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Jovan Johnson
With rising costs, stagnant salaries, and the pressures of social media, financial anxiety among young adults is at an all-time high. Financial anxiety can manifest as worry about paying bills, fear for the economy, a desire to avoid checking your bank account, hoarding cash, and being overly cautious about investing in the stock market.
According to Time Magazine, there is growing evidence linking financial anxiety to negative physical and mental health outcomes. Addressing this anxiety is critical — not only for your overall well-being but also for achieving greater financial stability.
As a financial planner, I have five ways young adults can overcome their financial anxiety.
Financially challenging times are inevitable, whether due to a job loss, medical emergency, or another unexpected event. One way to reduce financial anxiety about the future is by planning ahead. This includes building an emergency fund and sinking funds.
An emergency fund provides a financial cushion that can ease your anxiety about the unknown. I recommend automating savings into a high-yield savings account until you reach three to 12 months' worth of expenses, depending on your risk tolerance. One of my favorite options for a high-yield savings account is SoFi, because it allows you to have multiple savings accounts for your sinking funds and emergency fund.
Sinking funds are also key to giving you peace of mind. These are savings accounts set aside for specific goals, such as travel, medical expenses, or car maintenance. I suggest keeping these sinking funds in the same bank as your emergency fund for convenience. Many online banks allow multiple savings accounts for different goals.
Sometimes, all we need is a change of environment to feel less anxious about our finances. Find a place that brings you peace, where you can focus on addressing your financial situation without distractions. It is important to minimize added stress in your surroundings when you sit down to manage your money.
A quiet, calm space can help you be more productive and confident in your financial decisions. The key is to find what works for you and fosters the mindset needed to take meaningful steps forward.
In today's world, it feels almost impossible not to compare ourselves to others. Whether through social media or reality TV, we are constantly bombarded with the "best versions" of others' lives. We see our peers going on trips or buying things we can't afford, which only feeds into our financial anxiety.
But remember, much of what we see isn't real. Many people who project a "luxury" lifestyle are dealing with the same financial anxieties and struggles as the rest of us.
It is important to take breaks from these sources of comparison. Focus on your own journey and your current financial situation. Create a plan that works for you to reduce financial anxiety. Everyone's path is different, and that's OK.
One key habit to reduce financial anxiety is giving yourself grace. Life is meant to be lived and enjoyed, even while managing finances. Find ways to celebrate your progress along the journey. Have you saved one month of expenses for your emergency fund? Reward yourself! Don't let financial anxiety stop you from living your life. Tackle your money worries one day at a time, and remember to enjoy the process.
Remember, you do not have to go through this journey alone. Many others are experiencing or have experienced similar financial struggles. Building a support system is crucial to keep you moving forward. Life can be tough, but it becomes easier when we face it together instead of alone.
Additionally, take advantage of the many free resources available to learn more about managing money. Financial anxiety often stems from a lack of education. The more knowledgeable you become about finances, the more empowered you will feel to take control of your financial future.
