If you’re feeling anxious about your financial situation, you’re not alone.
The idea of losing money due to factors like rising costs, unexpected expenses, and market volatility can be frightening, and nearly 70 percent of Americans say financial uncertainty has made them feel depressed or anxious.*
But if you let anxiety take over, you run the risk of overreacting and making financial decisions that could have a negative impact on your future.
Recognizing how you’re feeling and developing strategies for managing your anxiety are key.
First, understand that you’re not irrational for feeling anxious when you lose money. It’s human nature to react more strongly to losses than gains.
In fact, Amos Tversky and Daniel Kahneman, psychologists known for their work in behavioral economics, developed a concept in 1979 called loss aversion, which means that people feel the pain of losing money much more intensely than the pleasure of gaining the same amount—about twice as much, according to their research.
So if you lose $1,000, it will take winning $2,000 before you stop feeling the sting of that loss.
Money is emotional. We work so hard for it over our lifetime, and we don’t want to lose it. But an exaggerated fear of negative outcomes can make us focus only on the negatives when there are a lot of positives out there. It can lead us to make short-term decisions with long-term money.
It can even have an impact on our overall health and wellbeing.
You’re unlikely to avoid financial stress, but there are strategies for managing the anxiety that can come with it:
- Set realistic expectations and think long-term goals instead of short-term losses
- Avoid comparing yourself to other people who might be in a different situation than you are
- Limit your consumption of media, which tends to be alarmist
- Avoid checking on your accounts too frequently
- Build an emergency fund to give you the peace of mind that comes from having a buffer against unexpected expenses or even a job loss
A financial advisor can work with you to create a balanced, long-term plan with clear short-, medium-, and long-term financial goals, taking your comfort with risk-taking into account. When you have a plan in place, you’re less likely to react emotionally to outside stress.
Regular check-ins with your advisor can help reassure you that you’re on track and offer you an opportunity to make any necessary changes to your plan.
Financial anxiety is common, and it can be a powerful force, but you can take steps to manage it.
By Matt Andreas, CFP®, CEPA®
Financial Advisor
*Source: Northwestern Mutual 2025 Planning & Progress Study
This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation. Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.
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