Overcoming Financial Anxiety and Doom Spending

Anxiety disorders often create feelings of worry and trepidation. These rank among the most common mental health conditions, affecting nearly 20% of the U.S. population. While generalized anxiety is widespread, specific anxieties, such as those related to family or career, are just as difficult for those impacted. Financial anxiety, particularly in individuals with co-occurring mental health or chronic conditions, and those with substance use disorders, is often overlooked or considered secondary to the core diagnosis. This type of anxiety arises when financial demands exceed available resources, leading to significant psychological stress. Many times, therapists ignore the financial stressors creating anxiety, or they are referred to some outside resources, but they should be tackled directly.

The pandemic and other natural disasters have exasperated financial anxieties. Fear about the future of price inflation and job stability has spurred something Oprah Daily recently called doom spending, where people buy things today to make themselves feel better in the present moment. Sadly, this works against you if you have existing financial stress, as you find yourself buried in even more debt to deal with! Reaching for the credit card might make you feel good in the moment, but it won't help your financial position.

Financial anxiety can disrupt daily routines and exacerbate poor money management behaviors, such as neglecting activities or procrastination. If you find yourself constantly worrying about making ends meet, affording retirement, or managing a partner’s spending habits, you might be experiencing financial anxiety. Financial worries and insecurity are a leading cause of divorce, and they often stem from underlying beliefs and behaviors. They are also one of the core stressors underlying suicides as well. Nearly 18 million households are severely cost-burdened, spending over 50% of their income on housing alone. Well over ¾ of Americans live paycheck to paycheck, struggling to save, with increasing credit card and student loan debt. When financial concerns lead to a sense of doom, it often stems from not knowing the best course of action or if there is a clear path forward. Uncertainty about job security or market downturns can also contribute. Since stress is often hereditary, learning to manage it, regardless of financial circumstances, is crucial.

Stress Manifestations

Stress manifests physically through agitation, sweating, and shallow breathing. But more importantly, the changes in your mental state are even more troubling. Attitudes and behaviors change when stress is high. Overwhelming thoughts and emotions can make you feel restless and out of control. Alongside physical symptoms, stress impairs financial decision-making. Under stress, our brains often rely on shortcuts and biases rather than thorough analysis, leading to impulsive decisions that may not yield the best outcomes.

So What Can You Do?

If financial stress is affecting you, there are steps you can take:

1. Start by declaring an intention. One of the problems with your finances may be your beliefs and mindset. Addressing your mindset will help you get started. What beliefs are you holding on to that might be limiting you? Start by declaring an intention to turn things around. This might be “to break free from debt” or to “increase my income by 20%.” Whatever your intention, say it out loud and be sure to focus on that daily. Write down what that intention means to you, and what you would feel like if you were to accomplish that!
2. Create a mindful plan for financial well-being: You won’t be able to tackle anxiety unless you are fully present and aware of your beliefs and behaviors and have a plan in place. Be mindful about your purchases and avoid the doom spending spiral. Being mindful means being present and aware of your thoughts and emotions. Slow down and avoid multitasking when facing tough financial decisions. Your plan should include details of how you intend to make more money, save more money, pay down student loans or credit cards, and improve your overall financial well-being. Make a list of your concerns and analyze them to understand what causes your stress. By identifying specific stressors, you can address them more effectively. You might need to take a break from problem-solving. While your brain may naturally seek a solution, allowing yourself to relax can help.
3. Address procrastination: Anxiety often leads to procrastination. We delay when we are uncertain about the right path, or just fearful of potential outcomes. Implement relaxation and breathing exercises to calm yourself before making any big decisions. Create a habit of waiting 24 hours before committing to any financial decisions to avoid rash choices. Make a prioritized list of short and medium-term action items and deadlines for you to focus on.
4. Work the right order of financial operations: It is important to not be haphazard. Focus first on setting aside an emergency reserve and getting control of your spending and debt. Spend some time developing a budget that allocates percentages of your income to spending, debt repayment, and savings. In the beginning, you will have much more of your resources directed towards spending and debt. Prioritize setting aside specific dollar amounts or percentages each month in savings and investments to start building wealth. If you find it challenging to make credit card or debt payments, you will need to consider secondary sources of increasing your income. Before making financial decisions, research and list at least three alternatives. Having multiple options reduces the feeling of being trapped and opens up alternative paths.
5. Consider a Financial Coach: Sometimes, individuals cannot overcome financial fears alone, and a traditional therapist is not always ideal to help with financial well-being. An independent coach or financial therapist can provide constructive guidance and help direct you toward positive actions. Choose someone who provides unbiased advice and is not motivated by commissions or product sales. An independent perspective might help you find new ways to address your anxiety.

If you follow these steps, and work a plan, I know you can begin to slowly move past financial anxiety.