ECONOMY | 10.30.2023
What financial anxiety is and how to deal with it
In situations of economic uncertainty, financial anxiety – a discomfort that can affect both the mental health and physical well-being of those who experience it – grows.
Financial anxiety is a feeling of concern, discomfort, or fear caused by financial issues such as debts, expenses, revenue, investments, savings, or adverse economic situations. This stress can be intense enough to interfere with everyday life and affect mental and physical well-being, leading to depression, cardiovascular problems, insomnia, or even alterations in the immune system. A poor relationship with personal finances can even lead to evasion and total ignorance of one’s financial status.
More and more people are being affected by financial stress in times of economic uncertainty. Some of the main reasons for this sentiment are:
- Excessive debt and lack of savings: the accumulation of debts together with the difficulty of paying them off is one of the main reasons for financial stress.
- Insufficient revenue: this type of anguish can often be caused by having unbearable financial goals or basic expenses that cannot be covered with the income generated.
- Poor investments or significant financial losses: taking risks in the financial sphere can cause sleepless nights if you stand to lose sums of money that affect your financial health.
- Occupational insecurity: uncertainty at work and the feeling of being able to lose one’s job at any time increases financial insecurity.
- Comparison and social pressure: one may experience financial distress despite having sufficient funds to cover essential expenses and being debt-free. This is because societal or environmental expectations regarding living standards or income can be unrealistic given the current circumstances.
Conquering financial stress requires dedication and time, and while the intricacies of each situation vary, there are methods to mitigate this form of anxiety, reducing its impact on daily mental and physical well-being.
- Face your financial situation: Evasion is a typical response to financial anxiety: people often avoid checking their bank accounts because, as the saying goes, “out of sight, out of mind.” This is precisely the opposite of what is recommended. It is crucial to maintain a clear understanding of one’s financial situation because, no matter how challenging it may be, it is always preferable to live with clarity rather than in uncertainty.
- Draw up a plan: set assumable short-, medium- and long-term financial goals. It is the best way to start taking action in this regard. Developing a strategy to overcome the present circumstances and having the confidence that it is attainable can help alleviate feelings of distress.
- Clean up: reduce your debts as much as possible and try to owe as little money as possible to third parties. Likewise, withdraw money from questionable investments that generate uncertainty and have a clear idea of how much money you actually have.
- Create an emergency fund: start saving to establish an emergency fund, which can provide relief from the anxiety of not being financially prepared to handle unexpected situations. Savings are the safety net of our finances.
- Maintain a lifestyle based on your income: avoid comparisons and start to lead a lifestyle that suits your financial situation. It is important not to generate unattainable expectations with our current reality and to differentiate needs from desires.
- Talk about the topic; you’re not alone: seeking professional help, or even talking about the issue with trusted people, is a great way to alleviate the feeling of stress. It is easier than you think to find people who have gone through the same situation and have successfully managed to get out of it. Moral support from those closest to us is also important if we are about to embark on such a journey, as it can be very difficult not to lose heart and fall back into a spiral of distress and discomfort.
At MAPFRE, we know how important it is to have a financial well-being that does not negatively affect our mental and physical health, so we want to contribute to improving financial literacy. Knowing how to deal with economic and financial environments is crucial for not only getting out of a situation of financial anxiety, but also for gaining confidence and achieving personal and professional success.
MAPFRE has a wide range of articles that will help you learn quickly and easily with practical advice that you can apply in your daily life. We also offer several financial products that can help with financial anxiety, such as life savings insurance or mutual funds (managed by MAPFRE AM), suitable for all risk profiles. In addition, it also offers a financial advisory service through MAPFRE Gestión Patrimonial.