How to Ease Your Money Anxiety When the Economy Is Stressing You Out

New York Times

12-04-2025

Even before this year's economic turmoil hit, financial anxiety among Americans was running high. Really high.
Four out of five Americans in a survey for Discover last year said they were worried about their money situation, with inflation, everyday expenses and the state of the economy leading a litany of concerns. Nearly two-thirds said they would be financially unprepared if they lost their job, and more than half felt the same way about a recession.
Now, tariffs and a global trade war, which could raise prices and discourage consumer and corporate spending, have economists raising their odds of such a downturn this year. Coupled with wild swings in the stock market, which is down about 9 percent for the year, it's no wonder that financial anxiety is spiking to new heights.
'Since Covid, we've all just been waiting for the next shoe to drop, moneywise,' said Megan McCoy, a financial therapist and an associate professor of personal financial planning at Kansas State University. 'For years now, it's been one kind of painful financial situation after another. We can't catch our breath.'
The danger is not just the financial anxiety, which has been linked to higher risk of various health problems, from depression to heart attacks. It's also that the pressure can drive you to take actions that could ultimately make your financial situation worse.
'The urge people feel to do something to make themselves feel better can be overwhelming,' said Anne Lester, former head of retirement solutions for J.P. Morgan Asset Management and author of the book 'Your Best Financial Life.' 'But it's hard to make sound decisions when you're scared.'
Here are six strategies that experts say will help you keep a cool head and protect your money when anxiety is heating up.
Adjust your perspective.
It's hard not to focus on the most recent hairpin turns of the stock market. In the span of just five trading days this month, the S&P 500 had one of the worst two-day drops on record (10.5 percent) followed by its best one-day climb since 2008 (9.5 percent). Add it up, though, and the index is down 4.4 percent for the month — and April isn't even half over yet.
But what happens to stock prices in a single week, month or even year won't matter in the long run to retirement savers, many of whom have decades to go before they stop working, said Brad Klontz, a financial psychologist and author of the book 'Start Thinking Rich.' Even retirees often have an investment time frame that could span 20 or 30 years or more.
From that perspective, stocks still look like a smart investment for long-term growth, particularly when paired with fixed-income assets for stability. Over the past 100 years or so, stocks have returned 10 percent annually on average, Dr. Klontz said, handily beating other assets.
And while recessions are painful, he said, they're a routine part of an economic cycle, happening every few years or so, and the country has always bounced back from them, too.
'What feels in the short term like you're headed off a cliff is more like a speed bump when you look at it with a long-term perspective,' Dr. Klontz said.
Viewing your 401(k) performance with a different lens is helpful, too, Ms. Lester said.
'We tend to anchor on whatever our highest balance was, so you may be focusing on how much money you've lost since then,' she said. 'But if you look at your balance from a year ago, you're probably still up. And compared to five or 10 years ago, you're likely up even more substantially.'
Slow your roll.
For some 401(k) investors, the urge to sell stocks as prices tumbled has proved too powerful to resist.
With these savers shifting money from stocks to fixed-income funds, the volume of 401(k) trading during the first quarter of 2025 was the highest in nearly five years, according to Alight Solutions, which tracks workplace retirement plan activity. (The activity involved less than 1 percent of total 401(k) plan balances, but the jump is notable.) The sell-off picked up additional steam after the free-fall in the market on April 3 and 4, with 10 times the usual volume on Monday, April 7, the next trading day — the most transactions in a single day since March 2020.
This shows how easy it is for anxiety to spur action that may not be in your best interest, since those sellers missed out on the surge in stock prices later in the week, which allowed the major indexes to recover a big chunk of the losses incurred so far this year.
'All decisions are bets — we never know if they're wise or not until time has passed,' said Naomi Win, a clinical psychologist and behavioral analyst with Orion Advisor Solutions, a wealth management tech firm. 'Resist the culture of immediacy by learning to pause and be thoughtful and take time on decisions rather than reacting on emotion.'
One way to do this: Impose a rule for yourself that you must wait at least an hour before making a trade; set a timer to hold yourself to it. And seek out advice first from a trusted source — a financial adviser, if you have one, or a knowledgeable friend or colleague with a calm head and experience in up and down markets.
