We all feel nervous about money from time to time. It’s natural to worry about bills, savings, or the future, but that nervousness can spiral into something more intense. It begins to affect decisions, sleep, thoughts, and even the ability to enjoy life. This is what we call financial anxiety, and if left unaddressed, it can quietly chip away at not only your financial future but your quality of life.
Let’s explore what financial anxiety is, why it happens, and how you can take steps to overcome it with clarity, strategy, and confidence.
Anxiety is an ancient mechanism in our brains. It’s a natural response to stress or uncertainty, designed to keep you alert and aware of potential threats. Anxiety can cause tension, worry, and even physical changes like adrenaline rushes or increased blood pressure. While anxiety is a normal reaction to stress or potentially dangerous situations, it can become a problem when it becomes persistent, overwhelming, and interferes with daily life.
Financial anxiety is the excessive fear or stress surrounding your finances. Financial anxiety can often be debilitating and can concern any aspect of your financial situation, whether it’s job security, investments, savings, debts, or the ability to afford the essentials to live. It can affect anyone, regardless of their income.
While being thoughtful about money is perfectly reasonable, financial anxiety goes beyond caution. It creates a loop of fear and avoidance that makes it harder to manage your finances effectively.
Depending on one’s personality and financial circumstances, the effects of financial anxiety can present in different ways, from major changes like the accumulation of debt due to procrastination, to symptoms so subtle that the person experiencing them may not even recognize them for what they are. No matter how they present, they are still powerful forces that can inhibit our ability to truly live a fulfilling life.
You might feel too overwhelmed to look at your bank account, put off paying bills, avoid phone calls or emails, or avoid making decisions about your investments. Ironically, the longer you avoid facing the numbers, the more those worries grow, which only deepens the anxiety. It becomes a feedback loop: anxiety leads to avoidance, which leads to worse outcomes, which leads to more anxiety.
There’s no single cause of financial anxiety, but it tends to be rooted in unpredictability. Risks, changes, and fluctuations create uncertainty, which our brains interpret as potentially threatening.
Our brains are not naturally wired to make optimal financial decisions. We’re built to avoid risk, dislike uncertainty, and seek comfort in the familiar, none of which are helpful when it comes to investing or planning for the future. To an extent, some worry is natural due to the unpredictability of life, especially regarding money and investments. When that worry grows out of control, however, we may be facing financial anxiety.
Financial anxiety can be triggered by many things, like job loss, a big shift in income, or even a sudden windfall that comes with new responsibilities. Market fluctuations and economic uncertainty can also cause anxiety, especially if your investments don’t align with your risk tolerance. Financial hardships like poverty, mounting debt, inflation, or unexpected expenses can quickly make anyone feel anxious or overwhelmed, as well.
The field of behavioral economics helps shed light on how our brains operate when it comes to finances. One example is the heuristic of familiarity bias, where people tend to prefer what they already know, even if it’s not the best option. This can manifest in various ways, such as choosing a bank because you’ve always used it, avoiding unfamiliar investment types, or buying brand-name products simply because you recognize the brand. While sticking to what you know might feel safer in the short term, it can limit your financial growth by keeping you from exploring better-performing investments or smarter financial strategies.
Here are a few common signs of financial anxiety:
Finding ways to manage financial anxiety isn’t just about improving your money habits; it’s also essential for your overall well-being. Chronic stress over finances can affect your sleep, your relationships, your ability to focus, and even your physical health. When anxiety takes the wheel, it often leads to avoidance, impulsive choices, or overly cautious decisions that can hold you back financially. Addressing your money worries head-on can help you feel more in control, make clearer decisions, and build a healthier relationship with both your finances and yourself.
Unchecked financial anxiety can lead to real consequences over time.
When financial anxiety runs rampant, it can quietly shape your habits in ways that hold you back over time. You might avoid looking at your accounts, delay important decisions, or stick with overly conservative investments that don’t allow your money to grow. You might also overspend to soothe stress in the moment, only to feel worse later. These behaviors can compound over the years, leaving you with missed opportunities, stalled savings, and even more anxiety. Beyond the numbers, financial anxiety can also impact your quality of life. In the long run, the cost of avoiding your finances can be greater than the cost of facing them.
When you avoid making decisions or play it too safe, your money might not grow the way it could. You may settle for underperforming investments or let inflation quietly erode your savings. You could also miss out on meaningful experiences like travel, education, or buying a home because the fear of spending feels too strong. Most importantly, you’ll spend far too much time worrying about what might happen instead of taking steps toward what could happen.
The good news is, financial confidence isn’t something you’re born with; it’s something you can build. Here are some tips to begin:
This is the first (and sometimes hardest) step. It requires you to take stock of all aspects of your finances and how they work together. You’ll need to outline your income, expenses, debts, and investments. Understanding where you stand brings clarity and makes it easier to move forward with purpose.
Working with a financial advisor, especially one who takes a holistic view of your finances, during this step may be beneficial as they’ll be able to provide valuable insights into your current situation.
Educating yourself about budgeting, investing, and financial planning gives you the tools to make smarter decisions. The more you understand, the less intimidating these topics will feel.
Set short-term and long-term goals, and break them down into actionable steps. Having a plan is like having a map of where you’re going; it gives you direction, and having direction makes it easier to feel in control.
Financial decisions don’t need to be rushed. If you feel fear creeping in, pause. Sit with your anxiety and remind yourself that you can take your time. Clear thinking leads to better choices.
This may sound easy, but in our current world of endless choices, it’s easier said than done. We’re constantly bombarded with marketing designed to create a sense of urgency or FOMO. It’s also easy to get hung up on old goals or dreams, even if they no longer gel with your vision for your future.
It’s important to remember that it’s your life, and only you can decide how to live it. Everyone has a different definition of a truly satisfying life, and finding yours is a difficult but fulfilling undertaking. Writing down your past, current, and future goals is a good starting point for clarifying what you truly want.
You don’t have to go it alone. A trusted financial advisor can help you make rational decisions, hold you accountable, and reassure you when things feel uncertain. Even just knowing that you have another set of eyes on your finances can be comforting, since you know they’re double-checking your decisions and helping you prevent costly mistakes.
If you have limited experience when it comes to financial decisions, without an advisor to guide you, you may end up needing to learn things the hard way. Building your financial knowledge by making mistakes with your own finances can hinder your ability to live a truly fulfilling life.
With or without an advisor, financial confidence plays a huge role in how you approach money-related decisions and how you follow through with actions. You can build your financial confidence by reading our previous blog post and begin to take control of your financial future.
Financial anxiety is more common than you think, and it doesn’t mean you’re bad with money. It means you’re human. The key is not to let fear take the wheel. By recognizing the signs, understanding the causes, and adopting rational strategies, you can begin to build financial courage. And when you do, you’ll find that making smart, confident decisions becomes much easier.
If you’re ready to move forward with more clarity and less fear, we’re here to help.