Your Money Stress Isn’t Your Fault: What the K-Shaped Economy Is Doing to Our Brains

There’s a feeling a lot of women are having right now that’s hard to name. It’s not exactly anxiety, it’s not exactly anger. It’s more like confusion, like one day the math just stopped working. We’re earning more than ever, doing everything we were told to do. And yet buying the house or paying down the mortgage feels further away than it should, the number we need to comfortably retire keeps growing (it’s currently sitting at around $2 million), and a full grocery run now costs as much as a car payment used to.

So what’s going on? This week on the HerMoney podcast, Jean Chatzky sat down with Hanna Horvath, CFP, personal finance journalist, and writer behind the Substack Your Brain on Money, to find out. 

Here’s what you need to know.

What the K-Shaped Economy Means for You

The K-shaped economy is a term economists have been using for a few years now, and if it’s felt abstract, here’s what it means in plain terms. Picture the letter K. The top line goes up. The bottom line goes down. And the middle hollows out.

Jean Chatzky: You write about two different kinds of squeezes happening right now. Material precarity, which is where the basics are genuinely slipping away, and positional precarity, which is where you make good money, and it’s somehow not enough. A Harris poll found 64% of six-figure earners now say that their income puts them in survival mode. What’s it going to take for us to spin out of this problem?

Hanna Horvath: I think this is one of the biggest behavioral challenges when it comes to personal finance and our current economy, where we have an economy that’s becoming increasingly stratified. If you think of the idea of the K-shaped economy, you’ll get a group of people who genuinely cannot afford the basics, and then you’ll get people who can afford the basics, but they thought their money would stretch much farther. 

And that, as you said, is positional precarity. A lot of the solution really does come at the policy level, and recognizing that this type of wealth stratification is an issue. There are a few individual things you can do, but at the broader level, that’s where most of the big change needs to happen.

Four Ways Economic Anxiety Shows Up

Hanna has identified four specific money behaviors that emerge when economic anxiety takes hold. Her key point is that none of them are irrational. They’re all predictable psychological responses to a system that’s stopped delivering.

Doom spending (also called revenge spending)

When big financial goals, such as a house, retirement, or real stability, feel permanently out of reach, the brain looks for something it can control. “Your brain is just looking for an action to self-soothe,” Hanna explains. “I know I’ll never be able to afford a house, but I can afford this new pair of shoes.”

The problem is that the relief is short-lived. And the guilt that follows often sends us right back to the behavior, what Hanna calls “the flywheel.” Jean Chatzy’s suggestion: a 24 or 72-hour pause. Getting out of the loop long enough to recognize that the purchase won’t solve the underlying problem can make all the difference.

The financial freeze

This one is harder to spot because, on the surface, it can look like responsible money management. But there’s a version that becomes paralysis, not investing out of fear of picking the wrong thing, not looking at bank accounts because engaging with them means confronting how precarious things feel. 

“Doing nothing is a decision,” Hanna says. “And it has a cost.” She thinks this is particularly common among women, who are often socialized to defer to experts and wait until all the information is in before acting. The problem is that in investing, we’ll never have all of the information. That shouldn’t prevent us from putting our money in the market.

Financial nihilism

One third of Gen Z say they believe they’ll never own a home. Only 36% have any investments at all. Hanna frames this as the “system is rigged” opt-out mentality. While it’s often discussed as a young-person phenomenon, she sees a version of it among women at every stage of life. 

For women, especially, the financial system has real structural failures. Retirement accounts and Social Security reward full-time employment and penalize caregiving, career interruptions, and part-time work patterns. “There’s this feeling of: this entire system was not designed for me, so what’s the point?” Hanna says. Yet, when we’re not participating, we’re missing out on gains that could help down the road.

Speculation

Crypto, prediction markets, day trading, sports betting, and taking bigger swings than usual. “It’s hard to fault people for wanting to get rich quick if they’ve lost faith in their ability to get rich slow,” Hanna says.

When traditional wealth-building feels inaccessible, the “just bet it all” play starts to seem rational. Instead, she wants us to legitimize the frustration with the system while walking through the actual risk — what’s the real probability that the bet pays off, and what happens if it doesn’t?

What We Can Actually Do

Hanna is clear that a lot of this requires systemic change and policy solutions at the local and national levels. But there are things that can be done individually, starting with awareness.

Jean Chatzky: What do we do? How do people maneuver in a K-shaped economy?

Hanna Horvath: We’re in a very consumerist economy right now. And a lot of that is driven by aspiration. Aspiration is the engine of consumer culture. It wants you to be in a place of lack in order to spend money. Because if you feel discontent, you’re more likely to spend. 

Understanding that gives you a lot of agency, and understanding that this entire world is designed to make me feel bad about myself, so I go buy this thing, and how can I individually get to a place where I feel like I have enough, or what actually is bringing me joy in my budget?

MORE ON HERMONEY:

• Stock Market Predictions for 2026: Stephanie Link on How to Invest Through War, Tariffs, and the AI Power Boom
• Ask Jean: What’s the difference between a home equity loan and a home equity line of credit?
• Why Healthcare Might Be The Biggest Threat To Your Retirement Plan

Ready to take control of your financial future? Join InvestingFixx, Jean’s twice-monthly women-only investing club, where expert stock pickers bring ideas to the table, and a community of women learn and win together. Your first two classes are always free.