6 Ways to Reduce Financial Anxiety to Boost Mental Health

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Mental health and financial wellness are inextricably related. When we don’t believe in ourselves and our ability to be financially well, we get caught in a downward spiral of fear, uncertainty, self-limitation, and financial self-sabotage. If we don’t believe we will be financially successful, we won’t. If we believe we will be prosperous and are deserving of that, we will take responsibility and necessary action to practice financial self-care.

As a licensed psychotherapist practicing for over 25 years and a financial behavioral expert, I’ve seen the benefits of eliminating financial stress and financial anxiety to improve mental health.

6 Ways to Conquer Financial Stress and Anxiety

1. Honor the financial experiences that have shaped your relationship with money. Practice self-compassion as you recognize how the past has impacted how you handle money. Using a multicultural lens, consider how your financial experiences may have been impacted by systemic racism, discrimination, or marginalization. Think about how your parents' beliefs about money and financial experiences have shaped your own.

A family’s finances can affect a child’s sense of safety in the world, their feelings of worth, and their beliefs about whether or not they have the ability to be financially successful one day. Poverty and economic hardship are financial traumas that can have long-standing mental health implications. We learn money scripts early on. If we have belief systems such as, “I am poor,” then we identify as such.

2. Rewrite the script of your money story. You are not only the protagonist of your money story, you are also the author. To rewrite the script of your money story and achieve financial success, you can:

• Identify your current money story: Take a moment to reflect on your beliefs and attitudes towards money. Are they positive or negative? Do you have any limiting beliefs or self-sabotaging thoughts? Understanding your current script will help you create a new one.
• Challenge your limiting beliefs: Examine the negative beliefs you may have about money. Are they based on facts or just unfounded assumptions? Replace such beliefs with empowering ones. For example, if you believe that "money is the root of all evil," reframe it to "money can be a tool for positive change and abundance in my life."
• Create a positive affirmation or mantra: Craft a new money story that reflects your desired financial success. Repeat this story daily to reinforce positive beliefs about money. For example, "I am attracting wealth and abundance into my life with smart financial decisions and opportunities."
• Surround yourself with positive influences: Surround yourself with people who have a healthy relationship with money and who inspire and motivate you to succeed. Avoid people who perpetuate negative beliefs or engage in unhealthy financial habits.

3. Apply mindfulness to finance. Mindfulness practices can be beneficial in reducing financial anxiety by helping you become aware of your thoughts and emotional spending behaviors around money. Mindfulness can help:

• Increase self-awareness: Mindfulness cultivates self-awareness, allowing you to observe your feelings and thoughts without judgment. By becoming aware of their financial worries and anxieties, people can gain insight into the underlying causes and work towards addressing them.
• Reduce stress: Mindfulness practices, such as meditation or deep breathing exercises, can help calm the mind and body, reducing stress levels caused by financial anxiety.
• Identify and challenge negative beliefs: Mindfulness allows you to recognize your negative thought patterns and challenge them. By becoming mindful of irrational or distorted beliefs about money, you can question their validity and replace them with more rational and positive beliefs.
• Improve decision-making: When you are mindful, you can avoid impulsive financial behaviors and think more clearly about the long-term consequences of your actions.
• Cultivate gratitude and contentment: Mindfulness allows you to focus on the present moment and appreciate what you have. This can help counterbalance the tendency to always focus on the scarcity or fear associated with money.

4. Be assertive and set healthy financial boundaries. Express your financial limits and ensure that others understand your boundaries. Clearly communicate what you are comfortable contributing or spending, and what you are not. Assertiveness and setting financial boundaries can help you:

• Stick to a budget: Create a realistic budget that aligns with your financial goals and priorities. By sticking to your budget, you establish firm limits on your spending and avoid overspending on things you do not need or cannot afford.
• Say "no" when necessary: Learn to say "no" when asked to lend money or participate in activities that are beyond your financial means or comfort zone. It is better to politely decline than to put yourself in a precarious financial position.
• Avoid comparing yourself to others: Everyone has different financial circumstances, and it is essential to make decisions based on your own financial health and well-being.
• Practice self-care: Taking care of yourself includes taking care of your finances. Prioritize saving money, paying off debts, and investing in your financial future. By focusing on your financial well-being, you establish healthy boundaries that enable you to live a more stable and fulfilled life.

5. Cultivate expansive, creative, and open-minded thinking. See past roadblocks to financial success and focus on opportunities, possibilities, and solutions. To challenge your own beliefs and perspectives in the financial realm:

• Embrace different perspectives: Seek out diverse viewpoints on financial matters. Engage in conversations with people who have different backgrounds, experiences, and opinions when it comes to money management, investment strategies, or career choices. Be open to their perspectives and try to understand their reasoning.
• Embrace failure as a learning opportunity: Instead of seeing setbacks as roadblocks, view them as learning experiences. Remain open to new approaches and strategies, even if they have the potential for failure. Embracing failure as an opportunity to learn and grow will help you approach financial success with an open mindset.

6. Break through the barriers of shame, fear, and pride. Talk to others if you are struggling, as financial anxiety breeds in isolation. You are not alone. Most people can relate to challenging financial times, and that is why it’s important to seek help.

Help Is Available

A recent study shows a significantly positive association between financial worries and psychological distress among U.S. adults. The findings suggest that accessible financial counseling programs and public health intervention programs are needed to mitigate financial worries and its negative influences on overall psychological health, with greater attention devoted to vulnerable populations.

When it comes to achieving financial wellness and eliminating financial anxiety, I suggest finding a therapist who specializes in the psychology of money. Also consider working through the program in my book, The Financial Mindset Fix: A Mental Fitness Program for an Abundant Life.