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Feeling Anxious? Depressed? It Might Be Taking a Toll On Your Finances

Dayana Yochim  |  February 28, 2020

Identifying the emotional triggers that are sabotaging your financial life — the “why” behind the “what” — can lead to behavioral changes that pay positive financial and psychological dividends.

“Historically we have assumed that finances are rational,” says accredited financial counselor (AFC) Linda Matthew, owner of MoneyMindful Personal Finance Coaching. But it’s not the math that trips us up, it’s the way we interact emotionally with our money. And, she warns, we ignore the emotional side at our peril.

Consider the person who is always late paying their bills. They just can’t seem to bring themselves to send in money on time, even though they have more than enough money in their checking account to pay all their obligations in full and on time. So late fees pile up, utilities get suspended, family members grow frustrated and anxiety levels spike.

Then there’s the couple dealing with one spouse’s manic spending sprees. The inability to address the issue together in a nonjudgmental and productive way puts a huge strain on their budget, and their relationship. 

And what’s up with our own inability to make progress on a financial goal we rationally know we can achieve? That loop of negative self-talk running in the back of your mind isn’t motivating you to make changes: It’s merely keeping you up at night. 

You can’t “math” your way out of this 

Being shown how much you’re racking up in late fees, credit card debt or even that you’re financially on track to achieve your goals won’t magically cure financial anxiety. But identifying the emotional triggers that are sabotaging your financial life — the “why” behind the “what” — can lead to behavioral changes that pay positive financial and psychological dividends.

For those who get sidelined from making progress by some internal opposing force, financial therapy can help. 

Whereas traditional financial planners address the dollars-and-cents aspect of money management, financial counselors (aka financial therapists) approach money issues through the lens of life coaching. These practitioners are not licensed psychotherapists and not all carry the official Certified Financial Planner designation. (When necessary, they’ll refer clients who could benefit from deeper, more specialized help to appropriate professionals.) They help clients understand the underlying cause of their money troubles and come up with ways to change unhealthy financial behaviors.

“Usually people come to me because they are feeling anxious, afraid and ashamed of their money,” says Holly Morphew, AFC, founder and CEO of Financial Impact. “As a financial counselor I’m holding their hand as they go through the process. I’m holding them accountable but also giving them space to have organic, non-judgemental conversations about their money.” 

Morphew was contacted by the couple described above who struggled with the wife’s overspending. The husband described how she needed to have massive quantities of food in the fridge at all times. At first the wife was unable to see that there was an issue, or what was motivating her behavior and why she felt anxious when the pantry wasn’t overflowing. It later came out that childhood trauma — being neglected and often under-fed — manifested in her shopping because of fear. 

That’s not the kind of insight you get from financial software.

More on HerMoney: How to Move Past Childhood Money Scarcity Anxieties

Face your fears, you’ll feel better

When clients first come to see MoneyMindful’s Matthew, she asks them how they are feeling. “Ninety nine percent of the time they say, ‘fear.’”

Take the chronically late bill payer described above. On the surface it’s perplexing: The person has the means to pay their bills, but something’s clearly blocking them from releasing the money. 

Matthew has seen this behavior in people who did not have a lot of money in the past. Clinging to money has become a habit that they’re not even aware of as a way to deal with the fear of letting go of the precious resource, even if it’s no longer scarce.

Vague, unspecified fears are often the fear of the unknown, she says. The first step in combating the fear is to dive into the numbers — savings, debt, spending, etc. — to know exactly where a person stands. “You have to have it written down before you can see what it is,” Matthew says. 

From there she works with clients to map out specifics of what to do going forward and how to accomplish those tasks. 

The emotional payoff of getting to this point is huge: “It helps tremendously to get clarity on where your finances are… to have this one area of life making sense,” Matthew says. When she asks clients how they feel after this exercise, they almost always say, “I feel so much better.”

More on the HerMoney Podcast: Finding the Courage to Face Your Fears

Dealing with all the financial feels

We’ve all got money hangups. Here are some tips to start exploring and overcoming the emotions that sideline financial progress:  

Don’t ignore discomfort: It’s a signal that there’s emotional work to be done. If you’re struggling to make progress explore why. If you’re not motivated to take action, it could be that the money goal you set isn’t the right one for you. If you’re numbed-out even when your finances are in tip-top shape, perhaps you’re putting money and energy into things and people that don’t truly spark joy. 

Know where you stand and where you need to go: Both Matthew and Morphew emphasize how important it is to not deal in hypotheticals. “Our heads are no place to work out these numbers,” Matthew says. Put it all on paper — your current financial picture as well as specific goals and steps to get there.

Put a system in place: Once you’ve figured out where your money needs to go, put your finances on autopilot. Whether it’s making automatic monthly debt payments or automatic transfers on each pay day into an emergency fund or retirement savings account. This helps minimize daily decisions, says Morphew: “Otherwise if we don’t have a system, our money is just going to go away because it’s meant to be spent.”

Schedule a weekly money hour: “Money, like exercise, is something you have to do on a regular basis,” Matthew says. Progress doesn’t magically happen on its own. You can spend your money hour paying your bills, checking in on your budget, totaling your savings or dealing with sticking points. 

Seek help: There is no reason to struggle through this alone. The Association for Financial Counseling & Planned Education and the Financial Therapy Association have searchable directories of practitioners. Some come from a psychology background and others from the financial advice world. Most will provide a free initial consultation to see if it’s the right fit.  

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