It’s normal to worry about money matters from time to time, but what if you’re unable to stop worrying? What if your money anxiety causes you to lose sleep or keeps you from focusing on priorities at work or at home? If you’re in a situation right now where financial anxiety is overwhelming other aspects of your life, read on for strategies designed to help you overcome the worry and develop a healthier relationship with money.
The Basics: How to Know if You’re Suffering from Financial Anxiety
If you’re accustomed to worrying about money and you’ve been doing it for a long time, you may not even realize you’ve crossed over into full-blown financial anxiety. To understand if this is what you’re experiencing, it can help to use the Consumer Financial Protection Bureau’s financial well-being scale. It helps you see where you fall on a continuum that goes from severe stress about money to high satisfaction with your finances.
If you aren’t currently where you want to be on this scale, these are some things you may be feeling:
- Unable to effectively manage your finances (paying bills late, falling deeper into debt, overdrawing your accounts)
- Unprepared for emergencies (living from paycheck to paycheck, unsure how you would handle an unexpected expense or financial emergency)
- Uncertain about the future (no real plans for retirement, or for other goals like buying a home or having children)
To be clear, none of these feelings are unusual – in fact, many people suffer from some level of financial anxiety. Luckily, it’s possible to improve your financial well-being and your peace of mind, too. Let’s talk about some strategies to do just that.
Strategy 1: Match Your Goals with a Plan
Goal setting should be fun because it’s a chance to dream about the future. If you’re anxious around finances, though, it can feel overwhelming to set goals at all – especially big ones. Focus on setting goals as a first step, but back each one up with a plan to make progress towards it. When you know you’ll be chipping away at your goals a little at a time, and according to a plan, you can reduce the stress you feel about accomplishing them.
Strategy 2: Prepare Yourself for an Emergency
If you’re facing serious financial anxiety, it may be because you recently experienced an unexpected event like a job loss or significant medical bill. Even if you haven’t, most people will experience some sort of financial emergency at least once in their lives and, obviously, it’s better if you have a pot of money available to help you through that time.
Here’s the trouble with emergency funds, though. With all the prevailing advice being to save six months’ worth of your expenses, it can seem like an insurmountable goal. You might have a “why even try” mentality about it. If that’s the case, get through your mental block by setting small, incremental goals toward your emergency savings, and making them feel more real. For example, instead of having a goal to save $20,000 – a big, scary goal for many people – make it your goal to save enough for one month’s worth of groceries for your family instead. Gradually work your way toward a healthy emergency fund one small, important step at a time.
Strategy 3: Get to Know Your Money Better
Do you keep track of your income and expenses? Getting a solid handle on how money flows in and out of your household can help you feel more in control of your finances. Start by tracking your spending for a week, then for a month, and watch how all your expenses add up. This exercise will help you make more informed decisions about spending and saving in the future. There are many helpful apps you can try, including Personal Capital and Mint which are both easy options to get started with.
Strategy 4: Be an Intentional Shopper
Many people who suffer from anxiety around money have an issue with overspending, as well. If you struggle to balance your budget, work to be a smarter shopper. It’s not possible to stop buying things completely, but you might try a no-spend month to jump-start a healthier mindset around purchases. Being a more careful shopper should help you feel more empowered to take control of your money and reduce your anxiety.
Strategy 5: Know Your Number
Do you know your credit score? Have you ever checked your credit report? Monitoring both is essential if you want to improve your creditworthiness in order to achieve a goal like buying a home or getting a small business loan. It’s also a great way to track your own progress toward better financial health and feel motivated to keep tackling your financial anxiety. You can check your credit score for free annually at this site authorized by the Federal Trade Commission.
Strategy 6: Be Direct and Ask for Help
Let’s say most of your anxiety is around a massive credit card debt you can’t seem to put a dent in. Reach out to the company directly and ask if they have hardship options or other programs that may help you remain in good standing with their company while also chipping away at your debt. Most lenders offer practical help when you take the time to ask.
Strategy 7: Work on Your Mindset
Each of the strategies above are practical ways to begin saving more, spending wisely, and improving your anxiety around money. If your financial anxiety has you feeling paralyzed, however, these small steps may still feel too big. If that’s the case for you, know that a mindset shift can be the catalyst for more forward momentum. In the 2019 “Mind Over Money” study conducted by Capital One and The Decision Lab, researchers found that simple shifts like forgiving yourself for past money mistakes is an effective way to reduce your stress and anxiety around money. So, if your anxiety is keeping you from taking action, start by doing some inner work and thinking more positive thoughts about money.
You CAN Overcome Your Financial Anxiety
When you’re entrenched in anxious thoughts about money, it’s easy to lose confidence in yourself and in your ability to establish a healthy financial future for yourself. That future is there for the taking, though, if you develop the habits and the mindset necessary to reach it.
I hope the strategies shared here will be helpful to you on your personal finance journey. If you’d like more content about money mindset and habits, I encourage you to check out the following episodes of my Flourish Financially podcast:
- Episode 55: How to Manage Your Money When You’re Extremely Busy
- Episode 57: The Interconnection Between Your Social Life and Your Financial Life
- Episode 70: Money Moves That Give Women Greater Financial Security
You can find all episodes of the Flourish Financially podcast on Apple Podcasts or your favorite podcast provider.