Feeling Emotional Distress? Don’t Make Any Financial Decisions

by Miranda Marquit · 6 comments


It’s rarely a good idea to make important decisions when you’re under stress – especially if that stress is emotional in nature. Emotional distress can lead to poor financial decisions, which, in turn, can deepen your money problems.

When you feel distressed, it’s common to try and ease your feelings by engaging in activities that trigger good feelings, or that at least allow you to temporarily escape from the situation. If you’re not careful, making money decisions based on your feelings can lead to ruin.

Distress, Control, and Money

“Distress often comes from feeling out of control,” says Kathy Gruver, Ph.D., a health and wellness expert specializing in stress. When you feel out of control, she points out, you do your best to seize control of the situation. The way you use your money is one of the easiest ways to exert control in your life.

“Either the person is very paranoid and concerned about and hoards it, spending little while fearing they don’t have enough,” explains Gruver, “Or the person uses shopping as therapy, spending more than they have while trying to find pleasure and relaxation by buying things they don’t need or want.”

Both of these responses are unhealthy ways to interact with money.

Hoarding money, rather than spending it wisely or investing it, can lead to shortfalls later. It can also mean that you don’t spend on things (like repairs to your home) that are needed. Refusing to spend now can lead to more expensive problems later. And many of us are already aware of the difficulties that arise when you allow your emotional distress to goad you into overspending.

Rather than overreacting to emotional distress, Gruver suggests that you use a few techniques to reduce your stress. Instead of turning to money, she says that you can use meditation, affirmation, and visualizations to help you deal with emotional distress. This will prevent you from making money decisions you might regret later.

Fear and Financial Decisions

The fear that comes with emotional distress can also harm your ability to make financial decisions. “New neuroscience research shows that fear, worry, or anxiety around your money triggers the amygdala, which is the fear center of the brain,” says Dr. Matt Mannino, a neuroscience expert, and researcher. “In this state of physiological stress, problem-solving abilities and creative thinking are suppressed.”

The last thing you want to do with suppressed problem-solving abilities is to make decisions about money.

When you’re in the midst of a fight-or-flight response, making snap decisions about money – especially what to do with your investment portfolio – can lead you down a path that results in more money problems.

Instead, Mannino recommends that you get out in front of the fear, settling down so that your mind is clearer and you can make better decisions. “Write down all the fears and worries you have regarding your finances. Expose the thoughts running through your brain. This puts you back in control of them.”

Financial Anxiety: It’s Not Just in Your Head

During the 2008/2009 financial crisis, psychologists coined the term “money anxiety disorder” to describe a condition in which worries about real or perceived financial difficulties evoke the body’s fight-or-flight response. In other words, because the person’s emotional anxiety is so intense, the body kicks into survival mode. Symptoms include rapid heart rate, erratic breathing, sweating, shaking, and nausea. What starts as a mental activity turns into a physical response.

We all know how hard this consistent stress response is on the body, even at milder levels (just look at how much material is dedicated to stress relief in the self-help section!), but how do we combat it?

I’d like to share three tips that might help.

#1. Mindfulness: Recognize It

Mindfulness is a fancy therapist term that simply means becoming more self-aware. Practice tuning into your body so you’ll be able to recognize the signs of anxiety before they get out of control. It might work best to move backward from your physical symptoms to their source. How does your body react to anxiety? Can you sense your heart rate increasing, a sweat breaking out on your forehead, or your hands starting to shake?

You won’t be in the state of mind to deal with the real problem until you deal with the symptoms, so take a few deep breaths, close your eyes, listen to some music, go for a quick walk — whatever it takes to calm down and recenter yourself. Learning to take control of your emotions can enable you to move from simply recognizing financial anxiety to actually doing something about it.

#2: Confront It

Ask yourself what trains of thought, activities, and hot-button financial topics trigger your negative emotions. What’s the source? Is it past financial fall-outs, a constant ‘shortage’ mentality, societal pressure to live up to a certain standard of success?

Once you recognize that your reactions are fear-based rather than rationality-based, you can confront the cause of that fear with logic and action.

#3: Take Small, Practical Steps to Improve Your Financial Outlook

Trying to tackle too many big issues at once is overwhelming. Choose one of the most pressing issues to deal with first, and brainstorm about how you can address it. If you’re at a loss, seek help from financially-wise family and friends or professional advisors.

Learning to overcome financial worry and anxiety is a process. Be patient with yourself, and you’ll see progress.

How do you avoid making financial decisions when you’re emotionally distressed?

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{ read the comments below or add one }

  • Raja Premi says:

    We can stop being worried if we already insured ourselves and belongings. At least a little right? 🙂

  • Andrew Hayes says:

    Get 8 hours sleep followed by a gym workout. Leave money issues to professional financial advisers.

  • Levi Blackman says:

    I have tried to use money as a emotional comfort in the past and it just doesn’t work out. It is a tool you can use to reach goals, but it isn’t something that is going to help you emotionally or to reduce stress. Money even increases stress because of the worry and unknown aspects involved.

    • David@MoneyNing.com says:

      It’s really funny how the more money people have, the more they are worried there won’t be enough. Yet, we spend so much time falsely believing that our life would be so much better if we just earn/accumulate a little more!

  • Joel says:

    That’s a great point! There’s research that shows that when we are stressed or super worried our IQ can drop the equivalent of 13 points. So avoiding those big decisions until you can chill out is great advice.

    • David@MoneyNing.com says:

      That’s interesting data, Joel,

      I used to have realizations of feeling dumber when I was stressed out for long periods of time. The lack of sleep, eating more comfort food than normal of course didn’t help my brain function at peak levels either!

      The best way for me to right the ship is to just chill out. I try to give myself a “prep talk” by reminding myself what a wonderful life I already have, which helps me relax and calm my nerves.

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