Nine Surprising Ways Anxiety Impacts Your Finances

Nine Surprising Ways Anxiety Impacts Your Finances

            At the heart of our brain's fear center is the amygdala, the part that helps us react to danger by fleeing, fighting, or freezing. Here's the catch: the amygdala cannot distinguish between real emergencies and imagined ones. When anxiety kicks in, it can create financial habits and decisions that feel urgent but may not be in our best interest.

1.     Making emotional decisions about investing

            It's December 2025. You log into your 401 (k) account to check the balance. Stock market performance has decreased, and the value of the stocks held in the 401(k) is lower than it was in the past quarter. Your amygdala screams EMERGENCY. So, as you make your plans for 2025, you decide," I'm not investing any money into this plan next year; the market is down." The market is likely to experience fluctuations from time to time. With 401K investing, you are playing the long game. The second way our emotions can have an effect is when people cash out investments when the market is down. As the saying goes, the only person who gets hurt on a roller coaster is the one who jumps off. Consult with a licensed investment professional if you have specific questions. 

2.     Buying a car, you can't afford

            Many people have a perfectly great vehicle with a check engine light on. If the car repairs are more than it is worth, consider a trade-in. That doesn't necessarily mean we need to be talked into purchasing a new 2025 vehicle.  Be sure to review your budget and numbers before visiting the dealership, which leads us to the next point.

3.     Not looking at the numbers.

            People can get anxious when they log into their bank account or budget.  However, in the words of the poet Robert Frost, "The best way out is always through."  Let's help you cope with your anxiety, and then let's dive into those numbers in 2025.  Take a walk, pour yourself a nice glass of ice water or hot tea, and engage in positive self-talk.  "Even though this feels scary, it's just information. I need the information to make decisions." Sit down at least once a week and review your spending, savings, and investment contributions. You can even use a budgeting app or spending tracker to help you!

4.     Buying stuff to help with anxiety

            Is anyone else seeing an increase in products marketed to help with anxiety? Social media ads of Himalayan salt lamps, weighted blankets, stuffed animals with lavender, fidget toys, and more flood our feeds. Women are sold the ideas of massages, hair appointments, and lattes as a form of self-care to help with their anxiety. You can buy all the stress balls on Amazon, but your thoughts are a part of this puzzle. Our thoughts, feelings, and behaviors are all connected. It's beneficial to learn some basic Cognitive Behavioral Therapy skills to talk back to the voice of anxiety and turn down the noise.  Then you can add a stress ball.

5.     Worrying about what other people think of you.

            Especially with social anxiety, folx can fear being negatively evaluated by others. This fear can pressure people to purchase a new office building, despite their small start-up business doing well with just a year or two of renting. Or buying a new home, rather than a smaller starter home, because you don't want other people to think bad things about you. Here's the deal: other people's thoughts about you aren't your business. Even if someone was thinking something bad about you, or thought you were cheap, frugal, etc. You could survive that. Anxiety overestimates the threat or underestimates your ability to cope with it.

6.     Emotional Spending

            Healthy coping skills and self-care are crucial for our mental health. However, if your emotions are leading you to make repeated purchases that aren't in your budget, it may be time to go a different direction to help you manage your anxiety. If you head to the stores every time you feel an emotion, this could lead to huge credit card debts. There are other options: calling a friend, family game nights, taking a walk, or listening to Ocean sounds on YouTube. If this is excessive and you are reading this and already deep in debt, reach out to a local therapist and make an appointment. You wouldn't be the first person to say, "I shop every time I get upset, and I need to work through my emotions and develop healthy coping skills."

7.     Not knowing the three states of mind.

            Okay, this one is famous in the psychology world, yet not as well-known in everyday life. In Dialectical Behavioral Therapy, we teach people that there are three states of mind from which we operate and make decisions. The emotional state of mind makes decisions based on how we feel.  When your kids are excited to see you after school and run up to give you a hug, this is them operating from an emotional state of mind. Super Bowl parties are notorious for being places where people can overhear others saying, doing, or chatting about things that reveal their emotional state. Yelling at the ref on a TV that can’t hear you? That’s an emotional decision. The logical state of mind makes decisions based on numbers, data, and statistics. A wise state of mind takes both into account when making decisions. 

            Here's why that is important. I may feel like going to Hawaii in 2026; however, am I contributing to retirement?  Vacations aren't bad things; let's make those decisions wisely. The wise mind might decide to go to Myrtle Beach this year while asking for a raise and saving the increase in an account for Hawaii.

8.     Being scared and playing it too safe

            Finances can be a source of anxiety for people! Anxiety is our challenger; it would be helpful if we knew more about our competitor. Famous football teams will study their opponents to figure out how to play against them. Find some reputable publications, podcasts, and YouTube channels and start learning more about your finances. Exposure with response prevention is an evidence-based treatment for anxiety. Sometimes in therapy, we ask people to take baby steps. So, if all of your savings are sitting in your local bank, earning low interest, a baby step would be making a small percentage of your savings in a high-yield savings account that is FDIC-insured.  

9.     Not being aware of the messages we received as children.

            We all received messages from our parents and other adults when we were little. Here are a few common messages:

• Being told always to save money and never spend it.

• Or parents who modeled the opposite.

• Go shopping to celebrate success.

• Go out to eat to celebrate good grades.

• Money comes from hard work; you must work diligently to earn a living.

• Helping people is more important than making money.

• It's not okay to ask for a raise.

• Or perhaps money was never discussed.

Anxiety can creep into our financial lives in surprising ways, influencing our decisions, habits, and even our health. However, understanding the connection between emotions and money is the first step to breaking free from its grip. By learning to recognize patterns, making informed decisions, and addressing underlying emotions, you can regain control over your finances. Whether it's developing healthier coping strategies, revisiting childhood money messages, or simply starting with small steps like reviewing your budget, you have the power to turn anxiety into a motivator rather than a barrier. Your financial future is worth it!

Author info: Jenn Lowe is a counselor in the states of Michigan and North Carolina. She treats women with OCD, anxiety, and phobias. She enjoys learning about finances.