This buys time to reverse the physiological response to acute financial anxiety. When stress rises, Dr. Klontz said, the body's fight-or-flight response kicks in, enlarging the part of the brain that processes emotions like fear and anxiety (the amygdala) and shutting down the part that helps us evaluate options and make informed choices (the prefrontal cortex).
'It takes a good 30 minutes to an hour to calm down,' Dr. Klontz said. 'Then the prefrontal cortex turns back on, and people are left feeling, 'Why, why did I do that?''
Don't look at your balances. (Really, don't.)
The pain of losing money is more powerful than the pleasure of making it — a cognitive bias that behavioral finance experts call loss aversion. That's why constantly checking your 401(k) when the market is falling is a bad idea; seeing your lower balances only makes you feel worse.
It can also increase the likelihood that you'll lose more money. According to studies from the behavioral economists Shlomo Benartzi and Richard Thaler, investors with long-term goals who rarely check their accounts end up earning significantly higher returns on average than those who monitor more often. Savers who check more frequently will more often see losses, which scares them off investing in stocks, even though stocks, over time, earn substantially more than bonds and cash.
If you check your account daily, for instance, you're likely to see losses 30 to 40 percent of the time, historical data shows. If you check annually, you might observe a loss only once every three or four years or so. That's why advisers suggest checking your balances no more than once a quarter and perhaps only once a year.
Try to limit your intake of bad news about the economy and market, too. 'We are herd animals, wired to pay close attention to the mood of people around us,' Dr. Klontz said. 'If you're constantly exposed to the panic of others, you're going to be very vulnerable to doing what everyone else is doing and making bad decisions as a result.'
Imagine the worst.
It may sound counterintuitive, but identifying your biggest fear about your financial situation now, then thinking about how you'd manage the fallout, can be a calming exercise.
'Psychologically, simply knowing there are options reduces anxiety in an otherwise paralyzing situation,' Dr. Win said.
Say, for example, you're worried about losing your job. The first thing you might do is calculate how long your emergency fund will last, then reach out to professional connections who could help with a job search. If your job hunt lasts a long time and you burn through your savings, what would you do next? Maybe you could move to a cheaper apartment, downsize or even move in with family for a while.
'The worst time to make crisis plans is when you're in the middle of a crisis, because you're not thinking as clearly — it's the reason we do fire drills,' Ms. Lester said. 'Hopefully, you'll never have to pull the trigger on these plans, but it's helpful to have them, to know what you'd do.'
Identify one move.
You cannot control stock prices or whether the economy will tip into a recession. So focus on what you can control, especially actions that could improve your financial situation in a downturn.
Take spending. 'If you don't have enough cash set aside to cover your expenses for three to six months in case you're laid off, you should be looking aggressively to cut back discretionary spending and get that emergency savings built,' Ms. Lester said. 'You may feel like every nickel is already allocated, but for anybody who is getting takeout, traveling or who has more than zero subscription services, you can find places to cut back.'
If you're worried you might lose your job in a recession, try to make yourself more indispensable by learning a new skill that is in high demand in your field. Or warm up your professional network by connecting with other people in your industry or develop a side hustle for extra income, Dr. Klontz suggested.
Finding other places in your life to assert control that have nothing to do with money can help calm financial anxiety, too — and provide a welcome distraction. Ms. Lester, for example, recently found respite from the market chaos by tidying her home office. Tending your garden, organizing family photos or taking a daily walk are activities that may give you a sense of mastery over your environment when your finances feel outside of your control.
'As soon as you start creating more order, even a little bit of control somewhere, you feel so much better,' Ms. Lester said.
Practice self-compassion.
Sometimes compounding the financial anxiety is a sense that you may be partly to blame for your money struggles.
'At times like these, people often see financial failures as personal failures: The market is crashing, and now I'm not going to have enough money because I didn't make enough or save enough or I didn't work hard enough or I'm not good enough at managing this stuff,' Dr. McCoy of Kansas State said.
She encourages a gentle reframing: 'Tell yourself, 'I did the best with what I knew at the time.''
Ms. Lester said she also saw this pattern of self-blame frequently. 'Understanding that we are hard-wired to behave certain ways under certain circumstances, and forgiving yourself, is really important,' she said. 'Understand that there are many things you can do from this point forward to help yourself financially, take a deep breath, then take that next step.'