This post is all about manage your anxiety about spending money.
It’s completely normal to be stressed out when you need to spend money. Whether it’s rent or Christmas gifts or treating yourself, dropping money when you have goals in mind is tough.
Half the time, I’m guessing your financial situation isn’t near as bad as you think it is, but you grew up in a family where money was scarce so you’re used to that way of thinking.
Or maybe you don’t have a ton of money and you don’t get to spend much of it on anything but the basic necessities, and that sucks. Either way, you need to know when you’re spending money because you need to be and should be or the money you’re about to spend really isn’t going to do you any good.
This post is all about overcoming your anxiety about spending money.
WORK THROUGH YOUR ANXIETY
ABOUT SPENDING MONEY:
1. Change the Way You Think About Money
When we’re stressed about money, nine times out of ten, it’s about how we grew up with money (or didn’t). The way our parents felt about money, whether they knew what they were doing or had zero clue, affects the way we deal with money.
We don’t usually realize it until the worst possible moment when we absolutely need to not have our money trauma come out. You know those moments when you’re paying rent then have to buy Christmas presents and, bam, you’re way too stressed out.
2. Develop a Budget
First thing’s first, you need to understand your money. This means you need to know all of the money you have coming in and all of the money you have going out. Open up a Google or Excel Spreadsheet (I’ve linked my favorite free and paid budget trackers here) or get out a piece of paper and pen.
Now, write down the numbers. Don’t forget any of your income (it’s best to use your average income for planning purposes) and include every single expense. Total up the things you can’t live without—AKA your rent/mortgage, insurance, groceries, retirement contributions (we’ll get to this later, so don’t freak out), car payment, etc.
Now, total up the stuff you choose to buy. This is everything from treating yourself to gifts for others to that cute little trinket Facebook got you to buy.
3. Identify Savings Goal
Once you know the amount of you make versus spend, you need to decide what your goals are and how much money it’ll take you to get there. You may not have a ton of (or any) money left to even think about saving, but having goals will get you thinking in the right way.
Think about those big ticket items that you love and that also require lots of money. We’re talking vacation, house, car. Other things can go on that list as long as they benefit you in a real way. For instance, a vacation helps burnout. A house gives you equity. A car gives you mobility.
4. Make a Spending Plan for Gift Season
The holiday season and birthday seasons should never catch you off-guard or stress you out because you don’t know where the money is coming from. First, if you don’t have the money to spend on your own basic necessities (I’ll let you decide what those are for yourself), then it’s a good idea to set boundaries with loved ones.
Every situation is different from how understanding loved ones will be to what your definition of basic necessities is compared to theirs. So, these types of boundaries conversations will be difficult, and yet they can be as simple as “I’m struggling this year, so I won’t be able to buy as many gifts.”
Then, you can follow up by providing other types of gifts: i.e. do an act of service, craft something, or make food. However, if you’re struggling with the amount of money you need to spend all at once and you get anxiety about spending money (because it can be a lot and it comes once a year), your solution is a plan.
Determine when you’ll need to spend extra on gifts and how much you want to plan on spending so, when that time comes around, you’ll be prepared to pull that money and spend it on loved ones.
5. Schedule a Weekly or Monthly Check-In
The most important step you can take in caring for your finances is making it a habit. Set aside a weekly or monthly check-in to identify where your money is coming from, where your money is going, and any issues that arise on your bank statements.
These check-ins are a great time to compare your spending to your budgeted goals. Depending on how happy your spending habits are making both present and future you (think instant versus delayed gratification), you might want change your spending habits or update your budget.
Use these check-ins to decide how well your money is serving you and how you can make it serve you better. This might mean spending less money on going out to eat so you can save for a vacation faster. Or you might adjust the numbers on your budget because you value eating out enough to save more in other areas instead.
6. Surround Yourself with Financial Education
Knowledge is power, as the saying goes. The more you read from news articles, blogs, and books, the more you’ll understand how to set yourself up for financial success—whatever that means to you.
We don’t get financial education in school, and rarely do we get it in the home. Therefore, to get a handle of your anxiety about spending money, subscribe to some financial experts to get fresh info in your inbox weekly. You can also read a couple of their blogs to get ahead of your finances.
At a certain point, the more you read, watch, and listen, the information will get repetitive. Until the information gets repetitive, continue actively searching for financial information to help you reach the goals that only money can help you achieve.
7. Do Your Homework Before You Sign Up
If you’re anything like, decisions stress you out. Financial decisions? Forget it. They take me FOREVER because I’m constantly worrying about being too naïve to make a good decision—don’t listen to that voice.
Understandably, being told not to listen to that anxious voice never works. So, for those times when it doesn’t, we can rely on straight-up information. When you apply for a credit card or open some sort of account (perhaps a HYSA like we’ll talk about in #8), read the fine print.
Google the company and the product you’re looking into. Figure out if it sounds too good because they’re advertising or if it’s actually just that good. My favorite give-into-the-anxiety habit is to search for the con.
When you’re looking to open a HYSA or applying for a new credit card and the rewards are WAY too good, look for the where they get their money. (Spoiler alert: credit cards typically make their money from the interest of other customers, subscription fees, and businesses paying for you using the card at their location).
Make sure you’re getting the best rewards for you or the highest APY by using a myriad of tools (linked here). These tools will help you make sure you’re getting the perfect card for you and the highest APY that works for you.
Keep in mind that these companies all use your data and will send you emails once you sign up, but I think it’s worth the information they provide. (That’s a decision you have to make.)
8. Open an High-Yield Savings Account
When you hold any type of money in a bank, you should put the vast majority in a High-Yield Savings Account (linked my preferred bank here). Banks will give you back a small percentage of the money you put in, which is not much. But, if you can make your money grow without putting it in the stock market, you should, especially if, being anxious, you’re risk-averse.
You should put in large sum of savings into this account that you’ll need within the next five years. Otherwise, you can invest it into the stock market, which provides a much higher return but can also come with short-term losses that require a few years come back.
9. Build Up an Emergency Fund
After you’ve come up with a financial plan, your emergency fund should be top priority (even above debt to keep you from getting more debt). Your Emergency Fund should be in your HYSA because it always needs to be accessible—given that it’s there for emergencies.
Once you build up this fund that covers three to six months of non-discretionary expenses (i.e. rent, groceries, insurance, etc.), you need to either make it physically or mentally inaccessible. This is essential to controlling your anxiety about spending money because an emergency fund is your safety net.
Put it in a different bank and delete the app or avoid thinking about it as part of your income. This fund is designed to help you out in the event you lose your job and need to support yourself for months at a time while you get another job.
10. Open a Retirement Account
If you don’t already contribute to a 401k (or something similar) through your work AND contribute to an Roth IRA, let’s get you started. Whether you’re in college and penniless or in your forties and stressing about not having an IRA yet, it’s the perfect time to set one up.
The best thing for any investment is time. The longer you get the money to sit in your account, the better growth you’ll see on the $500 you put in on a monthly basis.
11. Change Your Budget to Work For You
Your money needs to work for you. This is understandably difficult if you live paycheck to paycheck and it’s certainly a privilege to say that money is a tool rather than a source of stress.
For those of us who have grown up with financial trauma, it takes time to fully understand what financial freedom looks like for us. Regardless of what you want your money to do for you, we all can agree that money needs to help us achieve other goals that can only be achieved by not stressing out about money.
As you grow your financial knowledge, remember that your budget is fluid. Adjust your budget and adjust your habits to make sure your money is doing what it needs to to make your life the way you want it.