Knowing This Can Help You Reduce Financial Anxiety
When you see your friends willing to pay for extravagant items, do you wonder how they can afford it? Is there constant comparison and a nagging feeling of self-doubt, that you are not managing your money the best you can?
Trust me, I know how you feel. I often feel insecure and panicky when it’s only the middle of the month and I have depleted my monthly allowance or when I lose self-control and stress-buy an exorbitant number of needless things from Amazon. I also feel fear when people around me seem to be more successful than I am. My peer has such an impressive investment portfolio that she has been nominated for numerous awards. Comparing myself to her, I feel an inner pain of self-doubt, insecurity and inadequacy.
As we navigate the financial world, the pressure to be equally savvy with our finances is real. However, we each have our individual financial identity. By pinpointing who we are specifically, it helps to heighten self-awareness and establish our financial boundaries. This guides us to manage money more effectively and most suitably. These work harmoniously to reduce the fears we might have, hence alleviating the anxiety that comes with comparison.
Let’s begin identifying your Financial Personality!
1) Instant Gratification versus Delayed Gratification
Spending can cause anxiety for different reasons.
If you enjoy conscientiously saving and accumulating to find great joy in the rewards, you can identify as a delayed gratifier. Spending on a nice dinner or a big-ticket item can cause you anxiety as you visualise the money coming out from your bank account. When this happens, take a deep breath and ground yourself in the present. Know that you have already planned ahead and that the occasional spending is ok. To reduce your anxiety further, consider looking at how much you ‘have’, not how much you ‘spent’.
If you place greater emphasis and find more delight in the ‘now’ over the future, you crave instant gratification. Anxiety might happen when you cannot afford to buy something right now. In such situations, consider if there are free/cheaper options that can give you the reward rush while not affecting your pocket. Distraction can be a good way to reduce that FOMO anxiety!
To find out more, here is a good elaboration.
2) Risk Tolerance: High Capacity versus Low Capacity
With the variety of investment options available in the market, you might feel swamped and distressed about finding the ‘right’ one. Well, identifying your individual risk tolerance will help guide you in this decision. Clearly knowing your risk tolerance helps you know how much psychological endurance you have when it comes to the potential of losing money on an investment.
If you are comfortable and highly adaptable to changes, your risk tolerance is generally on the high side. This means you can invest in higher risk products without worrying excessively about the fluctuations. You are likely to cope better with the uncertainty. If you, however, are highly sensitive to changes and fluctuations, you have a low risk tolerance. Opting for low-risk choices will be better as you know that they do not pose dramatic losses. This gives you the important peace of mind. Hence, do not feel pressured to pursue high risk projects. It will inevitably cause more harm when the fluctuations cause unwanted stress and sleepless nights.
By investing in suitable products appropriate for your risk tolerance, this will also help to reduce the instances of unease or apprehensiveness when selecting what to invest in. With a more concrete plan that works for you, it will reduce uncertainty and stress!
Remember, you might have a low risk tolerance when you first start out (completely normal!) and you can work your way up to wherever feels the most comfortable! Constantly checking in with yourself will keep you grounded and less susceptible to anxious feelings.
For further elaboration, give this a read!
3) Approach to Learning: Intrapersonal versus Interpersonal
If you are completely new to this financial exploration, you might be confused and worried about where and how to even start. Trying to navigate your way through all the financial information available can be overwhelming. Listening to your friends’ opinions about the different investments or savings plans you should have, unease can quickly set in as you struggle to decide if you want to take their advice or listen to and trust yourself.
Knowing your approach to learning will help calm such anxious feelings. Identifying the best information consumption method for yourself will lead you to make better and more confident decisions. You can then explore more deeply into topics in a way that suits you, without feeling stressed or insecure.
If you have a habit of undergoing individual reflection and deliberation before reaching conclusions, you are intrapersonal orientated. Take your time to process information independently and don’t allow the opinions of your peers to sway you and cause you to doubt yourself! This will safeguard you from anxiety sprouting from comparison and irrelevant information.
If you prefer to learn through group activities and conversations with other like-minded people, you are geared towards interpersonal learning. Surround yourself with people who share the same financial goals and share new information with each other. Having such a community will ensure you are kept updated with the latest intel, reducing the worry that you are not in the loop.
By identifying your most suitable learning style, you will not be overwhelmed by the large amount of information surrounding money management. Instead, you will be equipped to absorb knowledge in the healthiest and most effective manner! This acts as a shield against anxiety and worry whilst handling financial matters.
For more, you could take a look here.
Overall, know that individual financial decisions are dependent on specific financial personalities. Knowing your financial characteristics will boost your confidence in your decision-making process. It will also alleviate stress as it provides an assurance that you are heading in the right direction, at your own pace!
If you and your friends would like to decipher your financial traits, have a go at this fun, insightful and interactive JigSaw Me game we have created! We hope that it provides clarity and instills you with confidence to reduce anxiety surrounding financial decision-making.