Money Mindset
Written By Annie Hanson
What to Do When You’re Stressed About Money
If you have found yourself thinking “money is stressing me out,” you are not alone.
According to the American Psychological Association, 65% of Americans reported feeling stress over money in February 2022. With high inflation and economic uncertainty over the past year, that number might be even higher today.
Money-related stress can show up in many ways. Having too much money can create feelings of guilt and insecurity, while not having enough money can lead to feelings of fear, helplessness, and frustration. Money can also be a source of competition and comparison, leading people to worry about keeping up with others. And perhaps most importantly, financial instability can create worry about future security, making it difficult to plan for the future.
To effectively deal with money stress, it’s important to understand the reasons behind your stress about money and learn some coping mechanisms to help you overcome it.
Why You Experience Money-Related Stress and Anxiety
Money anxiety is quite simply any worry, stress, or anxiety related to money. The first thing people think of when it comes to money anxiety is worry about not having enough. While that is a common concern when it comes to money, one that many Americans experience through no fault of their own, it is not the only way money anxiety can show up.
In fact, even those who have more than enough can experience money anxiety in that they constantly worry that they will lose it all. Often, this is the result of a childhood experience—growing up in a situation where there wasn't enough or where a parent or guardian did lose everything. This worry doesn't go away just because a person earns more money.
Others may experience anxiety around money because they were taught that having money was bad and living frugally is a virtue. If you grow up with that belief, it can be a challenge to accept that you suddenly make more money.
How money stress might be showing up for you:
You don’t have enough to comfortably cover your basic expenses.
You barely have enough to cover your basic expenses and are always worried about what you’d do if something bad happened.
You’re worried about factors beyond your control, such as inflation, the economy, the job market, or potential political changes.
You feel like you don’t know what you’re doing with money.
You’ve made money mistakes in the past and you don’t trust yourself.
You look at those around you and feel like you should have the life that you think they have.
You feel like you should be doing better.
You have a different way of thinking about and managing money than your partner and you fight about it.
You feel guilty about the amount of money you have.
You grew up not having enough money and struggle with buying things even though you theoretically have enough.
You feel overwhelmed with how much you’re supposed to have for retirement and worry you’ll never get there, so you just give up on saving.
You don’t have a clear sense of where your money goes.
You have and/or earn a lot of money, but you constantly worry about losing it all.
You experience decision fatigue and information overload and have no idea where to even start.
If you haven’t noticed by now, there are many reasons one can feel stress about money. This is nowhere near a complete list. You should come away from this knowing that money stress is common and normal, so don’t beat yourself up for having these feelings.
How to cope with money stress
While certain things are out of your control (hello inflation!), the best thing you can do is to focus on what you can control.
1. Start by noticing and observing your money stress.
Sometimes the cause of stress is obvious, like if you don’t have enough to buy groceries or are at risk of making your rent payments.
But often the cause is not so obvious. You might just feel general anxiety whenever you think about money. That’s when you want to take a step back and think about how you feel about money. What thoughts are you having about money? Which things in particular are causing your stress?
For example, you might start to notice that all of your fights with your partner about money are really because you (or your partner) grew up in a family that never had enough and you are constantly worried about repeating that even though you make more money than your family ever did.
Or maybe you notice that your money stress is because you feel a lack of control because you don’t know how much you have, where it all goes, or whether there is enough to buy something.
Getting in touch with your thoughts and feelings about money can help you identify steps you can take to improve your relationship with money.
2. Think about what beliefs you have about money and where they came from.
Did you know that most of our beliefs about money were cemented by the time we were seven years old? Even at an early age, we learn a lot about money from our parents and our environment.
Think back to when you were a child. What is your first money-related memory? How did your parents talk about money? Or maybe they never talked about money, but you were aware of how they thought about it.
Psychologist and financial advisor Brad Klontz has identified four general money scripts, or beliefs, that people have about money. These scripts are often things that we learned as children, and they have a huge effect on how we manage money as an adult.
