Managing personal finances can be stressful for anyone. But especially for young people, that stress can go above and beyond your typical day-to-day worries. In some cases, it can turn into a legitimate fear of money, whether of not having enough, of managing it incorrectly, or something else entirely.
A fear of money can stem from a variety of causes, including money trauma (such as early poverty, divorce, or a significant financial loss) and a lack of financial education. No matter the source of your money fear, there are things you can do to deal with it.
We spoke with three financial professionals to learn what young people can do to address and overcome their fear of money.
Key Takeaways
- A fear of money can be caused by many things, including a lack of financial education, past financial trauma, and negative money messages you learned as a child.
- The first step in addressing your fear is reflecting on the root cause, either alone or with the help of a financial therapist.
- Steps to overcome your fear of money and get ahead with your finances include starting with the basics, educating yourself, and identifying your financial goals.
- It’s important to address your fears to prevent them from hampering your ability to provide for yourself and your future.
What Is a Fear of Money?
There’s actually a clinical diagnosis for fear of money—often the fear of managing money, specifically: chrometophobia. It can lead to symptoms like anxiety, excessive worry, obsessive behaviors, and even physical ailments. Unlike many other phobias, those with chrometophobia can’t avoid the thing they’re afraid of entirely. In fact, it’s a central part of our lives.
Even if your financial anxiety isn’t extreme, it can still hold you back from progressing in your finances and reaching your goals.
For many people, their fear of money dates back to their childhood and the messages they received about money. Perhaps you had traumatizing experiences with money as a child, or you watched your parents struggle with money issues, or you were affected by their money beliefs.
“Children often absorb and mirror their parents’ financial attitudes, which means parental anxiety or negativity about money can directly impact their children’s financial perceptions,” says Khwan Hathai, a certified financial planner and certified financial therapist with Epiphany Financial Therapy.
And for many young people, their fear of money has to do with a lack of education about it.
“Many young individuals feel ill-equipped to handle their finances due to a glaring absence of formal financial literacy education in their upbringing. This educational gap leaves them unprepared and anxious about managing money,” Hathai says.
This fear of money can manifest in a number of ways that can have a significant negative impact on someone’s personal finances.
“Some young people may resort to avoidance, steering clear of financial responsibilities or ignoring bank statements,” says Hathai. “Others might find themselves in the throes of overspending, using it as a form of escapism or a way to seek validation.”
Another common manifestation of a fear of money, she notes, is the underutilization of financial products. For example, someone might avoid investing in their employer’s 401(k) plan, because they either don’t understand how it works or are afraid of losing money.
How to Address Your Fear of Money
The first step in addressing your fear of money has nothing to do with money management and everything to do with your relationship with money.
“To begin addressing these fears, the first and most crucial step is acknowledgment and reflection,” Hathai says.
Some young people may be able to draw a straight line from their fear of money to a traumatic event that happened in their childhood. Perhaps they grew up in poverty or watched their parents lose their wealth.
However, people with a fear of money may not be aware of the root causes. That’s where reflection can be particularly helpful.
“It involves recognizing your fear of money and introspectively examining your emotions and thoughts about money,” Hathai says. “This process of reflection, perhaps through journaling, can shed light on the underlying causes of your financial anxieties.”
According to Hathai, common underlying causes she has seen include a lack of financial education, parental influence, societal pressures, and past experiences with money.
Once you’ve gone through this introspective exercise, you can take tangible financial steps to address your fear of money and start making progress toward a more stable financial future.
Take Time to Educate Yourself
For many young people, their fear of money stems from a lack of education and knowledge of personal finance. Although more states are passing laws requiring financial education in schools, most have only done so in the past several years. That means many people in their 20s haven’t benefited from those laws.
The good news is that even if you didn’t learn about personal finance in school or at home, there are plenty of opportunities to educate yourself now.
“It should be added that thanks to technology, more resources are available than ever before to learn about money and take steps towards a strong financial future,” says Kimberly Hamilton, an accredited financial counselor and founder of Beworth Finance. “From books to online courses and podcasts, there are more learning opportunities available today with more minority representation than ever before.”
Here are a few resources that may help you improve your financial literacy:
- MyMoney.gov
- Consumer Financial Protection Bureau (CFPB) Consumer Resources
- Federal Deposit Insurance Corp. (FDIC) Money Smart
- U.S. Office of the Comptroller of the Currency (OCC) Financial Literacy Resource Directory
- Websites, podcasts, and social media pages by financial professionals, such as the “So Money” podcast by Farnoosh Torabi or “Her First $100K” by Tori Dunlap
Identify Your Goals
Setting specific and achievable financial goals can help you take your first steps on your financial journey. Having something to aim for gives you a starting point on your journey.
