer Debt Index, nearly one-quarter of Canadians (23 per cent) say they are postponing major life milestones — such as buying a home, starting a family, or changing careers — due to financial strain. Among younger Canadians aged 18 to 34, that number jumps to 33 per cent.
While Chapman says affordability is the top barrier, she also points to psychological factors, such as scarcity thinking and instant gratification, that can keep people stuck in limbo.
She explains that the brain has difficulty distinguishing between an actual lack of resources and the belief that resources are scarce. This scarcity mindset can cause a “cognitive tunnelling” effect, where it becomes harder to stick to long-term goals because you’re hyper-focused on what you lack. That, in turn, can lead to a “bandwidth tax” — reduced cognitive capacity that can show up as lethargy.
“When the goal feels unattainable and so far away, you’re just more likely to act out on temptations, which takes you further from the goal,” Chapman said. Instead of socking away money for a home, for example, people might book a trip now, or buy a car with high monthly payments.
“Finances are complex,” said Thuy Lam, financial planner and money coach at Objective Financial Partners. And there’s an emotional piece that runs deeper than the numbers, which can be difficult to untangle.
But numbers can tell a strong story, she adds. Some people may feel so overwhelmed that their goals seem out of reach that they avoid looking at their finances altogether. However, when you face them, you can see what plans might be possible, or start setting a savings plan little by little to begin working towards them, Lam says.
Chapman also says that high usage of smartphones and social media among younger generations contributes to instant gratification. Research shows that constant exposure can lead people to underuse their pre-frontal cortex, which is a part of the brain that helps with temptation control, she says.
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“That’s the part of the brain that helps us not only achieve long-term goals, but also set long-term goals,” she said.
One method Chapman teaches is “replace rather than restrict.” That means finding low-cost alternatives to satisfy the same emotional need. For instance, replacing an urge to book a vacation with meeting friends for coffee or planning a hike over the weekend.
Chapman used this method to replace her own temptations with actions that wouldn’t take away from putting money into her First Home Savings Account (FHSA). “We know that restriction leads to compulsion,” she said.
She also recommends setting up financial goals to work with the brain’s reward system.
“One way to do that would be to make sure you create mini goals and then celebrate them as you go,” she said. “The first milestone would be to set up an FHSA — goal one. Now, what can you do to celebrate it?”, she said. Ideally, that celebration doesn’t include spending money.
Chapman overcame her own savings hurdles by reflecting on her beliefs about money, finding examples of people who achieved homeownership, and researching different ways to get there.
“It made it feel a little more closer and achievable to me, rather than staying stuck in reading articles that say millennials can’t buy homes.”
For those feeling stalled by the financial realities of today’s economy, Chapman stresses that a delay, or even tweaking goals, is not due to an inadequacy.
“Understand that many financial goals are hard to achieve, not because of a personal failing, but because of the environment in which we are trying to achieve these goals.”