Share Article

Three Tips for Dealing with Irrational Financial Anxiety

Financial anxiety can hit at any age, and when someone is struggling to make ends meet, those worries are real and justified. However, that’s not the type of financial anxiety I’m referring to in this article. Here, I am addressing “irrational” financial anxiety, which can become especially pronounced as we get older and face the realities of retirement. By irrational anxiety, I mean the fear of spending money when one has plenty of money to spend.

I recently wrote a book, in which I give the example of my parents. One evening, I was at their house for dinner, and they were telling me all about their recent four-week luxury tour of Europe. As we were talking, my mom set a salad bowl on the table and explained that there were no tomatoes in the salad because tomatoes were too expensive that week at the store.

I love that story because it perfectly illustrates what I mean by irrational anxiety. My parents live comfortably in retirement. They had plenty of money to spend on a month-long dream vacation throughout Europe, yet my mom absolutely drew the line at spending a few cents more per pound on tomatoes. Would purchasing those tomatoes in any way impact my parents’ ability to enjoy their retirement? No, it would not have made the slightest impact, yet my mom just could not justify buying tomatoes at a slightly higher price than normal.

Regardless of how well-off we are, we all must make decisions about how to spend our money, but sometimes it’s okay, and even important, to spend a little more to enjoy all that you’ve worked hard to accomplish. Have you ever been anxious about taking a trip or maybe doing a major home renovation because you were concerned how it might impact your investment account(s) and therefore your retirement? When I ask clients this question, almost everyone can recall times where they hesitated or put off a decision because of the fear of not having enough for retirement, even when they inherently know that is not the case.

The following tips can help you turn off the irrational anxiety and stop worrying too much about spending your money.

Tip #1 – Know where you stand – The first step toward feeling more secure in your financial future is understanding how much you have saved and what that translates to, in terms of your retirement lifestyle. Your wealth manager can run projections based on various scenarios to help you understand your specific financial situation and what it means for your retirement. With this analysis you can identify investments or additional income that you may never need for retirement. Once you know where you stand, and how much retirement income you will likely have each month, you can spend freely within those parameters without worrying about every penny.

Tip #2 – Focus on your goals – What’s most important to you? How do you