“These may be things like building credit, paying down debt, or building up an emergency fund, but each should have an associated dollar amount and date (e.g., I will have $1,000 in my emergency fund by May 2024),” Hamilton says.
Once you’ve identified your financial goals, break them down into small, tangible steps. For example, rather than adding “pay off debt” to your to-do list, break the goal down into smaller steps that may include:
- Making a list of all your debts
- Adding up your total debt balance
- Listing your debts in order of importance to pay off
- Deciding how much to allocate toward debt each month
- Setting up autopay on your debt accounts
“Ultimately, it is a lot easier to be good with money once you’ve mapped out what you’re trying to achieve, and it doesn’t have to be as complicated as you think,” Hamilton says.
Start Small
You can’t get over your fear of money and master your personal finances all in one sitting. Instead, starting small can help you ease into money management in a way that you’re comfortable with. The more approachable your financial to-do list, the more likely you are to stay consistent.
One of the best ways to start small with your personal finances is by slowly building savings. Having an emergency fund can do wonders to ease your fear of money, but it can take time to build. Rather than pressuring yourself to build your entire emergency fund all at once, set the goal of saving just a small amount per week—even $5 is better than nothing.
Contrast that with a situation where you try to reach your goals too fast, such as building your entire emergency fund in just a month or two. Sure, you might reach your goal more quickly. But you may also burn out and give up entirely. Additionally, you could devote all of your disposable income toward your emergency fund for a couple of months, only to pull that money out a month or two later because you haven’t prioritized your other financial responsibilities.
Another example of how you can start small is with investing.
“For example, you no longer need a financial advisor or $100,000 to start investing,” Hamilton says. “Instead, starting with as little as $5 or $20 on your phone or laptop can reduce the fear that you’ll make a big mistake or the necessity to talk to someone, which can feel intimidating.”
Ultimately, it probably took years to develop your current fear of money, and you should expect rebuilding your relationship with money to be a slow process as well.
Create Appointments with Yourself to Check in
An excellent way to ensure you’re on the right track is to make appointments to check in with yourself. At these appointments, you can revisit the financial goals and tasks you’ve set for yourself to make sure you’re gradually checking things off your list.
“Consistency in reviewing and adjusting financial plans and celebrating each milestone, no matter how small, can foster a healthier relationship with money,” Hathai says.
These regular check-ins are also a good opportunity to consider other financial goals. As your financial education and confidence grow, you may feel comfortable setting more aggressive goals around saving, investing, income, and more.
When to Seek Professional Advice
If your fear of money is preventing you from living a normal life or addressing your financial obligations, it may be worth seeking out the help of a professional, such as a financial therapist.
“Financial therapists work with people on the intersection of their emotions and their finances,” says Shaywanna Harris-Pierre, an associate professor and licensed professional counselor at Shades of You Counseling and Consulting. “A financial therapist can help facilitate an understanding of your money behaviors and the underlying emotions driving those behaviors to help you develop a different relationship with money and be successful in engaging in new money behaviors.”
Another type of professional to consider working with is a financial planner or advisor. While they may not be qualified to help address all the emotional aspects of your fear of money, they can help you establish a money management plan that can give you peace of mind and reduce your money anxieties.
What Is the Root of Money Anxiety?
The root cause of money anxiety may be different for different people, but common causes include a lack of financial education, past financial trauma, or the financial messages someone received during childhood.
Why Am I Triggered by Money?
Money is an emotional topic that can be triggering for many individuals. Your money triggers likely date back farther than you realize. Doing self-reflection exercises or consulting a financial therapist can help you identify and address them.
How Can I Plan for My Future Financially?
An excellent starting point for planning for your financial future is setting specific financial goals, even if they’re only short-term ones. Examples might include paying off debt, building an emergency fund, or saving for a specific purchase. Once you’ve built the money habits to help you reach those goals, you’ll be prepared for larger financial goals.
Another way to start planning your financial future is with the help of a financial professional. This person can help you put goals in place and set up a plan to reach them. Having a professional to guide you along the way can help reduce anxiety on your part.
The Bottom Line
A fear of money may be holding you back, causing you to do things like overspend, over-save, or even ignore your finances entirely. However, regardless of whether your money fear is a result of a lack of education or past financial experiences, you can address and overcome it.
By following the steps that our experts shared, you can begin to understand the origins of your fear, take control of your finances, and reach your financial goals.
“The more you understand about how money works, the more you can optimize what you have instead of letting fear limit your true financial potential; and for young people especially, the sky’s the limit,” Hamilton says.
