How to Reduce Money Anxiety—Compassionate Advice from a Finance Pro

Worried about bills? Not sure if you're saving enough? Feeling uncertain about your financial future? Many are worried about their personal finances. We talked to Money Girl Laura Adams for advice on how to reduce your money anxiety by setting the right priorities and knowing some insider tips.

Jade Wu, PhD
12-minute read
Episode #312
The Quick And Dirty
  • Managing personal finances, especially during times of stress or change, can be daunting and anxiety-producing.
  • The first thing to do is to stop avoiding or procrastinating. Remember that your financial situation doesn't equate with your self-esteem and value as a person! 
  • Gather information about your expenses, debts, income, and creditors. Knowing the facts empowers you.
  • Talk to your creditors and ask how they can help. Don't be shy! They may very well have ways to help ease the burden. 
  • Explore ways to earn extra income through a side gig, especially if you have more time now due to unemployment or working from home. 

Even in the best of times, managing personal finances can be daunting. When and how much should I save for retirement? How do I get out of debt? Does my budget make sense? What the heck is a 403(b)? But things can feel even more dire during life or career transitions, after unexpected expenses, or especially when there's a global financial downturn.

If you experience money anxiety, you're certainly not alone, especially right now.

Sometimes, money questions can feel so overwhelming that we avoid thinking about it, letting the bills pile up, or not checking our credit score. Sometimes the opposite happens—we can't stop worrying, and we feel stuck in making financial decisions for ourselves and our families. If you experience money anxiety, you're certainly not alone, especially right now when there's so much uncertainty and change in the economy. 

How can we dial down the anxiety meter so we can keep our heads and make wise money decisions? I talked to a money expert to find some answers.

And not just any money expert. I talked to Laura Adams, one of the nation’s leading personal finance and small business authorities. As an award-winning author, media spokesperson, and host of the top-rated Money Girl podcast since 2008, millions of readers, listeners, and loyal fans benefit from her practical advice. She’s written multiple books, and the latest title is Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers. I love her work not only because she's got great practical advice, but also because she brings empathy and compassion to all her listeners and readers. Below is a lightly edited transcript of our conversation:

Jade Wu

Welcome to the show, Laura. We're so excited to have you with us.

Laura Adams

Thank you, Jade. It's really fun to be with you.

What are the most common money anxieties?


What are the most common money anxieties that you hear about from people? And are there any ones lately that are particularly salient?


I think a big [source of] anxiety is just not getting started early enough. I think a lot of people reach middle age, maybe even they approach retirement, and just feel like they haven't done a good enough job of saving. That's pretty common. Even people who've saved a lot will also feel anxious. So if you are starting earlier, I think that can give you a sense of peace and security that at least you have a plan in place.

And certainly, right now, people are anxious about burning through their savings, if they've lost their job, if they're dealing with fewer working hours, more instability in their work life, and maybe they have already burned through a lot of savings and they're worried:

  • What am I going to do next?
  • Should I be using my credit card?
  • Should I be tapping my retirement account?
  • Where should I either be pulling more money or what bills should I be prioritizing?
  • Should I stop paying certain bills or should I only be paying minimums on certain bills?

So there's definitely a lot of anxiety right now. I think about just managing cash flow and making sure that people are tapping their savings in a smart way. And maybe also how they can also continue to save—should they be saving for retirement or should they just totally cut that off and pause those contributions while they get their financial house in order or play catch up due to the pandemic?

How can you avoid making emotional money decisions?


I can so relate to some of those anxieties you just listed. And especially during this time, I think there's just extra anxiety and uncertainty floating in the air. And I think you tapped into a really important point, which is that there are a lot of emotional decisions around personal finances. And right now people are maybe having to make a lot of decisions that, perhaps, they were not planning on making yet, or just not ready to make. So, what are some examples of emotional decision making and how can we avoid the pitfalls of falling prey to not thinking rationally?


I do think that there are tons of emotions with money, both good and negative. Some of the most emotionally fraught money decisions have to do with our self-esteem. I mean, if we feel like our standing with our finances equates to our self-esteem, how we view ourselves or how other people see us, we can kind of combine those into our decision making in a way that's not wise.

I can guarantee you that whatever financial challenge or problem that you're dealing with, there are people who are dealing with far worse.

So for instance, let's say if you're really embarrassed about the fact that you're behind or having difficulty with payments, you maybe will procrastinate a little bit. Maybe you don't reach out to your lender to ask for help. What can I do? What should I be thinking about? And that's because you feel embarrassed about it, but the reality is there are a lot of people in the same boat you're in. Everybody's dealing with a problem, and I can guarantee you that whatever financial challenge or problem that you're dealing with, there are people who are dealing with far worse.

So putting that in perspective, I think, is really the key. And realizing that you're not alone, that there's nothing to be embarrassed about. And the faster that you meet a financial challenge, the better your options, the more options you're going to have, the more flexibility.

