If ever you've woken up in the middle of the night, cold sweat and all, because you're not sure whether or not you can pay your rent —you're hardly alone. According to a recent report from the American Psychological Association, financial worries rank high on the list of things Americans are anxious about in 2019, and Fidelity reports that 85% of women are stressed out about their finances.
In other words, worrying about money sucks—but it is quite common. That said, there's manageable stress and then there’s debilitating anxiety. Financial anxiety is defined as "a psychosocial syndrome whereby individuals have an uneasy and unhealthy attitude toward engaging with and administering their personal finances in an effective way." The line between the two (common stress and diagnosable anxiety) can be blurry during a time when 31% of Americans are carrying student loan debt and 58% of Americans have less than $1,000 saved, but there is a difference.
Here’s what you need to know to distinguish regular money worries from full-fledged financial anxiety—and an action plan for both.
How much does worrying about money interfere with your day-to-day?
So your credit card bill is higher than usual. If you spend a few hours feeling anxious and worried about it and then come up with a plan for how to cut back on spending, the way you worry (and cope with) stress is relatively healthy. If you spend days in a cloud of obsessive thoughts about it, on the other hand, you’re approaching full-fledged financial anxiety territory. "A small dose concern or thoughtfulness around money is certainly healthy, if not necessary for us to make smart financial decisions,” explains holistic psychotherapist Alison Stone.
“With anything, you want to be mindful of the level to which your anxiety interferes with your daily functioning. If money is the first thing you think about in the morning, the last thing you think about at night—and takes up a whole lot of space in between—that’s probably a clue that something larger is going on that you want to pay attention to."
We can’t fully blame financial anxiety on the way our brains are wired, though. Stone believes that the fact that money is still such a taboo topic can dig us deeper into an anxiety spiral. “With this type of framework, it makes sense that some individuals, especially the younger generations, are developing insecurity around understanding and managing their money,” she explains. “Closing off dialogue about any topic increases the chances that people will experience anxiety around it.” Consumer savings expert Tara Murphy adds that millennials, in particular, have a wide range of financial support from their parents, ranging from almost 100% to none at all—and those who fall into the “none at all” category can have a hard time keeping up, which inevitably causes anxiety.
“Some can count on parental support, but others are facing serious challenges like paying down student debt, and they lack the financial resources and skills to address them.”
Develop a financial anxiety action plan.
No matter what your level of anxiety around money looks like, one of the best ways to start developing a healthier attitude is to take action. Lorna Kapusta, head of Women Investors at Fidelity Investments, suggests building an emergency fund. “You want this to have enough money to cover six months of expenses, and this can also cover unexpected costs like a medical emergency or home repair.”
Stone adds that seeking therapy can be helpful no matter what, particularly if your feelings about money are irrational—such as if you have a robust savings account, carry no debt, and still worry about money nonstop. But if your worries about money are rooted in a real, not-so-great financial situation, the very best thing you can do to mitigate your anxiety is better educate yourself. "Seek the help of someone you trust, be that a family member, friend with a financial background, or business professional.
Have them sit down with you and explain the basics of financial management, including developing a budget and creating a savings plan,” she says. The more knowledge you have about a subject, the more agency and control you'll have, which can become empowering rather than anxiety-provoking.
Here’s to becoming more financially empowered—and hopefully a lot less anxious.