Feeling Financial Stress or Financial Anxiety? Understanding the Difference Is Key to Moving Forward.

The symptoms of financial anxiety and financial stress can look so similar it’s no wonder people get them confused. After all, mental healthcare professionals and financial researchers mix them up as well, as I found when my colleague and I proposed clear definitions for the two emotional states at the CFP Connections conference last October. But it’s vital that financial planners understand the distinction in order to provide clients with more effective holistic financial plans. 

Financial stress occurs after a person experiences defined stressors. Examples include steep medical bills, going through a divorce, or a sudden decrease in income. It’s important to note that financial stress can also be caused by positive changes, like moving to a different state for a new job or receiving an inheritance. 

By contrast, financial anxiety is excessive worry or uneasiness that persists whether or not a financial stressor exists. For instance, a financially anxious client may avoid paying bills because they are fearful that they don’t have enough money, even when, in reality, they have ample funds to cover their debts. 

Both financial anxiety and financial stress can lead to symptoms including irritability, anger, sadness, muscle aches, muscle tension, weight gain, trouble sleeping, and gastrointestinal issues. Both can cause a person to have conflict with their partners, friends, or children. 

To complicate matters further, prolonged financial stress can lead to financial anxiety. Since financial anxiety isn’t a response to a specific stressor, it tends to be longer-lasting than financial stress.

Steps to take. Financial advisors who know the difference between these two states can determine the most effective plan of action to offer a particular client. Take the example of a client whose adult child loses their job and asks the parent to dip into their retirement savings to support them financially. If financial stress is the issue, the advisor can recommend ways to help the child out in the short term without compromising the client’s long-term financial plan. 

But if the advisor finds they are determined to maintain their child’s expensive lifestyle through an extended period or repeated bouts of unemployment, financial anxiety is likely in play. Further evidence would be the client wanting to take actions that aren’t in their own best interest, like withdrawing a large sum of money from their 401(k) and putting it into a liquid account for the child.

If financial stress is in play, advisors may, depending on the scenario, help clients to resolve an issue by moves like increasing cash flow, automating bill payments, or increasing savings for potential financial stressors (weddings, vacations, emergencies, or medical bills).

If the advisor suspects financial anxiety is the underlying emotional state, they may instead want to explore the reasons behind the client’s worries or fears around money, encourage them to practice relaxation techniques like deep breathing and meditation, or offer support in routine financial tasks like opening bills or reviewing investment statements.

By knowing the difference between financial stress and financial anxiety, the advisor is in a position to craft a plan of action that the client feels comfortable and safe following. At the same time, advisors should be alert to signs that the client requires additional emotional or psychological support and consider referring them to a financial therapist or a mental health professional.

Kristy Archuleta holds the Betsy Barnard Sages Professorship in Financial Therapy and Financial Planning at the University of Georgia, where she combines research, clinical insight, and real-world experience to help audiences better understand the emotional aspects of money. She is a certified financial therapist as well as a licensed marriage and family therapist.

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