When she saw her stock portfolio nosedive, Maggie Baker felt so anxious she couldn’t sleep. “I was so overwhelmed, I couldn’t make a decision and just watched myself losing more money,” she says.
That was 2000. Baker, who holds a PhD in psychology, was already a practicing therapist when the dot-com bubble burst. Once she emerged from her analysis paralysis, she wrote a book about emotions and money: Crazy About Money: How Emotions Confuse Our Money Choices and What To Do About It.
Today, as a pandemic consumes our lives, Baker is seeing more of her clients display symptoms of financial anxiety, and she expects that number to grow. “People are in shock,” she says. “And when you’re in shock, you don’t feel anything. When the shock wears off, the anxiety will set in.”
Baker defines financial anxiety as having an uneasy and unproductive attitude toward thinking about, actively engaging with or effectively managing your finances.
If that describes you, or if you are feeling stressed or afraid about money, what can you do about it?
First, don’t let your feelings cause you to avoid or procrastinate. These coping mechanisms only make financial problems worse, says Lindsay Bryan-Podvin, LMSW, a financial therapist in Ann Arbor, MI, and author of the book The Financial Anxiety Solution.
The Causes of Financial Anxiety
Financial anxiety can stem from internal factors, such as your beliefs about money from childhood, and it can result from external factors, says Baker. The COVID-19 pandemic is the latest example of two types of external factors: market conditions and unexpected unemployment. For some, the outbreak is also leading to big medical bills. Other external causes of financial anxiety include conflicts with a spouse, family needs or a foreclosure.
Financial anxiety can happen to anyone, including high-income people, Bryan-Podvin says. And, not everyone with financial anxiety overspends. Some people save so much they can’t enjoy what they have. “Financial anxiety is normal,” Bryan-Podvin says. “It’s also temporary. It can be dialed down.”
How to Cope with and Harness Financial Anxiety
Coping with financial anxiety starts with understanding how it presents itself: as distorted thoughts, difficult feelings or counterproductive behaviors, according to Bryan-Podvin. Use the following tips to get yourself out of the fight-flight-or-freeze mode that financial anxiety causes and put yourself in a position to make better choices.
● Distorted Thoughts: You might, for example, believe you’ll always spend too much money. If your thoughts are distorted, try countering them with evidence of your own behavior, Bryan-Podvin suggests. Think of at least one example where you haven’t spent too much. Perhaps you’ve saved up a three-month emergency fund. Collect multiple examples if possible, and reframe the original thought: “Although I like to shop right after payday, I have proof I don’t spend every penny I earn.”
● Difficult Feelings: Perhaps you just feel guilty—or worried—about money. Maybe you experience physical discomfort, such as muscle tension or stomach pain. Bryan-Podvin suggests calming exercises that return your focus to the present. Try taking deep breaths for a few minutes or noticing five things around you that bring you comfort. There’s no need to try to force yourself to feel great; remember, the goal is to get to a place where you can think clearly.
● Unnecessary or Unhelpful Behavior: Do you check your retirement account multiple times a day? Shop online when you’re feeling lonely? If so, set boundaries for yourself, says Bryan-Podvin. Allow yourself to check your retirement accounts just once a week. Wait a little while before clicking “buy” and enjoy the feeling of emptying your shopping cart without checking out.
Once you’ve soothed yourself and are mentally and emotionally ready to take action, Baker recommends understanding your spending and aligning it with your values. Do they match? You may find you can cut deeply on spending that doesn’t matter to you, like the couple Baker counseled who wondered where all their money was going. After discovering how much they spent on restaurants, which didn’t match with their values, they started cooking more and saved money without feeling they had made a sacrifice.
Special Suggestions for Couples
If you’re in a relationship, financial anxiety is likely to show up as a self-fulfilling, negative prophecy.
“Couples [facing financial anxiety] think talking about money will be uncomfortable at best or cause an argument at worst, so they don’t talk about it,” Bryan-Podvin says. But money will inevitably come up, and when it does, all that accumulated avoidance will spike the tension level and probably cause an argument.
She recommends couples first set ground rules before discussing money. Each person should figure out what level of emotion is tolerable and what level is a red flag. A tolerable emotion might not feel good, but you can handle it well enough to continue the conversation, though you might need a short break. A red flag shuts down the conversation.
If you experience financial anxiety as physical sensations, use those to set your tolerance levels, Bryan-Podvin says. And, think about the comments you can tolerate from a partner and the ones you can’t.
Once you know your boundaries, communicate them, and honor those of your partner, Bryan-Podvin says. Couples should also keep money conversations to about an hour. Any longer than that, and you’ll almost certainly reach the point of mental and emotional fatigue, and potentially feel financially anxious.
Elizabeth Whalen is a freelance writer based in Seattle. She loves writing about business, financial services and sustainability.
READ MORE: Breathe! Tips to Recognize and Manage Your Financial Stress
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