The Plan to Eliminate Money Anxiety

The simple ways to reduce end-of-the-month stress as you evaluate your finances.

Does the thought of talking about your financial situation leave you feeling queasy? Do you find that your quality of life has been lessened due to pervasive, and perhaps incapacitating, worries about money? Have your relationships been strained, or even come to an end, over financial matters? If so, you may be among the millions of Americans struggling with money anxiety.

Now, here’s the good news. You can turn that money anxiety around without winning the lottery or receiving some other dramatic financial windfall. In fact, the solutions to money anxiety needn’t involve earning more income at all.

If you are wondering how that can possibly be true, it’s because I believe the root cause of money anxiety isn’t actually money!

Recognize the Root Cause

I want to clearly acknowledge the reality that millions of hard-working Americans live paycheck to paycheck. And when there’s no money left over at the end of a pay period, that stress and tension is very real indeed.

The kind of money anxiety I’m talking about here, however, is different. It’s not about numbers or spreadsheets. Its roots are much deeper. This type of money anxiety is highly emotional, and it stems from a combination of your earliest money memories and ongoing money messages.

Pull out a piece of paper and jot down some of your earliest money memories. Now ask yourself: What were the top three money messages you grew up with?

  • Did your parents fight about money?
  • Were you told by your caregivers never to talk about money?
  • When you walked into a toy store, were you allowed to buy anything you wanted?

Can you identify ways in which your memories and messages lead to the behavior today that hurts you financially and causes money anxiety?

Trust That There Is a Solution

The secret to eliminating money anxiety is contained in these four simple words: Spend from authentic joy.

This is about teaching yourself new ways to spend and save that align with your deepest beliefs and values. The result is both a path toward increased financial security and reduced money anxiety. Implement the plan to overcome money anxiety below.

Step 1:Use the 50-30-20 Rule to Separate Your Money and Emotions

Let’s create a mental frame of reference. What does healthy spending look like? Most people don’t know. So we default to judging what is “right” for us by observing what other people are doing. Enter the 50-30-20 rule - it’s a spending touchstone I first came across more than 20 years ago in a book called All Your Worth by now U.S. Senator Elizabeth Warren and her daughter, Amelia.

The rule of thumb boils down to this. In an ideal world roughly 50 percent of your take-home pay would go to needs. Needs are your true living essentials, like shelter, transportation, food, insurance, child care and mandatory minimum debt payments. Roughly 30 percent of your take-home pay would go to wants. Wants are all the fun things in life, the ones that make your heart sing. Then 20 percent goes to savings. This includes emergency funds, nearer-term needs (like a home or car down payment) and long-term needs (like retirement).

Because so many people are struggling with student loans and credit card debt, I’ve come to adjust this formula slightly and include any payments above and beyond the minimum on debt in the “savings” category. The logic I use is that you are saving on interest. Once those debts are fully paid off, you can keep allocating those funds to the 20 percent bucket for true savings.

The key to this exercise is to recognize when your needs exceed 50 percent of your take-home pay. That’s a sign something has to give. Either you won’t have enough room for saving, or your will have less left over for wants.

Simply having a way to begin measuring where you may be out of balance in your spending can really help reduce money anxiety. At least now you know why it sometimes feels like you can barely make ends meet.

Step 2: Stop Spending on “Shoulds”

For far too many of us, a source of stress on our cash flow – and one that leads to money anxiety – is the purchase of things we “should” have.

For a few weeks (a month or two is even better), write down everything you spend money on. The system doesn’t have to be fancy. You can make a note in your smart phone or jot it down in a little notebook. At the end of the time period, take a look through the list and circle anything you bought that didn’t bring you joy.

Some may be things you can’t do much about, such as paying for utilities. But others – like a meal out with people you don’t even enjoy being around – might be “shoulds.” When you stop spending on “should,” you start to realign your financial actions with what brings you authentic joy.

Step #3: Establish Financial Clarity

I call this final step “getting financially naked.”

It involves being completely clear about how much income you truly have coming into your household and what’s really going out in expenses. The goal is to provide the raw data so you can decide how to narrow the gap between what you have and what you truly want.

If you, like many people, find that your monthly expenses are as much or more than your monthly income, start asking yourself the key questions that relate back to your money memories and society’s money messages.

So give it a try. By combining the 50-30-20 rule with a commitment to using true, authentic joy  (not what other people say you “should” do or outdated beliefs from your money memories) to determine your financial actions, you can learn to quiet that money anxiety.

This plan was originally created for Dr. Oz's Truth Tube. Get more expert Truth Tube plans here

Manisha Thakor, CFA, is the director of wealth strategies for women at Buckingham and The BAM ALLIANCE. Connect with her at

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