Financial Anxiety

Published on: 04/02/22

We’ll all have it– let’s manage it!

All investors over their lifetimes will experience financial anxiety. If you have a sudden financial emergency, however, know that you’re not alone. Whether it’s fear over a lost job, a bad investment, too much debt, or lack of savings, financial challenges are a part of life and will affect everyone at some point. But when we feel financially anxious, we can make poor investing decisions at a time in our lives when we’re often least able to make the best decisions about our finances. So how can we prepare for financial challenges and reduce anxiety when they do come?

Identify the Problem

First, we need to properly identify what the financial challenges are. Sometimes the causes of our financial anxiety are easy to identify, like a lost job or an unexpected health care cost. Obviously, a lost job or large healthcare expense can cause serious financial problems and can cause significant worry and anxiety. We should try to be prepared financially before these types of unexpected expenses occur.

Financial anxiety can also be due to a combination of factors. For example, perhaps you have a job, but don’t know where or how to invest your savings. Or perhaps you have too much debt and are having trouble paying the minimum payments each month. Each of these issues can cause financial anxiety, and if facing multiple financial issues, the anxiety is often compounded. But all is not lost. Once we’ve identified what is causing us financial anxiety, we can try to remedy the financial situation in several ways.

An Emergency Fund

The best way to be prepared for financial challenges is to have an emergency fund. Your emergency fund should be separate from your other savings and should be ready to be immediately tapped when financial challenges present themselves. In other words, it should contain cash or cash equivalents (like Treasuries) that can easily be liquidated. An emergency fund could contain only one or two months of normal expenses. But some experts say that an emergency fund should contain six months of normal expenses–or more. It’s up to you what works financially for you, but it’s important to be honest in your appraisal of your monthly needs. That way when a major financial challenge presents itself, your emergency fund can be used quickly and will be enough to get your through your financial impasse.

Create a Plan

It’s important also to have an action plan to deal with the underlying financial challenges that are causing financial anxiety. For example, if large amounts of debt are causing you financial anxiety, then create a plan to pay off the debt. Sometimes just seeing how long a debt will take to pay off is enough to encourage people to pay off debt quickly. If you simply cannot pay debts like from credit cards or personal loans, consider credit counseling, which can often lower the interest rate on debts. Or, if you have a hospital bill that you are unable to pay, contact the hospital and see if you can renegotiate. There are many options available to you, especially if you are proactive in remedying your financial challenges. Your financial action plan will be different for each situation of course, but if you don’t have a plan you’ll often do nothing. Doing nothing is rarely a solution that can help.


Sometimes financial anxiety can also be a result from a lack of education. Lacking knowledge of investment products or banking in general can seriously impact your ability to invest– or prevent you from investing at all.  If you’re in need of investment education, there are many online tools that can help. And here at Indexperts, we offer books in our Investor Institute that can help even a novice understand about investing. Having enough money to invest requires you to have a certain level of financial literacy already. If you’re having financial anxiety from a lack of education, take the time to learn. It will give you greater confidence in your finances and help you make the right investment decisions, particularly when financial challenges present themselves.

Ask for Help

When we find ourselves in financial difficulties its important to have the right perspective. Many people have experienced the same financial difficulties, have survived, and later, even prospered. Avoid thinking that you will never get out of your difficulty and will never be in control of your financial destiny. It may take a significant amount of time to get a new job, pay a hospital bill, or get out of debt once and for all. But that doesn’t mean it will never happen. Remain positive and stick to your plan. If you still need help, reach out to family and friends that may be able to help. Or reach out to a financial professional. It’s never a failure to ask for help, and many times help from someone else is exactly what we need.