Vanessa, 31, is a Charleston-based nurse who’s never liked to spend money. Splitting the check at group outings can cause her anxiety (she just wants to pay for what she ordered, not Nancy’s steak!), and sometimes she stays home just to avoid that panic-inducing moment when everyone tosses in their credit cards. Objectively, she’s in decent financial shape — she saves good chunk of every paycheck, contributes to her 401(k), and paid off her student loans years ago — but that doesn’t put her at ease. She knows that some people roll their eyes when she says she “can’t afford” to do something, or remarks on how expensive something is, but it feels almost reflexive, like she can’t help it.
Recently, a former roommate told Vanessa that her “cheapskate” tendencies made other people uncomfortable, and that she needs to be more considerate and learn to loosen up. What should Vanessa do about this — if anything? She’d prefer not to be so awkward about money, but she also doesn’t want to compromise her savings and spend more. Isn’t being careful with money a good thing?
You’re right, Vanessa — a certain amount of financial anxiety is healthy. It’s what forces us to keep an eye on the future when the present is so full of cashmere sweaters, suede whatever-we-wants, and other immediate-gratification stuff that we’re tempted to blow our paychecks and figure out the rest later. In the right doses, financial anxiety can make us smart and keep us secure. Frankly, many of us could use more of it — or, at the very least, learn to recognize and heed it wisely.
However, it sounds like your financial anxiety is teetering on the edge of compulsion, particularly if it’s annoying your friends and keeping you cooped up at home. What’s the point of saving cash if you never enjoy spending it?
In her mid-20s, my friend Frances started getting panic attacks whenever she went out to eat. “I would be at a restaurant with a friend or a group, and halfway through the meal, I’d feel mad anxiety and the need to leave,” she told me. “I stopped going out for a while, even to really fun events, thinking that the anxiety was connected to the crowd size or something. I didn’t realize it was tied to money until I went to therapy, and now it’s so obvious to me.” The tipping point came when she had daily panic attacks during a vacation that she’d saved for and looked forward to: “That’s when I realized there were deeper causes, and they would not be fixed by avoiding things or trying to control my surroundings.”
Frances’s example is extreme but her story shows that there’s a fine line between being conscientious and taking it too far. How do you know when you’ve crossed over from shrewd to scrooge-y? And most importantly, how do you fix it?
Look at the root causes.
“So many of our money habits are unconscious,” says Dr. Brad Klontz, a psychologist, financial advisor, and founder of the Financial Psychology Institute. “How much anxiety do you carry around money? Where do you think it came from? What happened? Many people have no idea — it’s just their family culture. I think it’s valuable to get a clear picture of the origins of your beliefs about money.”
In Frances’s case, money was often tight when she was growing up. “My parents were mostly self-employed, so there wasn’t a biweekly paycheck to count on,” she says. “I’ve been privy to those fluctuations from a very young age, so I’ve always been conscious about spending. I’m also a child of immigrants, so the notion that I need to help my family has been ingrained since birth — a fun extra layer of guilt.”
This is a classic recipe for “money vigilance,” according to Klontz. “If parents are constantly penny-pinching, then their children are going to get the message that there’s not enough, and then they won’t learn to enjoy the money they earn,” he explains. Alternatively, these tendencies might create room to swing towards the opposite extreme. For example, the Depression-era generation spawned the consumer-culture baby boomers. “If you’re always worrying, then your kids can inherit a sense of helplessness, which leads to an outlook of, ‘There will never be enough money, so why bother trying?’ Which is followed by overspending,” he says. In some situations, this cocktail of financial fear can lead to accumulation — in a scary way. “There’s a type of person who will hoard cash,” he says. “Not just stuff and cats. Money.”
When talking to clients, Klontz seeks out past events that have shaped their current financial patterns (which he refers to as “money scripts”).“For some people, it’s growing up in poverty, or encountering a very significant financial loss in early life,” he says. “Maybe your dad got sick, or your parents got evicted — those things affect your long-term thinking.” Think back on your own formative years and see if you can find a link — self-awareness helps break the cycle.
Make a plan.
A positive aspect of being money-vigilant is that you’re naturally inclined towards budgeting; use it as a tool to ease anxiety. “One of the best things underspenders can do is make ‘fun’ a regular part of their budget,” says Liz Weston, a personal-finance researcher at NerdWallet. (She’s also quick to add that we regular folks — and overspenders — should do this, too.) “If money is earmarked for a purpose, it tends to be easier for the underspender to let go of it.” Better yet, shift your perspective: “Frame it as an investment in happiness. Underspenders like saving and investing; they don’t like the word ‘spend’ because it implies waste.”
John Foley, a certified financial planner and president of wealth management and advisory company SoFi, agrees. “Some people find that ‘petting their money’ makes them feel less anxious,” he says. “Check your balances and your spending against your budget. Do it several times a day if you must. If you’re on track, relax.”
Of course, that’s easier said than done. For Frances, staving off panic requires constant self-monitoring. “It’s very much a work in progress, and I’m not sure how close I’ll ever get to being anxiety-free around money,” she says. “If I have something big coming up, like a friend’s wedding or a trip, then I’ll go into hibernation mode for a month or so — cooking and staying in — to make sure I save enough. I keep a well-stocked emergency fund at all times, and add to it automatically with every paycheck.”
Another self-soothing method, according to Dr. Klontz, is to take a close look at your values: What do you choose to spend your money on? “Instead of thinking, ‘That’s too expensive for me,’ reframe it as, ‘I don’t want to spend my money on that,’” he says. Most anxiety is caused by the anticipation of losing control; when you remind yourself that you are in control, the white-knuckled grip on your wallet will give way to something more balanced.
Now, spend some money.
No one’s suggesting you run out and buy a Porsche — instead, take baby steps. Dr. Klontz advises minor behavioral experiments that expose your anxieties within a manageable setting. “For example, go pay for a massage for yourself, and keep a journal about the thoughts that come up,” he says. “Are you thinking, ‘This is ridiculous, what are you doing, you can’t afford this’? Follow that train, and watch all those intense emotional thoughts about worst-case scenarios that obviously don’t come true.”
Also, if your anxiety feels acute, it might be helpful to try therapy. “It’s been indispensable to me,” says Frances. “It helped me to identify the sources of my anxiety, as well as coping mechanisms, like remembering that I will be okay — I have a good job and great people in my life who would help if I really needed it. I can now think rationally instead of spiraling into a hypothetical doomsday.”
Ultimately, once you rein it in, your financial scrupulousness will serve you well. “I’ll never be the person who says, ‘Wait, where did my cash go?’” says Frances. “For better or for worse, I’m responsible, and I know that I can take care of myself.”