Even before the economic turmoil hit this year, Americans had high financial anxiety. Really high.
Last year, four in five Americans said in a survey of exploration that they were worried about their money situation, inflation, daily spending and economic conditions that attracted attention. Nearly two-thirds say they will be financially unprepared if they are out of work, and more than half of the recession feel the same way.
Now tariffs and a global trade war could raise prices and stop consumer and corporate spending, economists increasing the chances of such a downturn this year. Coupled with the stock market’s field volatility, which has dropped by about 9% over the year, it’s no surprise that financial anxiety is getting higher and higher.
“We’ve been waiting for the next shoe to fall since Covid,” said Megan McCoy, financial therapist and associate professor of personal financial planning at Kansas State University. “For years, it’s a painful financial situation. We can’t hold our breath.”
The danger is not just financial anxiety, it is associated with a higher risk of health problems from depression to heart attacks. Likewise, stress can motivate you to take actions that will ultimately worsen your financial situation.
“People feel that doing things that make themselves better can be overwhelming,” said Anne Lester, head of retirement solutions at JP Morgan Asset Management and author of “Your Best Financial Life.” “But it's hard to make informed decisions when you're scared.”
Here are six strategies experts say to help you keep your head cool and protect your money when anxiety heats up.
Adjust your point of view.
It's hard not to focus on the latest hairpins in the stock market. In a time period of only five trading days this month, the S&P 500 was one of the worst two-day declines (10.5%) recorded, followed by its best one-day climb since 2008 (9.5%). Added up, though, and the month's index fell by 4.4%, while April isn't even over halfway.
But, for a long time, a week, a month, or even a year’s stock price hasn’t been relevant for retired savers, many of whom have to go to work for decades before they stop working. Even retirees often have investment time frames that can span 20 or 30 years or more.
From this perspective, stocks still look like smart investments for long-term growth, especially pairing with fixed income assets for stability. Dr. Krenz said that over the past 100 years or so, stocks have returned an average of 10% of their stocks each year.
He said that while recessions are painful, they are a regular part of the economic cycle, happening every few years or so, and the country always bounces back from it.
“It feels like a cliff in the short term more like a speed bump when you look at it from a long-term perspective,” Dr. Cronz said.
Ms Leicester said it would also be helpful to use other lenses to watch the performance of the 401(k).
“We tend to be based on everything we have the highest balance, so you might be focusing on the money you’ve lost since then,” she said. “But if you start looking at your balance a year ago, you might still be up. You might be significantly increasing by comparison.”
Slow down your scrolling.
For around 401(k) investors, the impulse to sell stocks with prices falling as prices turn out to be too powerful to resist.
According to Alight Solutions, these savers transfer funds from stocks to fixed-income funds, with the highest number of 401(k) transactions in the first quarter of 2025 being the highest in nearly five years. (This activity involves a total of 1% of the planned balance of 401(k), but the jump is noteworthy.) After free falls in the market on April 3 and 4, the sell-out adds additional momentum, while the next trading day, the most since March 2020 since March 2020, is 10 times the usual number of the next trading day.
This shows how easy it is to stimulate anxiety that may not be in your best interest as these sellers missed the stock price increase late this week, which allowed the major index to recover a large portion of the losses caused so far this year.
“All decisions are bets – we never know if they are wise before time passes,” said Naomi Win, a clinical psychologist and behavioral analyst at Orion Advisor Solutions, a wealth management technology company. “By resist instant culture by learning to pause and be thoughtful and taking time to make decisions, rather than reacting to emotions.”
One way to do this: impose a rule for yourself that you must at least an hour to trade; set a timer to keep yourself. And first seek advice from trusted sources – if you have a financial advisor, or have knowledgeable friends or colleagues with a calm mind and experience in the up and down market.
This takes time to reverse the physiological response to acute financial anxiety. Dr. Cronz said that when stress is raised, the body’s combat or flight response begins, expanding the part of the brain that deals with emotions like fear and anxiety (the amygdala), and closing the parts that help us assess choices and make informed choices (the prefrontal cortex).