So having the conversation with the lender, and just being honest and not feeling shy about that, is going to give you more options in the long run. So that's an example of an area where owning up to your emotions and just not letting that stop you is important. You just can't let it put up a barrier to finding solutions. If you're not looking at the solutions and you're just dwelling on the problem, you're dwelling on the negative, you're really not going to ever give your yourself the opportunity to move forward.

How should you manage a personal financial crisis?


I love that answer because it's not only so practical but also very compassionate. And I think that's the wisdom in it because we're all humans. We're not totally rational all the time. These emotions do play into our decisions and we do sometimes feel shame or feel embarrassed. So I super appreciate that piece of advice. And you know, one of the other things I love about your podcast, in addition to the compassion that you bring, is that you give people very clear priorities for what to do first. In this moment, in these very uncertain times, what would you advise people to prioritize if they're feeling kind of wobbly or uncertain about their personal finances?

Funnel money you're not spending on clothing and dining out into savings


I do think that having as much savings as possible right now is a really good way to help yourself feel better. We're not going out to dinners these days! We're not buying clothes for work or for fancy events. Using those savings from those types of things that you're not buying—if you can funnel that into just an emergency fund or even continue to invest for retirement, you can continue on that path and be in a good place. I think just keeping those good habits are really one way to feel like Okay, maybe I'm a little uncertain about the future, but at least I know that I've got some savings there to back me up if need it.

Make sure that you are not paying creditors who are knocking at your door asking to be paid before you are taking care of yourself and your family and your basic needs.

Take care of yourself and your family before paying creditors

And if you're somebody who is really struggling, you're not able to make any retirement contributions or save, just make sure that you're taking care of your family, make sure that you have your needs taken care of—that's food, that's shelter. Make sure that you are not paying creditors who are knocking at your door asking to be paid before you are taking care of yourself and your family and your basic needs.

Communicate with your creditors

I mean, that's just something you're going to face up to. There may be some of your creditors that don't get paid, or they're just going to get minimum payments from you, let's say on a credit card. And if you are living on a credit card, you're going to need to maintain at least the minimum payment. If you're a homeowner, go to your mortgage lender and ask: “What are the options? Can we temporarily suspend payments?” Or maybe ask your landlord, “Can we suspend payments?” Figure out where you can kind of push some creditors and people off temporarily so that you can take care of yourself and your family. Don't pay other people before you pay yourself, basically,

How to manage your finances when you've lost your job


That's so refreshing to hear. I think it's so helpful for people to get permission to take care of themselves and their families. Because I think often the advice we hear is: “Do whatever you can to keep the wolves at bay,” and maybe not so much compassion. So that's lovely to hear. And this really, I think, speaks to the financial hardships that many people are finding themselves in these days, much more than usual. So do you have any specific advice for people who recently lost their jobs due to COVID-19, especially given that we don't really know when all of this is going to go back to “normal”?


Communication is the key, as we mentioned—just talking very honestly with your lenders, your creditors, and making sure they know the challenges you're facing. If they don't know, they can't help you. They can't put some solutions forward. And I would say also before you have those conversations, think about what really would help you. What is going to be the best [approach]?

Have a couple of proposals to put forward, thinking it through and creating a plan ahead of time. If you've got some solutions that you can propose a creditor may be willing to take you up on it.

Also, have your financial information handy. They're probably going to ask: “What's your income? What are your expenses? What savings do you have?” Gathering all that information is not only going to help you, but it's going to help your creditors help you as well. And it's a great time as you gather up your information to see: What are my expenses? Where can I cut back? What are the essentials that I'm going to need to hang on to?

Cut back on things that you can live without. And you know what they are. We all know what they are. We don't want to cut them, but it's temporary.

Try to figure out ways to lower your expenses. Shop around. Figure out: Can I reduce my internet plan, my cable plan? All of these things that you probably need right now, you might be able to do with a lower tier of a subscription or plan. You might be able to get some help from utility companies to get some forbearance right now.

So really gathering your information and cutting back those things that you can live without. And you know what those are. We all know what they are. We don't want to cut them, but you know, it's temporary. If you think about this as a step in the right direction, to get me back on track, this doesn't mean that you're never going to be able to, let's say, go to the gym again, or never going to be able to have cable again. Think about what are some sacrifices that you can make in the short term that will really help you. It won't be forever. You're going to get income coming in again, and you're going to be able to get caught up.


Wow. I have to say, I never even knew that was an option to talk to creditors to come up with compromises. That's really interesting to know. So, from what you've said so far, I'm hearing some themes: Getting out of our heads and our rumination and instead, doing more strategizing, putting together our information, organizing our information, reaching out for help, reaching out to creditors, making a budget, actively talking with our family members to see where we can make sacrifices and where we can't. So basically, would it be fair to say "Think less, do more?" Or to worry less and do more?


