During the holiday season, the onslaught of sales and promotions gives me crippling anxiety, and this year it’s particularly bad. Even though I have the means to cover my expenses and buy gifts, spending money comes with massive amounts of guilt — whether it’s for my own groceries or presents for other people. At this point, I struggle even to buy essentials like toilet paper. As a result, I have a lot of purchases that I’ve been putting off, and I just feel overwhelmed. I have the resources, but I am not sure how to stop fearing money and feeling bad about spending it.
In theory, when you’re afraid of running out of money, you manage it more carefully. And there’s truth to that: I’m less likely to wander into a store and buy something stupid when my bank account is low than right after I’ve gotten paid. But counting pennies like you’re about to go broke can also backfire. Research shows that persistent financial anxiety can actually impair long-term decision-making, because it prompts your brain to prioritize the present over the future. It also just sounds miserable and all-consuming, as you’ve described. Who wants to live with that red-zone level of stress every day?
It sounds like you’re struggling with what’s known as “scarcity mindset,” which is a natural response to a shortage of something you need — food, time, money, etc. Under those circumstances, it’s normal to become hyper-focused on the problem until it’s solved. That adrenaline-fueled tunnel vision is helpful in the moment, but over time, it blocks out the bigger picture. Multiple studies have found that people who have experienced financial scarcity are more likely to borrow money even when they don’t have to, or forgo insurance when they can technically afford it (and, more importantly, can’t afford not to have it). When the fear of not having enough becomes ingrained, you feel permanently on defense, and it can keep you from being proactive.
In their book Scarcity: Why Having Too Little Means So Much, economist Sendhil Mullainathan and psychologist Eldar Shafir examined different groups of people who had experienced various types of scarcity, like starvation, poverty, and lack of social connection. Their findings were not exactly shocking: Each group had developed powerful, subconscious, and even obsessive reactions to the specific deprivation they’d gone through (starving people had developed hair-trigger responses to food-related words, for example). More surprisingly, however, people often continued this reactive behavior long after the period of scarcity had ended. And here’s the worst part: This mindset ate up their brainpower — what Shafir and Mullainathan refer to as “bandwidth” — and reduced cognitive functioning in other areas. It even lowered some people’s IQ scores. As Mullainathan put it more bluntly, scarcity “can make you dumber.”
I’m telling you all this not to make you panic even more, but to explain that your anxiety is very common. Most of the time, scarcity is something that happens to people — it’s not their fault, and their reactions are natural and instinctive. (I’m also not suggesting that scarcity is a mindset — it’s usually very real.) But in your case, the threat has passed, and now it’s holding you back. You may be missing out on good opportunities to invest your money because you don’t want to let it out of your sight. You probably don’t get the best prices on the things you want or need because you avoid shopping until you absolutely have to. Paradoxically, loosening your grip on your finances could have real, quantifiable benefits. Also, you sound unhappy! So, for the sake of your sanity and your wallet, you need to zoom out a bit.
To start, take some time to understand where exactly this anxiety came from. According to Dr. Brad Klontz, a psychologist and co-founder of the Financial Therapy Institute, “underspending” habits often stem from something in your past that made you feel out of control — say, you lost a job suddenly, had major debt, or grew up in a household where money was tight. The source could also be more oblique; maybe your parents were overspenders, and you swung in the opposite direction to avoid their mistakes. Understanding the context of your fears can help ground you in your current reality: Your life is different now, and you have the means to provide for yourself. A good therapist, particularly one who specializes in financial issues, could help with this, too. (Check out the Financial Therapy Association for practitioners in your area.)
Next, you’ll want to put together a solid, realistic spending strategy that you can return to whenever your thoughts start to spiral. Remember: The antidote to anxiety is a plan. Your goal isn’t to limit or police your spending even further — it’s about looking at your wants and needs and organizing your money around them. You need something concrete and executable.
Also, allow yourself to see the upside of spending money. Dr. Klontz recommends making a list of the things you really value (maybe it’s having a cozy home, cooking good food, planning a trip to visit family in another country, buying gifts for your friends, whatever) and then crunching your numbers. “Ask yourself, ‘What am I most excited about spending on? What’s most important to me? Let’s create a vision for that.’ From there, you can do the actual math of how much money you can put toward those things every month, and create actionable steps.”
You should also write down all of the “needs” you’ve been avoiding — groceries, toilet paper, and other essentials you hate shopping for — and come up with a general idea of how much that stuff costs per month. Then, set aside that chunk of money as soon as you get paid so that you know it’s there and what it’s for. You could even set up a subscription service for recurring, predictable stuff; it might be cheaper, and it will spare you the process of hemming and hawing over Kleenex every few months or so. Whatever you do, make your necessities nonnegotiable.
If you want a more structured blueprint, you could try the tried-and-trusted 50/30/20 rule — 50 percent of your income should go to needs (including housing and transportation), 30 percent should go to wants (gifts, socializing, and so forth), and 20 percent should go to savings (including investing) or paying off debt. And since you seem like the worrying type, aim to build up an extra-healthy emergency fund, ideally with enough cash to live off of for about six months if something disastrous happens. You might also consider meeting with a financial adviser for an hour or so (shop around for options here); the advice of an objective expert can be incredibly reassuring.
The good news is that this process, much like any kind of therapeutic effort, will have a cumulative effect. The more you prove to yourself that you’re financially capable and secure, the more you’ll believe it, and the truer it will be.