The ‘facts not fiction’ exercise and five other ways to manage your money anxiety

It shows up in all sorts of ways; blurry vision when looking at your banking, confusion around what “should” be a simple financial decision, panic attacks, headaches, muscle tension, relationship challenges, avoiding meetings with your adviser, flaking on social meetups, fear you’ll never have enough and that pit in your stomach that’s keeping you up at night.

Financial anxiety is no joke for your emotional and physical health. Having worked in the financial well-being space for nearly two decades, these are six effective ways to reduce financial anxiety. 

Deprivation is not a strategy

How likely are you to stick to a diet of 500 to 900 calories per day? Zero chance it’s sustainable. 

We were all taught to believe that financial deprivation is the way to fix all our money problems. But, like a yo-yo diet, it never lasts. It’s too restrictive and doesn’t target the part of your brain that craves and thrives off of rewards.

Rewards give you the motivation to keep your financial momentum high. The key is to keep the rewards on budget and linked to some aspect of your financial well-being. For example, you could incorporate a small “treat” into your weekly budget — say $5 to 10 — that makes you feel great and that you give yourself when you’ve had a financially mindful week, or when you’ve been great about updating your budget. Small rewards can be more effective than big expensive ones, which often cause more financial stress in the long run.

As you gain financial confidence, you can start to link these small rewards to bigger milestones, like paying off your credit card, increasing your RRSP contributions and showing up prepared for your financial-planning appointment. 

Do something good for your finances each day

Simple daily acts of financial self care go a long way toward improving your money mindset, reducing anxiety and building confidence. They also bring a healthy sense of awareness to your financial situation, which you’ll need to improve your finances. 

I recommend these small self-care activities: move a small amount of money into your savings account every day, like $5, saying out loud a daily affirmation like, “I’m in control of my finances” or “Today I’m going to be mindful with my money.” Express gratitude for your money when making a purchase or looking at your banking, tracking your spending or taking a pause before purchasing anything to calculate the cost per use.

Just as going for a 20-minute walk each day can keep your body healthy, daily financial care keeps your money situation healthy.

Look at your money. Don’t hide

Money mindfulness is a daily practice of being aware of how your money is flowing; the ins and outs (the foundations of budgeting, a skill you’ll need in order to feel better). Be intentional about how you want to prioritize your hard-earned dollars. In action, money mindfulness is knowing (and saying) “that works for my budget,” or “I’m making this (fill in the blank) a priority” or “a coffee meetup works better for me versus dinner out.”

The craze on TikTok is loud budgeting. Finfluencers on social media are revealing specifically how much they earn, what they are spending their money on and why; and they’re racking up millions of views each week. You don’t have to mimic this exactly, there are many benefits to open communication about money, without fear or shame.

The ‘facts not fiction’ exercise

Similar to a reframing exercise you might do in therapy, take a pesky thought you have about your finances and use real facts to either affirm or debunk it. If it happens that the thought is indeed true after using real evidence to support it, make a plan to overcome it. More times than not, it turns out to be false, and is an opportunity to reframe the thinking. Here’s an example: thinking you’re bad with math, and therefore are bad with money. 

Facts for this thought being true might be that you have a hard time adding numbers together in your head at the grocery store. 

Evidence against this thought is basically no one is good at head math. Financially mindful people use their phones and AI to do the math, make their shopping lists, stick to their budget and so on. They don’t run numbers in their head. 

Reframe this thought: “I have the right tools to help me assess how much something will cost, and compare it to my budget.”

Reframing is also extremely helpful in relationships when trying to work through money issues that have a long history; using facts, not fiction, to make a plan to move forward.

A little bit of progress is all you need

We’ve all done this — set goals that are too big and then we fail and feel bad about ourselves. Smaller goals we can “win” at are going to be way more helpful.

I recommend micro-goals such as measuring monthly progress on your net worth. Tally up the value of your assets (don’t include your car because it depreciates) and then tally up your liabilities (yes, car loans are included on this list). Subtract total liabilities from total assets and that’s your net worth. Growing your net worth is how financial security and wealth are created. If it’s growing each month, you’re doing something right. If your net worth is going down (and it’s not related to market conditions) it usually means one of two things; your budget or habits aren’t working. Investigate and course-correct.

All progress on your net worth, even if it’s small, is good! 

Make a plan to improve your financial literacy

This could be reading books, listening to podcasts and so on. From my first-hand experience, money learning gets so much better and more fun when you aren’t doing it alone. Find a money community of like-minded people to join, or hire an adviser or therapist and start talking. Having people you can journey with is key to reducing financial stress and anxiety.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star