Financial stress: How to manage financial anxiety

Key takeaways

  • A number of factors can cause financial anxiety, from market volatility to a lack of financial confidence.
  • Acknowledging and understanding your fear is the first step in reducing your financial anxiety.
  • Other tips for managing financial stress include having a financial plan, maintaining an emergency fund and investing for the long-term.

From record inflation to continued market volatility, there are plenty of reasons to feel anxious about money and the wealth you’ve worked hard to build. If you’re worried about your finances, know that you’re not alone.

A recent study by the American Psychological Association found that 65% of Americans are experiencing significant stress about money—the highest percentage since 2015. What’s more, Americans rank inflation as their biggest stressor, more than supply chain issues and global uncertainty.1

The good news? There are things you can do to reduce your financial anxiety and feel empowered to take control of your finances now and in the future.

What is financial stress?

According to the Financial Health Institute, financial stress is “a condition that is the result of financial and/or economic events that create anxiety, worry or a sense of scarcity, and is accompanied by a physiological stress response.” Left unchecked, financial stress can lead to serious health consequences, such as cause cardiovascular disease, diabetes and obesity, as well as mental health issues such as depression.2

Having more money doesn’t necessarily lessen the risk of financial stress. “As one’s wealth grows, so does financial complexity due to taxes, legislation and new investment choices,” says Shannon Baustian, private wealth advisor for U.S. Bank Private Wealth Management. “High net worth individuals also worry about the impact on the next generations.”

Why you feel financial anxiety

There are a few reasons you could be feeling financial stress, not related to lack of money.

  • Triggering events or situations. “When the market becomes volatile, clients often start looking at their accounts more closely and become more concerned about their financial future,” says Heather Fitzmorris, chief operating officer for U.S. Bank Wealth Management. “They’re wondering, ‘What does that mean for me?’ and ‘Will I have enough money to retire when my investments are going down and prices on everything are going up?’”
  • A sense of financial insecurity. “Money is a source of security and market volatility threatens that security,” says Baustian. “Financial security doesn’t just mean being able to afford the basics; it also means the ability to maintain the lifestyle one has become accustomed to and the avoidance of making sacrifices because of factors outside of your control.”
  • “There’s often a push and pull of wanting to enjoy your life but also knowing that things can take a turn for the worse,” says Yasmin Ghodse-Elahi, a behavioral scientist for U.S. Bank. “Finances are inherently fluid, and that's scary.”

  • A lack of financial confidence. “Financial mindsets are inherited across generations,” says Ghodse-Elahi. “Growing up in a household that wasn’t financially healthy or transparent can affect your understanding of how the financial world works.”
  • Even if you have a good handle on the basics like budgeting, saving and investing, you may still lack confidence in your overall financial strategy. “While individuals may feel confident in how they pay their bills, they may feel less confident—and even experience significant stress—when faced with decision making because they don’t have a coordinated strategy,” says Baustian.

  • Making financial decisions emotionally. “Financial anxiety can cause you to make poor decisions and act more impulsively with your money,” says Ghodse-Elahi. “And it can be hard to seek advice when you're anxious. It’s called the ostrich effect. We avoid that which makes us feel uncertain.”

How to not stress about money

If you’re experiencing financial stress, these five tips can help.

1. Understand your financial anxiety

Start by recognizing that you’re feeling stressed about finances. Acknowledging a fear is the way to overcome it. Then, advises Ghodse-Elahi, pinpoint what’s causing your anxiety about money. “Are you afraid of the uncertainty in the market, or are you afraid you’ll make a bad decision that will negatively impact your finances? Those are very different fears,” she says.

In both cases, you can ease your fears by working with a financial professional to build a strategy around the uncontrollable, like market volatility, and the controllable, such as understanding what’s happening in the market. “The primary advantage of working with a professional is that they bring a certain level of objectivity, which helps you avoid making emotional financial decisions,” says Baustian.

2. Put a financial plan in place to reduce anxiety about money

While situational circumstances can occur that are totally out of your control, financial risk can often be mitigated with a comprehensive financial plan.

“When you partner with a financial professional, they’ll work to understand your goals and objectives, your risk tolerance and your time horizon,” says Fitzmorris. “They’re able to run ‘what if’ scenarios to help you better understand what type of risk you're taking in situations when the market is doing really well, or when the market is not doing so well. If you have a plan in place, you’ll feel a lot more confident you can weather the storm.”

“We find that when clients have a plan in place to achieve their goals, they’re more resilient in the face of market volatility and uncertainty,” adds Baustian.

3. Maintain an emergency fund to ease financial anxiety

Having an easily accessible emergency fund can reduce your financial stress.

“If you lose your job or experience another unforeseen circumstance, there are expenses that will need to be handled right away,” says Fitzmorris. “If you don’t have an emergency fund, where is the money going to come from? It's all interconnected and can be accounted for in a financial plan.”

Fitzmorris suggests that your emergency fund should hold enough money to pay for at least six months of your living expenses.

4. Think long term to relieve financial anxiety

A volatile market can cause anxiety about money, but jumping out too soon can make it worse. “Early investors tend to buy when the market is doing really well. Then, they often panic when the market drops and pull out their investments,” says Fitzmorris. “However, investing is a long-term strategy.”

Having a diversified portfolio comprising different asset classes can help ease financial anxiety and deal with any unexpected events, whether personal or macroeconomic. Don’t forget to factor correlation into your selection; asset classes that react differently to market volatility can provide better balance.

“The primary advantage of working with a financial professional is that they can maintain a certain level of objectivity, which helps you avoid making emotional financial decisions.”

–Shannon Baustian, private wealth advisor, U.S. Bank Private Wealth Management

If your portfolio is allocated well and you stay the course, you’re more likely to see strong returns over the long term, says Fitzmorris. “It's not a get-in-and-get-out approach” but more of a buy-and-hold strategy when you are looking at investing for the long term.”

5. Build healthy financial habits

Financial confidence can come from education and support. One of the best ways to ease your financial anxiety is continuing to build your knowledge of investments and how market conditions can affect them. Surround yourself with trusted financial professionals who can guide you on your journey.

Fitzmorris says, “Take the time to get educated and listen to different perspectives. When you’re ready to talk to someone, we’re here to listen and to help.”


Ready to make a plan and take control of your finances? Learn how our approach to financial planning can help ease your financial anxiety and put you in control of your finances.