Sunday, October 25, 2020
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Sunday, October 25, 2020

Tips for dealing with financial anxiety

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Chances are your financial situation won’t kill you. However, your financial stress can kill you. As such, it is important to manage it effectively.

Here are 5 tips to help you cope with your financial stress.

1. Know you are not alone

Stress in America

American Psychological Association

2. Take a time-out

3. Avoid catastrophic thinking

“I have credit card debt. I’m a failure. At everything.”
“I lost my job. I’m going to be poor. Forever.”

When our finances feel out of control it’s easy to slip into catastrophic thinking, where we ruminate irrationally about what is likely to happen and who we are. These exaggerated thoughts create stressful emotions. To minimize the negative impact of irrational worries you need to keep things in perspective. This is where the next tip can come in helpful.

4. Think about the worst-case scenario

If I just suggested you avoiding catastrophic thinking, why would I now encourage you to think about the worst-case scenario? While your financial situation is most likely not life-threatening your financial stress can be. This exercise helps you face your fears straight on. Taking a hard look at the worst-case scenario has the paradoxical impact of lowering your anxiety. It’s a form of exposure therapy and can help you keep things in perspective.

Take some time to think it through. For example, if you lost your job, what would happen next? If you had to move in with your family or friends, then what would happen? Keep following the chain of worst possible outcomes. For most people, fleshing out the details leads them to realize that the situation, while uncomfortable and possibly inconvenient, is not life-threatening and that they could eventually get back on track.

5. Ask for help

Our anxiety soars when we lack confidence in our ability to face a challenge. This is common in the realm of personal finance, where many of us lack basic financial literacy. If your financial anxiety is causing you significant distress or making it difficult for you to manage your life you may benefit from help. Consider working with a mental health and/or financial planning professional to help you cope with your anxiety and make progress on tackling your financial challenges.

Here are some following resources you may find helpful:

—By Dr. Brad Klontz, certified financial planner, financial psychologist and an associate professor of practice in financial psychology and behavioral finance at Creighton University Heider College of Business. He is also a member of CNBC’s Financial Wellness Council 

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