The four money scripts identified by Klontz are:
Money Status
You may think that it’s important to buy a larger house, new cars, the fancy lake cabin, or the pickup truck that “everyone” has. You buy things because that’s what someone with your income and/or net worth does. You may even believe that these status symbols are a sign of God’s blessing.
People with this money belief often end up overspending as they try to keep up with the Joneses or because they feel that they deserve to buy certain things because they make a lot of money.
Money Worship
You may think that everything will be better when you have more money because money can solve your problems.
People with this money belief sometimes end up overspending because they continually try to find happiness by purchasing things and are never satisfied that they have enough.
Money Vigilance
You might experience a higher degree of worry over having enough. As a result, it is likely that you have a high degree of awareness of your money situation and you save a lot of money just in case.
Those with this money belief sometimes actually have a healthy relationship with money, but extreme money vigilance can also occasionally result in saving too much money, feeling guilty about spending, and sacrificing enjoyment for the sake of money.
Money Avoidance
You might feel that money is bad, it’s better to live with less, or that wealthy people are bad people. You might be someone who takes a lower-paying “helping” job because you find fulfillment in “doing good” in the world.
People with this belief sometimes self-sabotage when it comes to money and wealth. They hold themselves back from pursuing higher-paying jobs, fail to save, or give all of their money away. Sometimes, they also avoid paying attention to their money at all, resulting in accidental overspending or anxiety due to a lack of awareness about their financial situation.
Obviously these are generalizations. You may not identify strongly with any category, or you might feel aspects of several. It’s not important to put yourself in one category (though you can take Klontz’s assessment if you’re interested). What’s more important is to be aware of how these money beliefs work and how they might be causing stress in your life. Once you’re aware of them, you can question and even change your money beliefs.
3. Focus on what you can control.
Many causes of financial stress are out of your control, and it’s a mistake to assume that anyone struggling financially can just “do better” or “pull themselves up by their bootstraps.”
But even if you can’t change certain external circ*mstances, you do have some control in your life.
You can’t control inflation, but you can take a look at your spending, create a budget, make choices about what you buy, and find ways to spend less.
You can’t control company layoffs, but you can build connections and increase your network, keep your resume updated, keep learning new skills, and save money to pay your bills in case you do become unemployed.
You can’t control the stock market, but you can educate yourself and/or work with a financial planner (who is a fiduciary) to develop an investment plan that gives you the best chance at success while being appropriate for your risk tolerance and goals.
When you feel like things are beyond your control, the best thing to do is to acknowledge your feelings and make a plan to address the things that are in your control.
Having a plan is sometimes the best antidote to money-related stress.
4. Refuse to imagine all of the things that can go wrong.
When you experience stress, your brain is trying to protect you from threats. This means that your natural response is to start imagining all of the things that can go wrong so that you can protect yourself.
For example, I used to have an extremely stressful job made worse by a system conversion gone wrong. I was definitely not being paid enough to spend my day talking to justifiably angry customers whose problems I couldn’t even fix because the system didn’t work.
So I thought about getting a new job. In all likelihood, finding a less stressful job with pay that matched my qualifications shouldn’t have been too hard. But change is scary, and my brain focused instead on all of the things that could go wrong.
I imagined that nobody would actually hire me, that the benefits would be worse, that I’d have to work longer hours, or that it would turn out to be a toxic work environment. (At least at my old job, I liked my boss and co-workers.)
In reality, it’s entirely possible none of those things would have happened, but I let my fears take over and held myself back from pursuing other opportunities. I stayed stuck in a stressful situation because I let my brain run away, thinking about all of the possible bad outcomes.
Imagining all of the things that could go wrong were both a result of the stress I was feeling and a cause of additional stress. I had those thoughts because I was already stressed, and those thoughts made me feel more stressed. It’s a vicious cycle.
So when you’re worried or feeling anxious about your finances, it’s important to notice what your brain is telling you and question it.
Ask yourself if those thoughts are really true. Look for evidence to prove that they are not. Or if there is a degree of truth (in my example above, all of those things were real possibilities), remind yourself that just because something is possible, doesn’t mean it is probable.
