What Is Financial Anxiety?
Understand Financial Anxiety
Financial anxiety is feeling nervous, worried, or on edge when thinking about or interacting with your money. Financial anxiety isn't recognizable in the DSM as a diagnosis. Still, it is something financial planners, behavioral economists, and financial therapists are starting to recognize and care for, even if it isn't "officially" a diagnosis.
The problem that I see with the way most people talk about financial anxiety is that they prescribe "getting good with money" as the antidote. As in "if you have a budget, your anxiety will go away." I'm here as a financial therapist to tell you that anyone can experience financial anxiety, regardless of how much money they have or earn, and that even the best budget in the world won't "cure" financial anxiety. Why? Because money is highly emotional, and assuming that our emotions will quiet down with a spreadsheet is naive. Yes, understanding the basics of finance and feeling in control of money help with financial anxiety, but coping with financial anxiety requires a more nuanced approach.
How is Financial Anxiety Different than Traditional Anxiety?
All humans experience anxiety. Anxiety is a normal, healthy reaction to a stressor that might look like worry or apprehension. Healthy anxiety is time-limited, meaning it quiets down after the stressor ends. An example of a healthy anxiety response would be your heart rate increasing and your throat getting a bit tight when you give a presentation at work, but it fades once you finish presenting.
Clinical anxiety is an overly excessive response compared to the stressor and impacts a person's ability to function. Clinical anxiety is distressing and gets in the way of a person being able to live their lives fully. Please note--you cannot diagnose yourself with clinical anxiety. If you are concerned that your anxiety may be tipping from healthy and time-limited into clinical, see your primary care provider for a mental health evaluation and referral.
Financial anxiety, on the other hand, is anxiety specific to money-related things. A person who experiences financial anxiety would experience it only within the context of thinking about or engaging with their finances. In traditional anxiety, anything--or nothing--can be a source of anxiety.
Financial Anxiety Symptoms
How financial anxiety shows up or "financial anxiety symptoms" vary from person to person. In addition to financially anxious thoughts, financial anxiety can include physical symptoms such as a racing heart, difficulty breathing, nausea, tingling, sweating, and dizziness. When left unattended, financial anxiety can lead to making unwise financial decisions to "just get it done," putting off taking important action steps on financial tasks, or avoiding engaging with money.
Financial anxiety can look like this:
Second-guessing you do after you make a 401k index fund selection.
The pit in your stomach when the bill comes at a dinner with friends.
Avoidance you have when your partner wants to talk about household bills with you.
Anxiety About Spending & Saving Money
Many people have anxiety about what to do with their money. Most commonly, I see people experience anxiety about spending their money and about saving their money. When a person experiences financial anxiety about spending, they might worry that they have to research "the best" thing before making a person. They might stress that they didn't get a good deal on a purchase. They might worry that if they spend money, they won't be able to stop. When a person experiences financial anxiety over saving, they might worry that they can't "save enough." They might stress that they don't know how to save. They might fear that they put their money in the wrong type of savings account.
Transforming Your Relationship With Money
To cope with financial anxiety, I invite you to reframe your relationship with money. I have a whole separate blog post on transforming your relationship with money that you can read here. In a nutshell, your relationship with money is fluid. This means it can change over time. The way you think about money, sometimes referred to as “money mindset” or your relationship with money, is shaped by many factors. It's informed by your personal beliefs, the ways your family and friends view money, how money is seen in your community, and policies and culture. If your view of money is causing you anxiety, see what happens if you try to reframe your view. For example, if you think, "I'll never understand money," what happens if you reframe that thought to "I'm working on understanding money?"
Personal Finance 101 to Help Financial Anxiety
Another key component of coping with financial anxiety is understanding the basics of personal finance. In my mind, there are three "pillars" of personal finance folks should know. The first is knowing how much money is coming in and going out each month, ensuring that they have enough money to cover all necessary expenses. This is also known as a "budget," or my preferred term, a "spending plan." The second pillar is having money for short-term needs. Think of an emergency fund you can pull from if you lose your job or have to stay home with a sick child, and other short-term savings goals like saving for a vacation or new car. The third pillar of personal finance is investing in your future. This can include investing in retirement, paying down student loan debt, and getting a will and trust in place. Of course, there are nuances amongst each of these pillars, but it helps to boil it down to the basics of personal finance. If you want help getting started with the basics of money, check out this blog post.
Financial Anxiety
Now you know that financial anxiety is an anxiety response to the stress of interacting with or thinking about money. It can't be "cured" by downloading a personal finance app or by having a certain dollar amount in the bank. Financial anxiety is common, but it doesn't mean that experiencing it is ok. If you struggle with any of the symptoms mentioned above of financial anxiety and are looking for help, I provide financial therapy and coaching services that can make a difference. Learn more about working with me here.
Want more about financial anxiety? Consider buying a copy of my book The Financial Anxiety Solution for more down-to-earth tips and ideas on coping with financial anxiety.