How do I get over the fear of losing money?

By Jessica Dosseh

Financial fears.

Fear is an incredibly personal experience.

Most people worry about money, but of all the things that scare us, the fear of losing money can seem like the most terrifying. Fearing the loss of money is inevitable and sometimes necessary, regardless of your circumstance. The issue isn't the fear itself; the important thing is to know how to respond when you are afraid.

When is fear healthy, and when is it not?

Emotions will always be part of our financial journey. Knowing when to acknowledge and handle how emotions influence our financial decisions is extremely important, especially when dealing with our financial future.

For some, the fear of losing money can be defined as a conservative perspective, but on the far side, it can become chrometophobia – the irrational fear of spending money.

"Chrometophobia can manifest in different ways, depending on the individual. While one person might repeatedly count their money for reassurance, another might be afraid to touch it, manage it, talk about it, or even think about it." – verywell mind.

Fear can be healthy. It gives you the survival instincts you need to keep yourself safe from danger. However, it can become unhealthy when it prevents you from doing things you would otherwise enjoy and makes you more cautious than you need to be.

It's important to remember that fear is a natural human emotion. What matters most is knowing the difference between fear that is keeping you safe and fear that is holding you back.

Common Money Fears.

Feeling financially lost.

Most people don't have confidence in their knowledge of personal finance. So if you feel financially lost, you are definitely not alone. Our society has a financial literacy problem; however, your level of financial literacy plays a very important role in your financial health. If you don't talk about money or know how it works, you may never be able to reach your desired goals.

"In 2021, only 36% of Gen Z adults scored 51% or above on a financial literacy test, compared to 48% of millennial adults, 48% of Gen X adults and 59% of baby boomer adults. 44% of millennials report they have advanced investing knowledge, compared to 37% of Gen X, 31% of Gen Z and 26% of baby boomers. While millennials have the most confidence in their knowledge of investing and cryptocurrency, they are also more likely to be financially constrained with debt." – annuity.

Everyone deserves better financial education.

Tip: The best place to start is to know what you don't know. Take a financial literacy test to determine the topics you don't understand. Make a list of the things you are struggling with, then make a plan to learn about them. Find a friend and set up time to learn together.

(Link to a financial literacy test people can take directly on the knowledge base) 

Fear of talking about money.

For the longest time, talking about money was seen as a taboo or as something that needed to be private. Often, this fear comes from not wanting others to perceive us as poor or label us as peacocking. Regardless of the perspective of others, it's essential to find a group of people you can talk to and learn from. The more discussions we have, the more we can start to understand which direction we should take our personal finance.

Tip: Start talking about money with people you trust. Talk to a professional advisor.

The more you talk about money, the easier it gets to let go of internal shame.

Fear of being a burden or needing to support others.

Supporting others or being the one supported can be a difficult position to be in, and the fear of either one can lead to poor financial planning and management due to overcompensation and guilt.

Money and relationships is a complex topic that can easily bring out the worst in people if not dealt with properly. Most people would rather not be in a position where they are upsetting their loved ones over money in fear of ruining existing relationships.

The journey to financial independence will most likely not be smooth-sailing for the majority of people, but it doesn't mean you have to struggle on your own. We all need help. That is why it's so important to get into the habit of talking about money so that when you do need help, you'll be able to ask for it. Prepare to have difficult conversations with your loved ones about money when the need arises.

Tip: Talk to your relatives about their finances. It will be a challenging conversation, but it has to happen for the sake of all those involved.

Fear of not being able to manage money.

The fear of not being able to manage your money can show up as the fear of never having enough or the fear of spending every penny.

Many people live with the assumption that they will never be able to get out of their financial situation, and this fear can be crippling, especially when you've put in a lot of work and see no real change. Managing your finances can seem complicated, but it doesn't have to be.

Tip: If you find yourself seriously doubting your ability to reach your financial goals, the first thing you might want to do is change your mindset. Believing that things will work out when it feels like it won't will be extremely challenging. Nevertheless, getting out of the scarcity mindset will give you more brain space to think of solutions that might help you regain your financial confidence.

Not knowing how to manage your money can lead to feeling lost financially, but before expanding your knowledge, you need to believe that you are capable and filled with abundance. An abundance mindset is associated with the belief and conviction that you have control over what happens in your life - and you use that conviction to take action.

Fear of losing all your money.

The hardest part about making money is keeping money. The fear of losing money can come from experiencing or witnessing others lose their money due to bad decision-making or bad luck.

If you are too afraid to lose money, you might be too scared to take on risks and opportunities, which will affect your decision-making process.

The loss of money is inevitable; however, you can work towards reducing the amount you do lose.

Tip: Take small steps before taking large steps. It's good to be cautious, but don't let your fear hold you back from potential opportunities. When investing, if you are not able to get over the fear of losing money by taking small steps, then maybe consider it as already lost – when you buy food and eat it, you can't return it, so pretend like you are buying something you can't return and let it sit there and grow.

Fear of never getting out of debt.

Americans owe over $800 billion in credit card debt as of Q1 2022.

When people compare what they earn to what they owe, it can feel like there is no way out. You can easily fall into an endless cycle of debt where you take a debt to pay debt or drown in interest as it keeps perpetually growing.

Tip: Whether you are afraid of getting into debt or afraid of not being able to get out of debt, it is important to identify the source of the fear, think about the outcomes, think about potential solutions, then take action because the worst thing you can do is do nothing. The more time you waste dreading over the fact that it is hard, the harder it will get to actually get out.

Fear of losing a job.

With the rise of unemployment rates, many people stress about the possibility of being out of work. In a January 2022 survey, 27% of Americans report worrying about job security.

For many people, work offers a sense of purpose, meaning, financial security, and economic mobility. When that lifeline gets weakened, it's easy to fear losing your job. It's not uncommon for people to get stuck in jobs they hate because of the fear of risking and losing their financial footing. However, despite this fear, 56% of Americans are unable to cover an unexpected $1,000 bill with savings, according to a telephone survey of more than 1,000 adults conducted in early January by Bankrate. Without enough liquid assets, it's hard to absorb a financial shock like a lost job, medical emergency, or other unexpected financial expenses.

The experience of getting laid off is very jarring, and the experience of being unemployed can be emotionally rough, and it never really gets easier, but if you look at it from a positive light, you can make significant salary and career growth because of this unfortunate circumstance.

Sometimes intentional or unintentional job hopping can propel your financial growth exponentially. It can teach you to save and invest strategically because it gives you time to reflect on where you are and how you plan to get to where you want to go.

Tip: Job security can't always be guaranteed, so the first step is to create at least a three to six month cushion in case you find yourself in an undesirable predicament. You can't wait around to be given security; you need to create it for yourself. Build an emergency fund, have a solid network of people, learn a variety of skills, have multiple streams of income, look for other jobs that you may be able to substitute your current job with if needed, and learn to negotiate.

Steps to acknowledge your fears.

Before you make a financial decision, take the time to consider these things:

1. Determine and define where your fear or reservations came from.

2. How does this fear affect you? Is it holding you back or pushing you forward?

3. Analyze every possible outcome, visualize the best-case and worst-case scenarios – Write it out!

4. Confront your fears using loss aversion.

5. Fear will always have a place in your life, but you don't have to let it control you.

6. If you cannot get through it on your own, it's okay to ask for help.

Depending on your level of fear, you might want to reach out to different types of professionals, like financial planners, life coaches, counselors, or even a therapist. Once you have gone through the process of acknowledging your fears, it's time to build positive long-term financial habits.