People feel anxious about money more often than ever, especially for young people dealing with today’s tough economy. Rising living costs, stagnant wages, and social media’s constant display of luxury lifestyles can all add to financial stress. But what causes this anxiety, and how can you start to manage it?
Here’s why many people feel anxious about money—and tips to help reduce that stress.
1. Your Fixed Costs Are Too High
One big reason for money anxiety is high fixed costs like rent, utilities, and loan payments. When these expenses take up most of your income, there’s little left for saving, fun, or unexpected bills. It can feel like you’re always one emergency away from financial trouble.
Why it happens: Fixed costs are hard to avoid, especially as housing prices and basic expenses continue to rise. Many young people spend 50% or more of their income on rent or student loans, leaving little room for anything else.
How to ease the anxiety: Start by looking for ways to reduce fixed costs. Move to a cheaper living space, refinance loans, or negotiate lower rates on bills. Budgeting apps like Mint and Truebill can help you see where your money goes and show you how to lower living expenses. Small changes, like cutting unused subscriptions, can make a big difference.
By taking steps to reduce fixed costs to approximately 50-60% of your take-home pay, you’ll free up money for savings and reduce financial stress over time.
2. You Don’t Have an Emergency Fund
Nothing causes money stress like being unprepared for emergencies. Without savings, a car repair, medical bill, or job loss can push you into debt. The fear of “what if” can make every expense feel risky.
Why it happens: Building savings is hard when you’re just covering basic costs. Many young people prioritize paying bills or debt over saving. Without an emergency fund, even small surprises feel overwhelming.
How to ease the anxiety: Start small. Save $10 to $20 a week. Over time, small contributions add up. Focus on reaching an initial goal of $1,000 to handle minor emergencies. Then aim for three to six months of expenses for greater security. Learning how to start an emergency fund and understanding the importance of savings for financial security can give you peace of mind.
3. You’re Trying to Keep Up With the Joneses
Social media makes it harder than ever to avoid comparisons. Lavish vacations, designer clothes, and fancy dinners can leave you feeling like you’re falling behind. Even if you live within your means, it may seem like you’re not doing enough.
Why it happens: Social media often shows only the best parts of people’s lives. Seeing others’ “success” can make you feel inadequate. This pressure leads many to overspend to maintain appearances.
How to ease the anxiety: Remind yourself that social media isn’t reality. Much of what you see is curated, not the full picture. Focus on your own goals instead of comparing yourself to others. Practicing gratitude and stepping away from social media can also help. Remember, keeping up with the Joneses causes financial stress. Learning to stop comparing yourself to others financially can ease this pressure.
4. Living Above Your Means
Spending more than you earn leads to constant stress. When your bills exceed your income, debt piles up fast. Credit card debt is especially dangerous, as high interest adds to the burden.
Why it happens: Many people don’t realize they’re overspending until it’s too late. Small habits, like using credit cards or skipping a budget, can snowball into bigger problems.
How to ease the anxiety: Commit to living within your means. Track your spending and cut non-essential costs. Budgeting apps like YNAB can help you prioritize expenses and pay down debt. If you already have debt, consider strategies like the snowball method to regain control. Avoid overspending by learning how to avoid credit card debt.
5. The Economy Is Unpredictable
Uncertainty in the economy creates stress for everyone. Rising inflation, slow wage growth, and job insecurity make it harder to plan for the future. Even those who save and budget may feel stuck when costs keep going up.
Why it happens: When wages don’t match the cost of living, progress feels impossible. Despite your best efforts, financial security can feel out of reach. This hopelessness is a major source of anxiety.
How to ease the anxiety: While you can’t control the economy, you can control your actions. Focus on saving, learning more about money, and finding ways to increase income. Starting a side hustle, freelancing, or upskilling can provide extra security. Learning how to cope with financial uncertainty can help reduce money anxiety in a bad economy.
Final Thoughts
If you’re wondering, “why I feel anxious about money,” you’re not alone. Common financial stress causes include high fixed costs, lack of savings, social pressure, overspending, and an unpredictable economy. The good news is, there are ways to reduce money anxiety. By building an emergency fund, focusing on your goals, and controlling your spending, you can take steps toward a more secure and less stressful financial future.