By Mikelann Valterra

Whew! Recently, I attended the Financial Therapy Association conference in San Diego.  What IS financial therapy, you ask? It’s a process that uses both therapy skills and financial knowledge to help people achieve not just financial health but higher overall wellbeing.  Money is never just about the numbers, is it. How we feel about it, and how we use it to create a life we love, is a huge subject. And it got me thinking about financial stress vs. financial anxiety.  Yes, there is a difference.

Do you have financial stress or financial anxiety?

People who come to see me often mention being tired of money stress and not feeling empowered in their personal finances. But often when we dive in, they are experiencing financial anxiety. So, what is the difference?

Financial stress is usually caused by an external trigger, though it could be short term (being hit with a huge car bill) or long term (dealing with divorce or the effect of the pandemic on their business.)  But when a stressful “event” happens, this causes a lot of financial stress. Sometimes the event is so big that it takes a while to see it as the cause of financial stress. Sometimes it is very obvious. But financial stress generally means we fear our inflow is not covering our outflow—big or small, now or in the future.

And financial stress causes all the mental and physical symptoms that general stress does: digestive troubles, difficulty sleeping, irritability, tension in relationships etc.

Financial anxiety is something different. It is more diffuse and on-going. Your money worries feel more persistent, even when there isn’t a specific stressor in front of you.

So, if you feel stress whenever you think about money, then you are likely suffering from financial anxiety. You can’t always put your finger on what is bothering you, but you feel a general sense of unease whenever you think about your finances. You can’t point to a single obvious trigger. You may live as if waiting for something bad to happen. If feels like walking around with a pit in your stomach. Or perhaps the feeling of unease comes over you when you think about the future.

The difference between financial stress and financial anxiety is important. For one thing, one is talked about, and one is not. People are more likely to share their financial stress with a loved one or a trusted friend. But when your feeling of “stress” drags on, it is something else. It is anxiety. And this is less talked about but can be more impactful.

Unfortunately, people often get used to financial anxiety, as if it is the air they breathe. They assume money is always “stressful”, though different things may bring it to the fore (like paying bills or buying a house.) But the reality is that it is always there in the background.

It is financial anxiety that blocks us from thinking about the future and is also the cause of financial indecision. It tends to fuel the money fog that keeps people vague about their money.

Financial anxiety saps your energy. It becomes hard to plan, or dream, when you suffer from financial anxiety. It all feels pointless, so why dream anyways?

The way out of financial anxiety is a two-pronged approach.

First, to feel more secure around money, my top recommendation is to design a personalized spending plan – a.k.a. budget– so you can clearly see your income and spending and then decide where YOU want your money to go.

Creating a nourishing spending plan that is in alignment with your values and what truly gives you satisfaction, while including a plan for savings, is a major stress reliever. When you automate some of your savings, anxiety lifts even more. Seeing that your income and outgo are balanced in both the small and big picture is a tremendously good feeling.

Second, it’s important to process where your feelings of financial unease come from. Exploring your money story can be hugely helpful, as so many beliefs we have about money are not conscious. They operate in the background creating various feelings (like anxiety!) Sometimes the roots go all the back to childhood. You may have been raised with parents who fought about money, and hearing this conflict as a young child created many feelings of fear and distrust of money.

And perhaps as a young adult, you went through huge financial stress when money was so tight you feared not having enough money for rent. These fears of our young adulthood often lurk in the background long after we have the specific fears of being short at the end of the month. Processing them with your therapist, financial therapist or money coach can be hugely beneficial in helping you feel better about money in general and alleviating long-standing financial anxiety.

So while we all go through periods of financial stress (life happens!) we do not need to suffer from financial anxiety. Financial anxiety can be overcome so you breathe freely, are excited about the future, and feel great about your money life.