If you feel a deep sense of guilt every time you swipe your credit card. Or lie awake at night worrying about all the bills you need to pay. That’s money anxiety. It can affect anyone — regardless of income, net worth, or financial confidence. And feeling anxious about your money can manifest in the same way general anxiety does (think: stress, irritability, and tension). But it shouldn’t hold you back from living your best (financial) life.
Here’s how to cope with and overcome money anxiety in all of its forms.
Back up. Where does money anxiety come from?
All around. Personal finance and budgeting expert Mykail James explains: “We live in a society with information overload and it can be hard to decipher what applies to you and what doesn’t. We have so many unknown factors and the fear of losing out or losing money altogether can create even more anxious feelings.”
How can I tell if my money anxiety is a problem?
Feeling concerned about your money every now and then is natural and OK. But if you’re overwhelmed by money worries, it can lead to some unwanted or unhealthy behaviors. “Money anxiety can cause you to not act,” James says. And that can hold you back from reaching your big goals, like homeownership, retirement, or being financially ready for a family.
There are two common ways this can manifest:
The ostrich effect: Ever wish you could just *not* check your credit card statement after a vacation? That’s the ostrich effect at work. It’s when you don’t deal with the important things that might hurt. “Money anxiety can make you freeze up, digging you deeper into a financial hole,” James says. “When it comes to money, no decision is the worst decision.”
Loss aversion: When you focus more on losses rather than wins. It can keep you from taking the risks you need to grow your money. Example: You might be hesitant to start investing, especially if you see headlines about falling stocks. But NOT investing can hold you back from reaching big goals like retirement. (Psst… market volatility is totally normal.)
What’s the best way to cope with (or even overcome) money anxiety?
It’s a process, but here are a few ideas to help:
Start with awareness. Do you feel depressed when it comes to your finances? Scared to spend money? Obsessed with scarcity? Recognize your struggle, then give yourself some grace. “You must accept there is no perfect way to handle your personal finances,” James says.
Become a financial minimalist. Instead of trying to do everything, focus on what matters to you. Like saving for a down payment for a house or a dream vacay. Then pare back the stuff that won’t help you get there. Close extra accounts, cancel unused subscriptions, and reign in your spending. “This can ease anxiety and make it a much more fun and enjoyable journey,” James says.
Prep for the unexpected. Having a safety net to fall back on can make you feel a whole lot more secure when money anxiety strikes. Strive to save up an emergency fund that’s six times your monthly expenses for maximum security.
Make a budget you love. Don’t be afraid of the “B” word. With a budget, you’ll always know where your money is coming from and going. Giving you power over your money — not the other way around.
Start a sinking fund. Aka a savings account for planned, irregular expenses that don’t fit in your monthly budget. Think: insurance premiums, new tires, or holiday gifts. A high-yield savings account can help give your savings a small boost.
Anything else I should know about coping with money anxieties?
Don’t forget to check in. It can be tempting to ignore your finances. Or, on the other end of the spectrum, worry about them 24/7. So set aside a bit of time on your calendar to catch up and track your progress. You can assess your budget, check in on account balances, and take a peek at your investments. Remember, you can always tweak your plan if needed.
Also, consider getting help from a pro. Like general anxiety, a healthy way to deal with money anxiety is by talking about it. A financial therapist can teach you coping mechanisms. And a financial planner can help you better manage your money and deal with the root causes of your anxieties.
Some money anxiety is natural, but too much is a problem. Alleviate it by starting an emergency fund, keeping a budget, checking on your finances regularly, or seeking help from a pro.
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