Money can bring up all sorts of emotions. Joy when you treat yourself to something special. Confidence when you hit a savings goal. Some anxiety isn’t uncommon, either—in fact, 90% of people say their finances can impact their stress levels.1
All of these emotions about money are totally normal—even fear.
“There’s no such thing as a bad emotion,” says Truist happiness expert Bright Dickson. “What matters is how you respond to the emotion.”
Related: Podcast: How to cure money anxiety
Keeping fear from clouding your judgment
Fear is the brain’s response to danger—a hardwired reaction that can help keep you safe from perceived threats.2 But fear can also cause you to imagine worst-case scenarios that are unlikely to happen and fret about things that you can’t control, like inflation or a recession, Dickson says.
Behavioral science teaches us that our brains are biased toward negative information, says Brian Ford, Truist’s head of financial wellness. This negativity bias can lead you into a “generalized fear” that doesn’t consider your specific situation.
Sometimes, listening to fear can lead you to make bad money decisions. “Fear can cloud your judgment and cause you to act impulsively,” Ford says. For example, short-term market downturns can sometimes scare investors into selling at the wrong moment. “People get fearful and they want to sell their investments or stop investing altogether—but that can lead to bad outcomes.”
Similarly, Ford says a “fear of missing out” in a booming market can cause investors to make rash decisions and speculative investments. In investing, it’s important to think long-term and stay the course without making irrational short-term moves based on feelings of fear—whether it’s a fear of missing out on a “meme stock,” or fear of a market crash, Ford says.
But is there ever a time when a little bit of fear can be a good thing? The short answer is yes.
How fear can be a positive money motivator
The key is knowing how to take action in spite of your fear.
“It’s about facing the truth of your personal financial situation,” Ford says. “If you come to realize you’re not where you should be and a little bit of fear kicks in, that’s normal. You just need to use that to help you take control of the things you can.”
If a financial planner tells you that you don’t have enough emergency savings, would you worry? Maybe—but that worry can drive you to action as you start putting more money in an emergency savings account. When you take action, you start to strip fear of its influence.
To help you turn feelings of fear into positive action, consider these three tips:
- Identify where it’s coming from. Getting specific about the source of your fear can help you decide on a course of action. Is it something out of your control, like the stock market? Or is it something specific that you can control, like an overdue bill or lack of a debt payment plan?
- Make an action plan. Act on what’s going to make a difference for you by finding ways to take control of what you can. This could mean writing out your goals, building a budget, talking with a financial advisor, getting on the same page as your significant other, saving more for retirement, or beginning long-term habits that should help you feel more confident and in control.
- Acknowledge the good. If fear feels like the dominant emotion, tap into some positive ones—like pride in what you’ve accomplished before, or hope for what you’ll do in the future. “Shining a light on good things you’ve done in the past and giving yourself credit for your progress on financial issues can be a great way to build momentum,” Ford says.
Growing financial courage
When you acknowledge your fear and take the time to identify what’s causing it, you can take steps to figure out the right response. It can be a helpful way to figure out a plan of action for a specific financial challenge.
Keep in mind, however, that emotions like confidence and hope can be even more powerful than fear when you’re looking for motivation. Remind yourself what you can do when you put your mind to it—and then do it.
“If you’re not on track for retirement, go meet with a financial planner and start participating in your 401(k),” Ford says. “If you’ve got debt, start tackling it. Take that step in the right direction. Face that fear head-on.”