Managing Financial Anxiety

Financial anxiety is a term used to described the overwhelming sense of panic related to money problems. Almost everyone experiences some form of financial anxiety from time to time. It takes on many different forms: an unexpected emergency, a forgotten bill auto-drafting, losing your wallet, or a reduction in hours at work.
Money makes us all crazy. So how do you deal with financial anxiety?


The basic steps to managing financial anxiety are very simple. You need to create a financial UPPER:.

  1. Understand your current financial situation.
  2. Plan for your finances.
  3. Practice your plan.
  4. Edit the plan as needed.
  5. Raise your financial situation.


Step 1: Understanding

Starting Out

First, you need to become aware of your current financial situation.
Do you know how much money you make each month?
Do you know how much money you spend each month?
Do you know where your money goes? All of it?
Below are a few questions to ask yourself. Be aware that answering all of those questions might increase your financial anxiety a bit.

  1. How many times did you eat out last month?
  2. How many times did you stop for coffee, tea, or another drink last month?
  3. How much did you spend on groceries last month?
  4. Do you know all of your spending categories?
  5. Do you have limits on your spending categories?
  6. Do you know how to find the answers to these questions quickly?
  7. Did you just look at your bank statement to find the answers?
  8. Is this how you make spending decisions normally?
  9. Do you think there might be a problem with this?
  10. Are you ready to move on to figuring your situation out?

Take a minute to write down your monthly income, all bills and debts, and any other important information.

Step 2: Plan

Now you need to make a plan (or budget). If you’ve created a budget before, awesome! If not, I’ll walk you through all the steps.
List all of your bills. List all of your important spending categories. List ALL spending categories. Here are several categories that are often overlooked:

  • vacation fund
  • emergency fund
  • savings
  • retirement
  • pets
  • holiday shopping
  • car maintenance
  • property taxes
  • yearly bills
  • new car fund
  • home repairs
  • new furniture fund

Now look at your bank statement(s) and credit card statement(s) for the last month. Write down how much you spent in each category (or if you use Mint look at your pre-generated list).
Add up your total spending for the previous month. Now compare that amount to your monthly income. If you spend more than you make, you have a reason to be anxious. If you spend less than you make, you’re off to a good start.
Regardless of where you start, you can make positive changes to get your finances to a less anxiety-producing level.
Before you continue, you need to do 2 things:

  1. Stop putting things on your credit card
  2. Get your expenses down to less than you make each month

While it is best to do these 2 things immediately, it may require some time to fully make this adjustment.

Creating A Budget

A budget is simply a plan for your money. Typically budgets are created for the month but you can create whatever kind of budget works best for you.
To create an effective budget, list all your spending categories to plan for the following month.
Next, you need to create reasonable limits for all spending categories.  You can estimate a reasonable grocery budget using the USDA Cost of Food Chart.
Be sure to include a savings category in your budget. It can be saving in general, an emergency fund, retirement, etc. Just save something.
Most importantly, look for ways to spend less to make the most of your monthly income.
Don’t waste money on food waste, impulsive purchases, or anything related to keeping up with the Joneses. It’s far better to drive a reliable, modest car than to continue going into debt each month for a flashy new car.
And look for ways to increase how much you can put towards your debts since those are likely the biggest source of your financial anxiety. Check out my Complete Guide to Creating A Successful Debt Repayment Plan for more information.

Step 3: Practice

Now that you’ve created your plan, it’s time to follow the plan. It’s difficult at first to reduce spending but if you want to be successful you’re going to have to make some changes. Read 4 tips to control your spending.
Remember, your plan is only useful if you follow it. Otherwise, it was just a waste of your time.

Step 4: Edit

As you continue to follow your plan, you might notice your original version doesn’t fit your needs anymore. It’s time to edit your plan to work better for you now.
Make any needed changes as you go along, provided you don’t go back to spending more than you make or putting everything on your credit cards.
Do what works for you.

Step 5: Raise

As you keep rocking your plan, you’ll notice an improvement in your ability to handle your finances and reduce your financial anxiety.
You can also improve your finances by adding another form of income. This can be a hobby, starting a business, starting a blog, babysitting, dogsitting, baking, sewing, writing, transcribing, or anything.
If you can add a side hustle to your income stream, you’ll decrease the amount of time it takes to get your finances back in order.
Financial Anxiety UPPER


Reduce your financial anxiety with UPPER.

  1. Understand your current financial situation.
  2. Plan for your finances.
  3. Practice your plan.
  4. Edit the plan as needed.
  5. Raise your financial situation.

Share your best tips for managing financial anxiety below!

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