“It takes 30 minutes to an hour to calm down,” Dr. Cronz said. “Then the prefrontal cortex starts over and people feel, 'Why, why, why am I doing this?'”
Don't look at your balance. (Really, don't.)
The pain of loss is stronger than the pain of making it pleasant – behavioral finance experts call cognitive bias in losses. That's why it's a bad idea to keep checking 401(k) when the market is down. Seeing your lower balance will only make you feel worse.
It may also increase your chances of losing more money. According to research by behavioral economists Shlomo Benartzi and Richard Thaler, investors with long-term goals rarely check their accounts for a significantly higher average return than those of more frequent monitors. Those who savers check more frequently will see losses more often, which will make them afraid to invest in stocks, although stocks earn far more than bonds and cash over time.
Historical data shows that if you check your account every day, you may see a 30% to 40% loss of time. If you check it once a year, you may only observe losses every three to four years or so. That's why the consultant recommends checking your balance no more than once per quarter, maybe only once.
Try to limit your bad news about the economy and the market. “We are herds of cattle, keeping a close eye on the mood of the people around us,” Dr. Cronz said. “If you keep experiencing panic from others, you will be very susceptible to what everyone else is doing and make bad decisions as a result.”
Imagine the worst.
This may sound counterintuitive, but it can be a calming exercise to determine your biggest fear of your financial situation right now and then think about how to manage the consequences.
“Psychologically, I only know where yes In the case of originally paralysis, choices can alleviate anxiety,” Dr. Wen said.
For example, for example, you are worried about unemployment. The first thing you might want to do is calculate how long your emergency fund will last and then connect with a professional who can help with job search. If your work lasts a long time and your savings burn, what will you do next? Maybe you can move to a cheap apartment, downsize or even move in with your family.
“The worst time to make a crisis plan is when you’re in the middle of a crisis because you’re not thinking clearly – that’s why we do fire drills,” Ms Leicester said. “Hope you never have to trigger the trigger on these plans, but having them and knowing what you’re going to do is help.”
Confirm every move.
You can't control the stock price, or whether the economy will fall into a recession. So focus on you able Control, especially actions that can improve your downturn in finances.
Spend money. “If you don’t have enough cash to pay for three to six months, just in case you get fired, you should actively seek to cut your discretionary spending and get emergency savings,” Ms Leicester said. “You might feel like each nickel has been allocated, but for anyone who is going to show up, travel or have a zero subscription service, you can find a shorter place.”
If you are worried that you may lose your job in a recession, try to make yourself even more essential by learning a new skill that is in high demand in your field. Dr. Klontz recommends, or warm up your professional network by connecting with others in the industry or developing the side hustle and bustle of additional income.
Looking elsewhere in life to claim control that is not related to money can also help calm financial anxiety and provide welcome attention. Ms. Leicester, for example, recently breathed from the market chaos by tidying up her home office. Taking care of your garden, organizing family photos or daily walks are activities that may give you a sense of mastery of the environment when your financial situation is beyond control.
“Once you start creating more orders, even with a little control somewhere, you feel much better,” Ms Leicester said.
Practice self-sympathy.
Sometimes, complicating financial anxiety can be the financial struggles you might be owing to your money.
“Sometimes, people often see financial failures as personal failures: the market is collapsing, and now I don't have enough money because I don't have enough money or save enough hard, or I don't work hard enough, or I'm not managing that in managing these aspects,” said Dr. McCoy of Kansas State University.
She encouraged a gentle reconstruction: “Tell yourself, 'Everything I knew at the time was done with my best.'”
Ms Leicester said she also often sees this self-proclaimed pattern. “It’s really important to understand that it’s hard for us to act in certain ways and forgive ourselves in certain situations,” she said. “It’s really important to understand that from now on there are a lot of things you can do to help yourself financially, take a deep breath and take the next step.”
