Key Takeaways
- Intense financial anxiety can cause people to ignore important financial matters as well as spend recklessly.
- Money fears can impact your mental health and relationships, not just your bottom line.
- Consider steps such as learning more about financial topics, aligning saving and spending with your goals, and talking with your advisor.
In our experience, the topics of money, finances and investing can cause feelings of fear, anxiety and uncertainty in many people. Although money anxiety may be found most often among people who struggle to make ends meet, it’s surprisingly common among wealthy individuals and families—who may objectively have plenty of financial security, but who don’t necessarily feel that way.
Financial fears can lead to significant challenges and problems—potentially impacting not only the person with money worries but also their relationships with others. What’s more, financial fears can be tough to address because they’re often rooted in negative experiences during formative childhood years.
The good news: Fears about money matters can be overcome, with some understanding of what’s causing the issue and some action steps.
The potential impact of financial fear, anxiety and trauma
Anxiety and fear about money-related matters—earning, saving, spending, investing and so on—might crop up in anyone from time to time (after a job loss or during a market downturn, for example). But there’s also chronic financial fear that exists frequently or even constantly. An intense fear of spending money, for example, is called chrometophobia—something that is essentially impossible to avoid given that everyone needs to buy goods and services.
Such deep-seated fears can lead to negative outcomes—very negative, in some cases—for the people suffering from those fears. Consider some of the problems that intense financial fears can potentially cause:
- Avoidance. When we fear something, we often try to stay away from it. Financial fear can cause people to avoid dealing with important financial matters—from paying bills to saving for their futures to investing to grow their money. In extreme cases, money avoidance can cause people to refuse to spend on key necessities they require in order to live a healthy, functional life.
- Overspending. Alternatively, fear can cause us to lash out against what frightens us. In the case of money, some people might spend recklessly without keeping a budget or knowing whether they have the financial means to make a seemingly endless series of expensive purchases. Spending that becomes excessively lavish can damage the financial future of even extremely wealthy individuals.
- Poor retirement preparation. Money fears can prevent people from saving and investing for their futures. But even if they do take those steps, they may invest too conservatively based on what they want or need for their retirement years. Conversely, their fears about money could drive them to act too aggressively—for example, continually buying and selling investments at inopportune moments and missing out on potential future returns that could help strengthen their financial health.
- Poor workplace performance. Money fears can quickly fill up the mental spaces needed to focus on other matters. Consider that people suffering from financial anxiety have lower work performance, tend to get distracted more easily and are emotionally exhausted from constantly worrying, according to a 2022 study published in the Journal of Vocational Behavior.
- Poor health. Numerous studies over time and in several countries have found links between financial stress and poor physical and mental health outcomes. One example: “Higher financial worries were significantly associated with higher psychological distress,” according to one 2022 study.
- Negative impact on heirs. Often, our attitudes toward money are taught to us by our parents—what they tell us about it and (just as important) their actions when it comes to spending, saving and allocating their dollars. If your relationship with money is rooted in fear, there’s a good chance that you’ll instill that fear in your children or grandchildren—whether you intend to or not.
Overcoming money fears and phobias
Addressing issues such as these (and others) can help individuals and families adopt better attitudes toward money that could potentially give them a stronger sense of financial freedom and flexibility. Here are some ways to overcome the money fears and phobias that hold people back:
1. Get clear on the cause.
If you’re stressed out about money and facing actual financial challenges—such as a lack of income or excessive debt—you probably know why you’re feeling anxious. But if you have money fear that isn’t rooted in anything immediately tangible, you may need to look for the underlying cause. For example:
- It’s not uncommon for financially secure people who came from financially insecure backgrounds to have a nagging worry about their financial health. Did you struggle to make ends meet growing up? Did your family lose a great deal of money in the past?
- Conversely, perhaps your parents were preoccupied with having the best of everything in order to fit in socially, which now makes you feel pressured to spend lavishly—and doing so has you worried about getting in over your head.
Regardless, if money anxiety is an issue for you, understanding why is a good first step in addressing the issue.
If you’re stressed out about money and facing actual financial challenges—such as a lack of income or excessive debt—you probably know why you’re feeling anxious. But if you have money fear that isn’t rooted in anything immediately tangible, you may need to look for the underlying cause. For example:
- It’s not uncommon for financially secure people who came from financially insecure backgrounds to have a nagging worry about their financial health. Did you struggle to make ends meet growing up? Did your family lose a great deal of money in the past?
- Conversely, perhaps your parents were preoccupied with having the best of everything in order to fit in socially, which now makes you feel pressured to spend lavishly—and doing so has you worried about getting in over your head.
Regardless, if money anxiety is an issue for you, understanding why is a good first step in addressing the issue.
2. Learn more about financial topics.
“Knowledge is power” is a catchphrase for a reason. A better understanding of financial issues that cause you discomfort can be a great way to reduce the fear you feel about them. That doesn’t mean you need to go for a Ph.D. in finance, of course. Rather, depending on what’s got you feeling anxious, become more informed about how financial markets work, the percentage of time stock prices rise versus fall, how long it has historically taken for stocks to recover from a bear market, or the likelihood that your current wealth will see you through your retirement. Financial literacy classes aimed at adults are becoming increasingly common. Once the curtain is pulled back, things that seemed mysterious and a bit scary can potentially begin to feel more familiar and comfortable.
Trusted financial advisors can be an excellent resource here, as they can provide you with general financial knowledge and answer your questions. They can also give you important context if, say, rapidly falling stock prices have you in a panic.
3. Align money decisions with your goals.
It may be possible to become more comfortable dealing with money and making financial decisions if you have clear goals that you want your money to help you accomplish. Creating a detailed vision for your retirement, for example, may help you say yes or no to lots of spending, saving and investing questions that arise. If saying yes would help you move closer to that retirement vision, then say yes—and if not, say no and move on.
4. Fight back.
If financial fears have you feeling trapped in a pattern of always behaving in certain ways, take steps to push back. For example, say you chronically overspend to keep up appearances. You might delete one-click apps that allow you to make purchases in the blink of an eye or delete saved credit card information from online stores. Making it even a little bit harder to thoughtlessly buy may be beneficial.
Conversely, if you’re a money avoider, schedule one or two days per month when you require yourself to spend a few bucks on an item or service that makes you happy—and let a friend or partner know your plan so they can check in and make sure you are “splurging” as scheduled. Also consider setting up automated payments and direct deposits (to bank accounts, 401(k) accounts, etc.) to help you take care of financial responsibilities without feeling overwhelmed.
5. Have regular financial check-ins.
Ever notice that anxieties have a habit of feeling a lot bigger when we keep them to ourselves? If money fears have you worried or acting in ways that make you feel uncomfortable, bring them up when you meet with your advisor to review your financial situation. Your advisor can provide you with facts that can help you see whether your concerns are valid or you’re fretting over nothing. They can also suggest methods or resources for altering behaviors that may be hurting your overall financial health.
Conclusion
We hope that you and the people you care about don’t approach issues related to money with a deep sense of fear, anxiety or dread. But if you find that dealing with finances spikes your blood pressure or causes you to act irresponsibly, know that there are people you can reach out to for help who can give you strategies aimed at empowering you to cope and overcome the hurdles in front of you—and, in doing so, develop a healthier relationship with wealth.
VFO Inner Circle Special Report
By John J. Bowen Jr.
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