Overcoming financial fears and phobias

Money, finances and investing can cause fear, anxiety and uncertainty for many people. While money anxiety is often associated with those who struggle financially, it is surprisingly common among wealthy individuals and families who have financial security but do not necessarily feel secure.

Financial fears can lead to significant challenges, and they are often rooted in negative experiences from childhood or earlier stages of life.

The good news? Financial fears can be overcome with a better understanding of what is causing them and a few intentional steps.

The impact of financial fear
Anxiety about earning, saving, spending and investing can affect anyone from time to time, especially after a job loss or during market volatility. For some people, however, those feelings become chronic.

Here are a few ways financial fear can affect daily life:
• Avoidance: Fear often causes people to avoid important financial decisions. That might mean putting off paying bills, delaying retirement planning or avoiding investing altogether. In some cases, people become so anxious about money that they hesitate to spend even on necessities.
• Overspending: Others respond in the opposite way by using spending as a coping mechanism. Without a budget or financial plan, excessive spending can jeopardize even a strong financial future.
• Poor retirement preparation: Financial fears may prevent people from saving and investing consistently. Others become either too conservative or too aggressive with investments, making emotional decisions that may work against their long-term goals.
• Lower workplace performance: A 2022 study published in the Journal of Vocational Behavior found that people experiencing financial anxiety often have lower work performance, become more easily distracted and experience emotional exhaustion.

Action steps to consider
If financial fears are holding you back, consider these strategies:
• Get clear on the cause: Financial anxiety is often connected to past experiences rather than current reality. Someone who grew up with financial insecurity may continue to worry despite being financially stable today. Others may feel pressure to spend based on family or social expectations. Understanding the source of those feelings is the first step toward addressing them.
• Learn more about financial topics: Education can reduce uncertainty. Whether it is understanding how markets work, learning about retirement planning or gaining confidence in your financial strategy, knowledge often helps replace fear with clarity. A trusted financial adviser can also provide valuable perspective and answer questions as they arise.
• Align money decisions with your goals: Having clear financial goals can make decision-making easier. Whether you are planning for retirement, supporting your family or creating a legacy, keeping your long-term objectives in mind can help guide your financial choices.
• Have regular financial check-ins: Financial concerns often feel larger when we keep them to ourselves. Regular conversations with your financial adviser can provide perspective, help address concerns and keep you focused on your long-term plan.
Money should not be a source of constant fear or anxiety. If financial decisions leave you feeling overwhelmed or uncertain, know that help is available. With the right guidance and a thoughtful plan, it is possible to overcome financial fears, build confidence and develop a healthier relationship with wealth.

Thomas M. Dowling, CFA, CFP®, CIMA® is the Head of Wealth Management at Alliance Global Partners of the Lowcountry on Hilton Head. He can be reached at infohh@allianceg.com or (843) 420-1993.