I love that. Yes, absolutely. Because until you start having conversations and really looking actively at your own financial situation, you probably aren't going to see solutions. It's only when you start digging into it and you say, "Oh, I didn't realize I'm paying this much for this particular subscription. Let’s cut back on that." Or "Oh, I forgot that we were subscribed to this thing and we should probably cut that." Or you go to the lender and they say "Hey, we have this program that is a grant that we can give to certain families in a particular county to help them with their utility bills for a certain period of time." You're just not going to know what's available until you start probing and asking. And as you said, it is worrying less and just communicating more.

You're not going to know what [financial help] is available until you start probing and asking.

The question that you want to ask [creditors] is: “How can you help me? Here's my situation. How can you help me?” If you're not asking for that help, they're not likely to just call you on the phone and say "Oh my gosh, we have this wonderful deal for you." And this is something that I always see when it comes to insurance—auto insurance, home insurance. These are other areas where you can probably get some savings simply by shopping, asking your carrier "What discounts do I qualify for? What else is out there?"

Nine times out of ten, there is something that you're missing. And the carrier will come up with it. Oh, you work in a certain occupation. Oh, you're married now, and you were single when you previously got the policy, but now you qualify for a discount. Oh, your credit is better or worse. So there's just a lot that we don't know until we start asking for help. And then all of a sudden it's like all these options open up and you can move forward.


So, don't be shy. Ask, investigate, research, strategize, and just see what's possible out there.


Not every creditor will be able to help you, but I guarantee there will be some who can.

Yeah. And certainly, it's easier said than done. I know a lot of people would rather put their heads in the sand and just wish that all of this would go away. But the reality is, you're not alone, you know? So don't be shy. Don't feel that you just don't have the options—they're there. So, you know, feel confident in your ability. And not everybody that you talk to is going to have a solution, but I guarantee you, there will be some of your creditors who can, and some of your financial arrangements can be improved or helped just by having those conversations. So it's worth it. You might hear a couple of no's, but you're going to also hear some yeses when you start having those conversations.

Is there hope during financial uncertainty?


That's so encouraging to hear. And my final question: Is there anything hopeful you can tell listeners who are facing uncertainty right now? Anything else you'd like to share?


Yeah, I do think that we have a lot to be thankful for. The stock market is still in good shape, so investing is still a great thing to do.

And that's something a lot of people have been asking right now is "Hey, you know, the stock market is so volatile. Should I continue saving for retirement?" And my answer is always, yes. There's always going to be volatility. So if you can afford to continue making your retirement contributions, don't let the volatility of the market keep you away. It's going to increase over time. Yes, there are going to be dips, but over time, there's going to be a rise. So continue thinking long-term. Don't get stuck in short-term thinking. So if you can continue it, by all means, continue the good habit of saving.

If you can afford to continue making your retirement contributions, don't let the volatility of the market keep you away.


I thank you for being a voice of reason and compassion in this time when many people are feeling unmoored or uncertain about their financial outlook. Any parting thoughts for our listeners?


I would also say if you're somebody who’s looking to start a business because you are looking for more income, that's another thing that many people are doing. They're finding the time to start a little side gig, maybe working in the on-demand economy. There are a lot of opportunities to make a little extra money or a lot of extra money, depending on how much time you want to devote to it. So that's an option.

I call it solopreneurship—solo and entrepreneur. There are actually over 26 million small businesses right now. And a majority of them are solo businesses. They are one person owners that have no employees. So, you know, if that's something that you're interested in, I would love for your listeners to check out my new book. It's called Money Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side Hustlers. And it will kind of take you through the process of starting a small business. For a lot of people, it might be a way to use your talents and turn a hobby into something that could be a moneymaking venture right now.


This is actually a potential opportunity for many people to take something they've been passionate about before but didn't have time for, and now they have an opportunity to take it further!


Yeah. That's a great way to think about it. I mean, if you are somebody who is still working a full-time job from home, but you're not commuting, you might have an extra couple of hours in your day that you used to spend in the car. And now if you're working from home, that may be an opportunity for you. I know a lot of people have a lot going on at home, especially if they've got young kids, but if you do have an interest in starting a side business, it can be a really great way to continue your saving, continue the retirement contributions, and feel like you've got a little bit more security with multiple streams of income. Having a couple of different income sources is another way, in my opinion, to reduce anxiety.

All content here is for informational purposes only. This content does not replace the professional judgment of your own mental health provider. Please consult a licensed mental health professional for all individual questions and issues.

About the Author

Jade Wu, PhD

Dr. Jade Wu is a licensed clinical psychologist. She received her Ph.D. from Boston University and completed a clinical residency and fellowship at Duke University School of Medicine. Do you have a psychology question? Call the Savvy Psychologist listener line at 919-533-9122. Your question could be featured on the show.