Anxiety and Finance

Thinking about money can be stressful. Financial anxiety is something lots of people experience at some point and some experience it every day. A Capital One study found that 77% of participants reported feeling anxious about their financial situation. Financial anxiety also can affect people at all kinds of income levels. It isn’t always just a matter of not having enough, although that can be a large factor for many.

In this article we will break down what it looks like, why it happens, and how you can cope with financial anxiety if it happens.

What financial anxiety can look like

Financial anxiety takes different forms for different people. Common symptoms include:

• Extreme and frequent worry about finances. Spending money is scary, thinking about bills is stressful. Looking at your bank balance makes you worry about the future.
• Compulsive saving or extreme frugality. Even if you can afford it, you are too scared to make purchases and instead choose to save your money, feeling like you missed out due to financial reasons.
• Avoidance: you ignore or choose not to look at your financial picture. Often we avoid things because we are not sure what to do or it makes us panic

Financial anxiety could mean other things as well depending on your situation. But as a general rule of thumb any negative emotions or fear associated with your money probably shows some level of financial anxiety.

Why financial anxiety happens

There are lots of reasons for financial anxiety, common ones include:

• High amounts of debt - long term debt can sometimes feel like it’s stuck to us and we can’t escape it
• Lack of Emergency Fund - being one large bill away from $0 is scary! Unexpected events throw off our plan and cause baseline stress
• Cost of Living Stress - cost of living and bills being too high or hard to track can make it feel like our income doesn’t go far enough for our goals
• Poor Financial Literacy - when it’s hard to understand what it all means that can make it scary to talk about money
• Childhood habits or Financial Trauma - sometimes we spend based on the examples we grew up around or we inherit financial stress from our environment

So what can we do?

Knowing that financial anxiety is common and knowing what kinds of things can cause it, there are some things we can do to try to help as well.

Build a Plan / Have a Map

You are going to be spending and using money, so you might as well plan to use it as best you can.

Something that can help financial fear and confusion is clarity. Clarity comes from building a plan and a roadmap you can follow. When you go for a drive, you don’t move forward randomly based on each turn that you come to. You have a map and a path to follow. Same for your money. Having a plan you can follow can lift a lot of the burden and mental load from decision making. You have a clearer picture of what you should do next. That doesn’t mean it will be easy to stick to it all the time, but having a roadmap for your finances can build confidence for your finances.

Routine

Good habits and a routine can also be helpful. Just like when working out or eating well, you might need to build momentum through small habits to help you feel less afraid of your financial picture. It’s hard to fix your finances in a day or become healthy. But you can drink more water every day.

Same idea for this, create routines / habits that fit your lifestyle and preferences for your finances. For example, check your spending once a week every Friday.

Small routines can help build a positive relationship with your money and even turn stressful maybe to someday exciting and proud when you check on your finances.

Emergency Fund

Having some money saved as a basic goal for everyone seems like good advice. Having some money ready for any unexpected things can help you feel secure knowing that even if I have to pay for my car this month I have some extra money and it won’t disrupt my life. This is easier said than done of course, but using a previous idea you can approach building an emergency fund as a new habit and build it slowly over time. The goal is to make small improvements that help over time.

Expect the unexpected might be another name for this one

Education

Educating yourself about the terminology and basics of finance can also help some of the fear. Knowledge is power. Spending time learning about finance itself, even simple concepts can help a lot. Knowledge can help us feel more equipped and less in the unknown.

When It’s Time to Get Professionals Involved

Financial tools can help with visibility and routine, but they are not a substitute for professional support. If money stress is affecting your sleep, relationships, work, or daily life, consider reaching out to a mental health professional or financial counselor.

Financial Tools

Something that can make much of the financial habits easier is to use a modern tool for the job. A tool like Penny Penguin or other finance apps can make building a plan easier by helping you track your balances and spending and see upcoming expenses.

If a finance app isn’t your preference, you can always review your banking data yourself directly to accomplish the same goal.

Financial anxiety is a common problem. And sometimes things are out of our control. But anxiety thrives in uncertainty, so creating clarity and a plan can help you focus on the things you can control and make steady progress.