Now Is A Really Good Time to Start Talking About Financial Anxiety
Financial anxiety can act as a warning to be cautious when making money decisions. But, it can reach a level of concern and cause serious health issues.
April 15, 2021
While some people thrive on the excitement of not knowing what is coming next, for many, uncertainty is something they struggle with. Not being able to see a clear path can be unsettling, stressful, and, frankly, exhausting. Due to the ongoing coronavirus pandemic, many people may be feeling very uncertain when it comes to their financial future. Will they lose their job? Will there be another round of stimulus checks? Will they be able to progress in their careers? Will they be able to buy a home? It's no wonder thoughts like these might be spinning around a person's head, causing struggles with financial anxiety. For more insight into this important topic, we spoke with Financial Therapist Clare Dubé about what financial anxiety is and how to manage it.
What is Financial Anxiety?
Financial anxiety is an internal trigger caused by thoughts relating to money. It is a feeling of distress and can be described as worry. An example of this is when someone has thoughts of not having enough money to retire or worrying about being laid off due to COVID-19.
Constant worrying, trouble sleeping, and money fights can all be symptoms of financial anxiety.
“Many people believe financial anxiety is caused by a lack of money or debt. Truth be told, people with a high net worth can fall prey to this condition as well,” Dubé said.
What Does Financial Anxiety Stem From?
Financial anxiety can stem from many different life events and often passes when that event does, and the individual feels financially stable again. A job loss, expensive home repairs, or getting in a car accident can all lead to increased worry about money, but ideally will be temporary, and the anxious feelings will resolve when the financial issues do. In some cases, financial anxiety is more of an ongoing issue and can stem from a lifetime of influences. A person's childhood can impact how money makes them feel.
“If you grew up in a household where your parents often complained about their bosses being greedy so there was no money to pay the bills, you might feel anxious if, as an adult, you earn a high income. You may worry that you will become greedy. The cause of your financial anxiety comes from your thoughts and interpretation of your childhood experience,” Dubé explained.
How Does Financial Anxiety Manifest?
So how can someone know if they have financial anxiety? This can be challenging to identify.
“Not all people who endure financial anxiety behave in the same manner,” Dubé said. “Some may hoard money, some may ignore money management, some may fight with their partner and others may overspend compulsively. The one common denominator is the root cause—their thoughts.”
For some, financial anxiety can manifest as:
Overspending: If someone gets a rush of stress relief after spending money, they may turn to shopping when they feel anxious about money. These actions can create a vicious cycle that causes more financial issues and stress.
Hoarding: On the flip side, hoarding money because they are deeply afraid they may never have enough money can take a mental toll. Especially if someone overworks in order to keep earning more money and isn’t able to enjoy the fruits of their labor.
Excessive frugality: While frugality might be helpful when making good financial decisions, if someone takes frugality to the extreme and skips out on very necessary purchases, this can be a sign of financial anxiety.
Dysfunctional family finances: If someone uses money to control a partner, enables another person's bad decisions by providing them with money, or hides money from a partner, their damaging actions may result from financial anxiety.
Financial anxiety isn’t always debilitating and can act as a warning to be cautious when making money decisions. It can, however, reach a level of concern and cause serious health issues.
“These issues, such as obsessive worrying, depression and/or substance abuse can be damaging and may require professional help to cope and address the behaviors,” Dubé said.
How Can Someone Overcome Financial Anxiety?
If someone suspects they’re struggling with financial anxiety, Dubé recommends they first seek clarity.
“The number-one step I recommend to overcome financial anxiety is to seek clarity,” Dubé said. “Question your thoughts about and around money.”
She suggests asking yourself if your thoughts about money are true and what proof do you have to back these thoughts up? If you believe your thoughts are true, what do you think is the worst case result? She recommends reverse-engineering the worst case scenario and asking yourself what you would do at each step.
Example: You’re worried you will lose your job due to COVID-19.
Has your employer already laid-off employees?
Has your employer warned that there may be layoffs?
What proof do you have that you, specifically, will be laid off?
Note: Be specific with your answers and don’t rely on “gut instinct” as proof.
Worst Case Scenario: You lose your job and have no source of income.
Worst Case Scenario Solutions:
Ask: What would I do first if I was laid off? Answer: Apply for unemployment benefits and seek other job opportunities.
Ask: What will I do if those options don’t give me enough money to pay my bills? Answer: I can look at cutting costs, ask for relief from mortgage or rent or bring in a roommate to help with costs.
“The goal is to acknowledge what your worst-case scenario is and ask questions and brainstorm solutions for each step. This becomes solution-focused rather than worry-focused,” Dubé advised.
Is credit card debt causing you to worry about money? Learn how Tally can help you pay down your credit card debt faster, while potentially saving you money in the process.