Avoidance Comes with Financial Anxiety

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Knowing how to budget or invest one’s retirement savings are useful skills. But managing money isn’t just about what you know – it’s also about how you feel.

That’s the gist of a handful of recent studies into a newly identified emotion known as financial anxiety. These early studies look at two things: 1) is financial anxiety real?; and 2) does it explain why people do things like avoiding money issues or going into debt to paper over their financial problems?

The evidence says yes to both questions.

A 2012 study established financial anxiety as an identifiable psychological condition that can be measured using a standard psychological test. The researchers gauged their subjects’ reaction times to pairs of words flashed on a computer screen – negative financial words (debt), positive financial words (jackpot), neutral financial words (bank), or anodyne control words (camp). The subjects were timed on how long it took to identify a word after an on-screen icon replaced one word in the pair.

When only the negative financial word was left on the screen, people with higher financial anxiety were slower to respond than when only the positive word was visible. The prevalence of longer delays for negative words suggests that most subjects had at least some financial anxiety.

Researchers dived deeper into how financial anxiety influences behavior in another exploratory study that was awarded the Financial Therapy Association’s “outstanding research paper” at its 2014 conference. This study found that people who had lower anxiety levels – and, counterintuitively, were more physiologically aroused – were more open to seeing a financial planner. Some researchers had assumed the prospect of dealing with financial issues would elicit a “flight” response, but the study indicates that arousal can spur people to positive action. On the other hand, people with higher anxiety who were less aroused were less likely to seek help – similar to the avoidance behavior exhibited in the word experiments.

Further study is needed, but the researchers conclude that financial planners “should not expect those who are experiencing longer-term financial anxiety to enthusiastically demand planning services.”

In fact, they’ll probably avoid it.


Since when is “bank” a neutral financial word. Based on documented history, I believe it is the most negative financial word.

Mark Zoril

Great post and issue!! I hope you are able to delve into this a bit more in the future. As an adviser that has been working with middle class people for years, I have become keenly aware of how their emotional attitude about planning (and money as well) impacts their willingness to engage in the process. So often I come across people that are just not “ready” to get engaged in the process of planning for their future. It can be for many different reasons, but they feel anxiety about the process, the terminology, the execution of their plan, the uncertainty of dealing with an adviser, etc…


People with high financial anxiety probably have debt issues. Not always, but likely that’s the case.

That said, they may be slower to act on engaging a financial counselor for fear that it will probably cost more money…something they either don’t have enough of or maybe don’t manage well.

Wendy Weiss

Thank you for this article. It clarifies the thought and emotional processes that prevent intelligent and capable people from acting in their own self interest.

Annabelle Smyth

So basically if you’re not worried about money you’ll meet with a financial planner, but if you are worried about money you won’t? That seems counterintuitive.

Chris Grande

Help Highly-Anxious/Depressed Clients with Small Steps First

I think what these researchers found out was the link in the anxiety leads to depression leads to inaction chain. Studies in positive thinking show that action must be taken, even when we don’t feel like it, to change our attitude. The attitude change doesn’t happen first.

Along similar lines, as I get older I see so many ways that our personal weaknesses play out. And interestingly there are so many ways to work on those weaknesses, if we choose to (and not give in the despair).

For some, it’s finances – brings out their worst. For others, sports or martial arts training, and for others, sales or trading markets. I have first hand knowledge in many of these areas on how they highlight weaknesses and cause poor/slow decision making.

As much as we teach to learn subjects and topics in school, we all could have really benefited from a Martin Seligman course on optimism or a Zig Ziglar course on successful thinking! In my opinion, this is one of the biggest things that successful parents impart on their children, and something average kids get much less often: successful talk, attitude, and action. not necessarily successful in financial terms, but in confidence, taking a chance, and trying things without self-defeating behaviors.

For financial planners, helping people take small steps, to start the positive mental energy flowing, would be a wiser first step for highly anxious people, than developing and encouraging a full financial plan. This way, we can build on supportive feelings and snowball effective, positive actions.

Chris Grande
Walnut Hill Advisors, LLC
a MA based Registered Investment Advisor

M Voutour

It is almost impossible to avoid financial anxiety in a world where you can lose half of your retirement savings literally overnight, and where employers are no longer providing retirement pensions and many people are going into debt simply to make ends meet. Financial advisers are all well and good, but advising someone to save for retirement when they can’t even pay today’s bill probably creates even more anxiety.

Drew Harrison

I had no idea that anxiety can measured. I know a big problem with mental illnesses is that it is hard to quantify. I really look forward to the day when we can wipe out all mental illnesses with a miracle drug. Great post!

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