Money worries? Learn to differentiate rational concerns.

  • Understanding the difference between rational concern and irrational panic
  • Factors that contribute to valid worries about money
  • The role of emotions and personal history in shaping money worries
  • Identifying the real source of financial anxiety
  • A thought experiment to distinguish between genuine money problems and emotional flare-ups


It’s normal to worry about money. The trick is figuring out if your worries are valid or not. Worry is tied to uncertainty. We fret about potential outcomes that breed fear and adversity. Running out of money is among the scariest of those outcomes: The very thought of losing money can trigger a downhill spiral where we imagine a grim future beset by deprivation.

If we’re going to worry about money, the real test is separating rational concern from irrational panic. How can we differentiate between the two? For starters, step back. Place your worry in a larger context to determine its validity. “When a client worries about money, I think about what other factors are going on in the environment that might be contributing to that worry,” said Sarah Mouser, a certified financial planner in McLean, Va.

Factors that Contribute to Valid Worries about Money

Market Volatility and Life Transitions

Examples include periods of sustained market volatility, stressful milestones or transitions in one’s life. A common irrational worry arises among pre-retirees as they look ahead. Even if a financial plan ensures they’ll have enough money throughout retirement, angst can take hold. “It’s not just about the numbers,” said Mouser. “It’s about the big emotions around major life decisions” like segueing into retirement.

Insufficient Emergency Funds

On the other hand, it’s entirely rational to worry about money if you don’t have enough to get by. Advisers urge clients to set aside at least six months and preferably one year of cash reserves for emergency expenses. Many people lack sufficient funds to do so.

Emotional Factors

Feelings of fear or resentment can undermine our efforts to manage our finances. That’s why some advisers ask new clients to reflect on the role of money in their life, starting in childhood. As they relate their “money history,” they reveal how they view money and their earliest memories of it. If you grew up watching your parents equate their self-worth with their net worth, you may worry that you never have enough. “You might see money as an end-all to your success and happiness,” said Judy Ho, a Los Angeles-based clinical neuropsychologist.

Identifying the Real Source of Financial Anxiety

Large expenditures can also spark irrational money worries. Even wealthy people can feel antsy about purchasing a new home or taking an extravagant vacation. “They can have lots of liquidity and a very strong cash flow and still have an irrational fear about money,” said Reese Harper, a certified financial planner in Salt Lake City. Clients who worry about money often harbor deeper concerns. By listening attentively, advisers encourage them to open up and share their struggles.

A Thought Experiment to Distinguish between Genuine Money Problems and Emotional Flare-ups

In trying to distinguish between sensible concern about money and aimless nail-biting, try this thought experiment: Imagine it’s a year from now. Ask yourself, “Am I still worried about money?” Through this exercise, you can tell if you’re right to worry because, say, your overspending habits jeopardize your long-term financial plan. Or you might realize that despite a market downturn’s impact on your stocks, your portfolio can withstand the hit. In this way, you’ll learn to separate real money problems that merit serious attention from emotional flare-ups that dissipate over time.


Money worries can consume our thoughts and emotions, but it’s important to determine if our concerns are rational or not. By understanding the factors that contribute to valid worries and exploring the role of emotions and personal history, we can gain clarity on the real source of financial anxiety. Through thought experiments and self-reflection, we can separate genuine money problems from emotional flare-ups. So, next time you find yourself worrying about money, take a step back and evaluate the rationality of your concerns.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *