It's a funny thing, isn't it? You've worked hard, saved diligently, and your finances are in pretty good shape. But that nagging fear of it all going south still lurks in the shadows. Let's talk about how to quiet that inner critic.
1. Acknowledge Your Feelings
First things first, it's okay to feel anxious. It’s no big deal, it’s just your life savings, right?. Okay. Full stop. Maybe this sentence is why you feel anxious? (insert arrow pointing up). If so, that makes total sense. Congratulations to you for recognizing the gravity of how important your money is as a tool for you. However, that doesn’t mean fear around it should control your thoughts.
Let’s talk about these feelings. You probably missed your kid’s soccer game (or 15) to make sure your project was done on deadline, and though your job is intrinsically rewarding, it's important to acknowledge the trade-offs involvoved, such as the time spent on work (for a paycheck) that might have otherwise been dedicated to your hobbies or family. It can be conflicting to feel happy about dollars earned at the cost of missing out on other events you enjoy, even if you like your career.
It’s normal. Lots of people have anxiety over money, even when they're financially secure. Recognizing your feelings is the first step to managing them. You probably already know this, but anxiety isn’t logical. Let's look at an example. If someone is nervous about flying, they probably have an annoying friend who tells them “but flying is the safest form of travel!” While, this may be logically true, it isn't helpful. Anxiety is not logical, and the key to debunking it is understanding the emotions that are driving those fears. So, your self talk (or annoying friend, who you should really stop being friends with) of “why are you worried, you have PLENTY of money!” isn’t really that helpful. It’s time to get to the root of the problem.
It can be helpful to know, anxious tendencies at one point in time were helpful to you, which is why you have them. Perhaps they helped you (or your parent(s)) make sure you have that emergency fund when there was an unexpected expense or job change, which was helpful. But now that you’ve saved up, it’s okay to ask those anxious feelings to take a break; kind of like redecorating your house (bear with me here). Let’s talk about this redecorating analogy. When you were first out of college, you likely sat on boxes or lawn chairs in your living room before you could get the fancy IKEA furniture. And that was helpful, because you were living within your means, and is part of the reason that you have a decent savings and investment accounts now. However, now that you’re older, it may be time to say goodbye to the IKEA and make room for some matching furniture your mom would be proud of (we’re not unpacking looking for your mom's approval today, by the way…). Your IKEA furniture (and boxes) had a place, but you don’t need them anymore- just like you don’t need your money anxiety anymore either.
2. Identify Your Fears
Okay, this is the fun part- time to get real introspective. What exactly are you afraid of? Losing your job? A market crash? A sudden, unexpected expense? Pinpointing your specific fears can help you address them more effectively.
3. Build a Safety Net
Even if you're in a good financial position, having an emergency fund can provide peace of mind. The general guideline is 3 months living expenses for a dual income household, and 6 month’s worth of living expenses for a single. Now, if you’re the anxious type, that may look more like 6 & 12 months respectively.
4. Diversify Your Investments
If you're invested in the market, diversification is key. Spreading your investments across different asset classes can help protect you from market fluctuations.
5. Educate Yourself
Knowledge is power. The more you understand about personal finance, as well as anxiety, the better you will feel. Regardless if you're in a great financial position or one that could be improved, when you understand where you are it can give you peace of mind on how to navigate the future. Just like if you feel lost (which is normally anxiety inducing), when you identify where you are on the map you can figure out how near or far you are to where you want to go.
Want to have a safe space to talk about money? Well then... is this a time to plug the Finances & Feelings groups? Sure is! These groups are designed to get people together who just want to learn more about money in a safe, inclusive space.
6. Practice Gratitude
Focusing on what you have, rather than what you might lose, can help shift your perspective. Gratitude can be a powerful tool for reducing anxiety.
7. Seek Professional Help
If your anxiety is overwhelming, consider talking to a financial advisor or therapist. They can provide guidance and support.
Remember, while it's impossible to eliminate all risk, you can take steps to mitigate it. And sometimes, the best thing you can do is to trust in your ability to handle whatever comes your way.
Investment advisory services offered through Equita Financial Network, Inc. an investment adviser with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Equita Financial Network also markets investment advisory services under the name, Astraea Wealth Management LLC.