Financial anxiety can be paralyzing, but some financial understanding can help so much. If financial worries are keeping you up at night, find a proactive way to address them. Ignoring your financial struggles won’t make them go away, but developing a plan that gives you control can help you become more secure in your financial future. We can help. Contact Safe Money Partners to learn how to make the most of your money.
Overcoming Financial Anxiety
February 12, 2021
Financial anxiety is real and it can be paralyzing. You may feel physically sick when you think about the debt you have, the savings you don’t, or what would happen to your family if you lost your job. When you have anxiety, it’s easy to try and calm yourself by avoiding the situation, but that’s not going to help much. By taking control of your finances, you can begin to overcome financial anxiety.
Don’t Compare Yourself to Others
Financial shame is real, and often it’s caused by comparing ourselves to others who seem to be in better financial shape. Maybe you are looking online and it seems that everyone is remodeling their homes or taking vacations while you are wondering where all your money goes. But you don’t know everyone’s full financial picture. You are likely not the only one carrying debt, worrying about saving, or feeling the pinch of the economy. Be careful not to let any feelings of financial shame stop you from trying to better your situation.
Focus on What You are Doing Well
Start with the positive. Are you contributing to a retirement fund? Do you have a savings account? Are you paying toward your debt without adding to it? Did you recently pick up some additional income? These are all positives to focus on. It can be very easy for financial worries to drag you down, so make sure you spend some time looking at what you’re doing well. It may be as simple as understanding where all of your money really goes, and finding ways to cut extra expenses. Just knowing that you aren’t burying your head and ignoring your financial picture is a huge plus.
Revisit Your Budget
If you’re having financial anxiety, take a look at your budget. You may have set your budget when you first moved into your home, and now that you have a family, your money situation has changed. Maybe your income is different, or your expenses have gone up. Are there areas that need to be adjusted? Go over the numbers. Make sure that your income and expenses are accurate. If you realize that your expenses are exceeding your income, look for ways to cut back or start looking for an additional source of income to balance things out. If you’ve started to build up debt, looking at your budget can help you develop a plan to pay that debt off before it becomes overwhelming.
Adjust Your Savings Goals
A big cause of financial anxiety is wondering if you will have enough money when you need it. In most cases, this worry relates to retirement, but it can also be caused by worrying about job security, or what could happen if you got really sick, had an injury, or were faced with a large unexpected home or car repair.
A big part of this financial anxiety may come from the way 401(k) plans do their marketing and give American’s the impression that they are getting behind on their retirement planning. When the 401(k) plan was created in 1978, it was never intended to be a major part of a person’s retirement plan. For some reason American’s have allowed the marketing noise surrounding them to run their lives.
The best way to combat this stress is to adjust your savings goals. Start with an emergency fund. Although you eventually want to have a nest egg of several months of living expenses, don’t panic by thinking of that amount. Start with a savings goal of $1000 in an account that is designated only for emergencies. Once you’ve reached that goal, set a goal of one month’s worth of living expenses. Having that emergency fund may allow you a little bit of breathing room and keep your financial anxiety at bay. Once you have accomplished this it is time to take the next step, which probably does not involve increasing your 401(k) contributions.
Talk to a Consultant
The best way to ease financial anxiety is by talking to an expert. You may fear what will happen if you can’t save enough for retirement. You may worry about how you’d cope with a job loss. A financial consultant can help you develop a plan and help you realize that the best weapon against your fear is being proactive. The next way a financial consultant can help ease financial anxiety is by educating you about things you may not understand. The ins and outs of retirement planning, saving for unexpected expenses, and buying a home can be overwhelming.
By Jeff Mohlman
Jeffrey has developed a comprehensive network of financial planning and estate planning experts who work for their client’s short-term and long-term goals. Today, the approach he incorporates for his clients follows three basic tenets: 1) being debt-free, 2) maximizing after-tax retirement income, and 3) protecting their estate from unforeseen risks.