What is Financial Anxiety?

When someone says that they struggle with financial anxiety, they often mean that they experience, worry, fear, and uneasiness regarding their finances. This is actually a common form of anxiety, but the severity varies from person to person.

What Causes Financial Anxiety?

There are several factors that can cause financial anxiety besides the lack of money or economic uncertainty. While these two factors can be common causes, money anxiety can also stem from a range of things from your upbringing as a child to your income and even to mental health conditions. 

Increasing Amounts Of Debt

Whether your total amount of debt is growing from a mortgage, student loans, or the “Buy Now, Pay Later” deals that we see so frequently while online shopping, adding to a list of debts can be overwhelming. For some, even small amounts of debt—like spending $30 on a meal—can trigger anxiety.

Current Income

Income is a huge factor that can trigger and contribute to financial anxiety. This can look different for everyone, like if you’ve recently lost your job or your partner has moved out, suddenly cutting your household income in half. Even your current income can trigger your money worries if you feel as though you’re underpaid in your position. 

Previous Money Trauma

Your past relationship with money affects your current one. If you’ve previously had a bad experience, such as an unexpected health bill or income loss, or you endured financial-related childhood trauma, then it’s common for these experiences to trigger money stress and hinder your relationship with your own finances.

What Are The Signs Of Financial Anxiety?

There are many signs that can indicate that you’re struggling with financial anxiety. Similar to general anxiety disorders, these symptoms can be behaviors, such as impulse spending or hoarding money, or they can be more physical, like poor sleeping habits and even depression.

Overspending

While it may seem counterintuitive to splurge when you’re constantly stressed about finances, overspending is actually a common symptom. When someone is feeling depressed about money, it’s easy to find happiness at the bottom of an online shopping cart. With just a few clicks, you can successfully treat yourself to new items from your wish list, but you've also just surpassed your entertainment budget for the month (or two).

Many people resort to this behavior when they need comfort because it offers a natural high, and it can even provide temporary relief from stress. However, that’s just it—it’s temporary, and it can become an unhealthy routine when left unchecked.

Fears Of Spending 

On the opposite end of the spectrum, people that struggle with financial anxiety may suffer from a fear of spending. These individuals are extremely frugal to the point that they will skip out on adventures that make life more enjoyable, like a dinner out with friends or going on a vacation. Many may even cut corners on essentials—from groceries to home repair—while others may cut costs on health care. While it’s always important to spend your money with intention, hoarding it in a checking account or standard savings account is not a beneficial behavior for you or your financial future.

Obsessive Behavior 

Another common response to money and wealth anxiety is developing obsessive behaviors. This can come in the form of constantly checking your bank account or repeatedly studying the balance and charges. While it’s important to stay alert to the happenings of your accounts, checking them multiple times per day can cause you to develop and support the belief that money is dangerous. Instead, designate one day a week to review your accounts; this can help to reduce the feelings of anxiousness and allow you to get a better idea of any common charges coming in and out every week.

Depression

Just like general anxiety, financial anxiety can take a toll on your mental health. When you’re constantly feeling defeated by finances, your sleeping patterns may become disrupted, and it can even lead to feelings of poor self-worth.

How To Cope With Financial Anxiety

Living with financial anxiety can prevent us from living our lives to the fullest. While it’s perfectly fine to stay in and watch movies, doing so because you’re fearful of spending your money only helps to fuel your worries. Instead, try these tips to face your anxiety and build a stronger, healthier relationship with money.

Refresh Your Mindset

Before you can tackle your stressors, you must first reframe your feelings around money. To do this, start by desensitizing yourself by engaging with your money in neutral and positive ways. Forgive yourself for any financial mistakes that you’ve made in the past. Instead, choose to reflect on the positive decisions that you’ve made, and find purchases that you can enjoy without feeling the spending guilt.

Build Your Financial Confidence 

Many cases of money anxiety can stem from a lack of financial literacy. Money can help you reach your goals and dreams when you know how to maximize what you have. However, you need to have the confidence to do so first. Start taking small steps that you can do as part of your your day-to-day routine in order to build your financial confidence. This can be as simple as saving a couple of bucks by making a coffee at home or bringing your own lunch to school or work. Once you’ve begun with little things, you can work towards bigger goals, such as finding a financial advisor to help you save money and guide you through planning for retirement.

Create A Budget

A budget is made to be reconfigured to fit your needs. While many people create a budget for the entire month, even more are turning to budgets that align with their pay frequency so that their spending can be easier to monitor. Regardless of which frequency you decide to schedule around, don’t be afraid to readjust where your money goes.

If you find that you’re spending less on groceries each week than you allocated, move the excess cash around to pay off a debt, invest it, or use it to give yourself a treat. Besides, money should help make your life more fun!

Start An Emergency Fund

The fear of not having money saved in the event of an emergency can be a common trigger for those with financial anxiety. Instead of waiting until havoc arrives and scrambling for cash at the last minute, start building up your emergency fund now.

As a general rule: Most experts recommend having enough money in your emergency fund to cover three to six months’ worth of expenses. If you’re nervous that you’ll be tempted to break into this fund to splurge on your next shopping spree, consider adding it to a separate account (or bank) from the checking account that you use everyday. 

Ask For Help 

Let’s face it—living with financial anxiety is exhausting. Whether you’re looking to take control of your finances or just looking for someone to help work through the mental exhaustion money-induced stress brings, don’t be afraid to seek help from a financial planner, counselor, or mental health clinician. Taking these small steps towards gaining control of your life—financially and otherwise—can help alleviate money stress.

How To Set Achievable Finance Goals 

One of the best feelings in the world is being able to cross items off our goal lists. But when that list becomes overwhelming with out-of-reach goals, it’s easy to quickly become defeated. This applies to your financial goals, too. 

Set Clear Goals

Adding specifics to your goals can make them easier to achieve. Instead of simply writing “Save money for vacation!” on your to-do list, specify how much you want to save. 

Set A Clear Timeline

It’s equally important to set a realistic timeline when you’re planning your goals. Setting a projected finish can help you to add focus to your plan, so that you can determine which goals are top priority. 

Check In On Your Progress

Set aside time each month to review your progress and ask yourself if you’re on the right track to achieving your goals. This can also help you figure out if you need to make any adjustments to your budget and plan.