5. Break overwhelming tasks into bite-sized bits.
Many of us feel totally overwhelmed when it comes to solving a problem or figuring out how to do something. Maybe you’re trying to figure out how to file self-employment taxes for your new side-hustle. Not only do you not know what to do, you don’t know what you don’t know and it feels so big that you just want to avoid it altogether.
Or you want to start saving for retirement, but you know you have to figure out where to save, how much to save, which account type to use, how to invest it, and who knows what else. That feels big and overwhelming.
If you can relate, try taking one baby step. Don’t try to do everything at once—identify the first step and start there.
Maybe today you just read a guide on how to save for retirement. (Shameless plug: you can get my beginner’s guide to saving for retirement here.)
Then tomorrow you figure out what kind of retirement savings account you need. Then the next day you figure out the next step.
Breaking it down makes it feel much less overwhelming and will help you make progress.
6. Just take action.
Sometimes financial stress is caused by fear of making the wrong decision. This one is for all my perfectionist friends out there. You might be an accomplished person who takes pride in carefully evaluating all of the options in order to make the absolute best decision.
What this might look like:
You want to open a Roth IRA, but you don’t know how to decide where to open it and you’re worried about making the wrong decision.
You spend hours researching high yield savings accounts because you want to be sure that you got the absolute best rate for the longest period of time.
You want to get a new job, change careers, or start your own business, but you don’t because you’re afraid that it might not be the perfect job or that you’re not perfect for the job or that you’re not already the absolute expert.
This perfectionist quality, which often helps you make good decisions and do your best work, can backfire. Instead of taking action, your fear of failure or of not being perfect paralyzes you. You don’t do anything.
As someone who suffers from decision fatigue and overwhelm due to perfectionist tendencies, I know how stressful this can be. You put something on your to-do list (mental or physical), and the decision looms over you for months, ending up in a spiral of shame as you judge yourself for not taking action.
In these situations, it’s best to remember that “done” is better than “perfect,” and it’s okay to just pick something. Choosing any retirement account and putting money in it is better than no retirement account. Imperfect action is better than no action. Any progress is better than no progress.
It can be hard to take the leap, but from experience I can tell you that just taking action is the best antidote to perfectionism-caused money stress.
7. Support the social safety net.
As individuals, we don’t always have control over larger trends and policies that affect our everyday lives, but that doesn’t mean we can’t still influence them. We Americans apparently don’t like to admit it, but the social safety net does support and benefit every single one of us.
Many people benefit in direct ways, such as receiving social security or medical coverage. Other people benefit in more indirect ways, such as from the ability to hire talented and skilled employees who received publicly funded education or not having to pay for and care for their elderly parents in their own homes because we have social security, medicare, and publicly funded nursing homes.
As former Senator Paul Wellstone said, “we all do better when we all do better.”
If we’re serious about taking care of our neighbors and creating a better, less stressful society for all of us, we need to build up and support the social safety net to ensure that nobody has to worry about having enough to eat or having a roof over their head.
Dealing with Money Stress
As someone who is prone to anxiety and stress in general, I know that it can feel like there is this giant cloud of unknown that you just can’t quite grasp or get control of. And the cloudier it is, the more stressful it becomes.
To reduce the stress, you have to bring clarity to it. You have to start finding the shapes, examining it, questioning it, and making sense of it. Once you know what’s there, you can more effectively identify the steps to take to exert some control over it. Ignoring it does nothing.
Stress and anxiety are common and normal, but that doesn’t mean you have to suffer. If you struggle with these steps, it’s important to get the right kind of help. That might mean working with a mental health professional, but you can also get help specifically in sorting through the financial aspects of your money stress.
If you need financial assistance to help pay the bills, contact a local non-profit or state/local government agencies in your area.
Or, as a financial coach, I help those who have enough to pay the bills learn how to create a budget, make a plan to pay off debt, or develop the habits needed to save money and build wealth. Even if you just need some support, direction, and handholding, I can help.
And finally, financial planners are excellent resources for anyone who has the basics of finance covered and wants help increasing and managing their wealth. Be sure to find a financial advisor who is a fiduciary (has your best interest at heart) and who is a good fit for who you are.
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Annie Hanson
